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Eurozone crisis live: Stock markets slide after Spain suffers bond auction blow Eurozone crisis live: Stock markets slide after Spain suffers bond auction blow
(40 minutes later)
5.09pm: It appears that Italian prime minister Mario Monti has given some concessions to Italy's unions in an attempt to get his labour reforms approved.
Monti has trying to make it easier for Italian firms to dismiss if they believe they need to cut their workforce for economic reasons. At present, Italian workers enjoy strong emnployment protections.
Labour minister Elsa Fornero told reporters in Rome this afternoon that the courts will be given more flexibility to reinstate sacked workers if they believe there was no clear reason for their dismissal. Fornero said:
In cases where the economic motivations for firing are manifestly non-existent, a judge can decide to reinstate that worker.
Opposition to the reforms has been fierce, threatening Monti's support base within the Italian parliament. It's not clear yet whether today's concessions will be enough to get the plans through.
4.36pm: The London stock market has suffered its worst day's trading since 21 November.4.36pm: The London stock market has suffered its worst day's trading since 21 November.
The FTSE 100 shed 134.57 to close at 5703.77, with every share falling, as indices across Europe nurse heavy losses.The FTSE 100 shed 134.57 to close at 5703.77, with every share falling, as indices across Europe nurse heavy losses.
Here's the damage:Here's the damage:
FTSE 100: down 2.3%
German DAX: down 3%
French CAC: down 2.8%
Italy's FTSE MIB: down 2.4%
Spain's IBEX: down 2.09%		FTSE 100: down 2.3%
German DAX: down 3%
French CAC: down 2.8%
Italy's FTSE MIB: down 2.4%
Spain's IBEX: down 2.09%
In New York, the Dow Jones is now down 1.15%.
Will Hedden, sales trader at IG Index, said events throughout the day had created a "perfect storm":Will Hedden, sales trader at IG Index, said events throughout the day had created a "perfect storm":
The non-event of the ECB rate decision was followed by a press conference from ECB chief Mario Draghi, who seemed to have inflation on his mind. Positive jobs data form the US was tempered by a slowdown in the growth of the service sector there in March.The non-event of the ECB rate decision was followed by a press conference from ECB chief Mario Draghi, who seemed to have inflation on his mind. Positive jobs data form the US was tempered by a slowdown in the growth of the service sector there in March.
As explained earlier, traders were already in downbeat mood after Federal Reserve minutes showed that further US quantitative easing was unlikely.As explained earlier, traders were already in downbeat mood after Federal Reserve minutes showed that further US quantitative easing was unlikely.
4.10pm: News in from Athens where Helena Smith says hundreds of Greeks are making their way to Syntagma Square to pay their respects to the pensioner who killed himself there this morning (see 11.36am for details of the suicide.)4.10pm: News in from Athens where Helena Smith says hundreds of Greeks are making their way to Syntagma Square to pay their respects to the pensioner who killed himself there this morning (see 11.36am for details of the suicide.)
Helena writes:Helena writes:
The impromptu gathering, organised by the aganaktismenoi, or outraged, who spent weeks protesting against austerity measures in the square last year, follows a wave of shocked statements by Greece's political leaders to the death.
In a note found at the site, the 77-year-old retired pharmacist said he decided to take his life because he did not want to be reduced to "foraging through rubbish bins to survive."		The impromptu gathering, organised by the aganaktismenoi, or outraged, who spent weeks protesting against austerity measures in the square last year, follows a wave of shocked statements by Greece's political leaders to the death.
In a note found at the site, the 77-year-old retired pharmacist said he decided to take his life because he did not want to be reduced to "foraging through rubbish bins to survive."
Meanwhile, says Helena, the government is pleading with the Panhellenic Seamens Union (PNO) to call off a 48-hour strike next week in the run up to Greek Orthodox Easter.Meanwhile, says Helena, the government is pleading with the Panhellenic Seamens Union (PNO) to call off a 48-hour strike next week in the run up to Greek Orthodox Easter.
Speaking to Skai news today, the Greek culture minister Pavlos Geroulanos beseeched the seamen not to go ahead with the industrial action, saying its effects would be devastating for tourism, the country's main foreign currency earner.Speaking to Skai news today, the Greek culture minister Pavlos Geroulanos beseeched the seamen not to go ahead with the industrial action, saying its effects would be devastating for tourism, the country's main foreign currency earner.
The walk-out would see ferries and cargo ships being impounded in ports nationwide next Tuesday and Wednesday traditionally the time when Greeks and tourists will begin making their way to islands to celebrate Easter on April 15th.The walk-out would see ferries and cargo ships being impounded in ports nationwide next Tuesday and Wednesday traditionally the time when Greeks and tourists will begin making their way to islands to celebrate Easter on April 15th.
"I ask them to think again, because we all know that every Greek family lives from tourism. Harming tourism at this moment in time doesn't do any good to anyone and actually turns people against you," Geroulanos said."I ask them to think again, because we all know that every Greek family lives from tourism. Harming tourism at this moment in time doesn't do any good to anyone and actually turns people against you," Geroulanos said.
Officials at the development ministry said they were pushing for a meeting with the union. "So far our efforts have failed but if oossible we would like to hold talks with them within the day," said one official.Officials at the development ministry said they were pushing for a meeting with the union. "So far our efforts have failed but if oossible we would like to hold talks with them within the day," said one official.
And in another development in Greece, AP is reporting that the governing board of the Greece's track and field federation has suspended all athletic operations after an emergency meeting. The federation's president had warned yesterday that deep cuts in state funding was threatening its survival, with some coaching staff and suppliers not being paid paid for months.And in another development in Greece, AP is reporting that the governing board of the Greece's track and field federation has suspended all athletic operations after an emergency meeting. The federation's president had warned yesterday that deep cuts in state funding was threatening its survival, with some coaching staff and suppliers not being paid paid for months.
3.51pm: Stock markets on both sides of the Atlantic are in full-blown retreat this afternoon.3.51pm: Stock markets on both sides of the Atlantic are in full-blown retreat this afternoon.
Wall Street opened lower, and the Dow Jones is now down 169 points, or 1.28%, at 13030. In London, the FTSE 100 is also nursing a triple-digit loss, down 131 points at 5706, a 2.2% fall.Wall Street opened lower, and the Dow Jones is now down 169 points, or 1.28%, at 13030. In London, the FTSE 100 is also nursing a triple-digit loss, down 131 points at 5706, a 2.2% fall.
The German Dax has suffered an even bigger fall, down 2.5%.The German Dax has suffered an even bigger fall, down 2.5%.
As my colleague Nick Fletcher explains here, investors have been spooked by today's disappointing Spanish debt auction -- and the news last night that the Federal Reserve is not inclined to embark on more stimulus measures (details here)As my colleague Nick Fletcher explains here, investors have been spooked by today's disappointing Spanish debt auction -- and the news last night that the Federal Reserve is not inclined to embark on more stimulus measures (details here)
3.38pm: Irish journalists quizzed Mario Draghi on the Ireland goverment's attempts to restructure €27bn of high-interest promissory – and found that the ECB president offered little support for Dublin.3.38pm: Irish journalists quizzed Mario Draghi on the Ireland goverment's attempts to restructure €27bn of high-interest promissory – and found that the ECB president offered little support for Dublin.
These bonds were taken out when Ireland was battling to stabilise its banking sector. It is now trying to swap these notes for new bonds, with a longer maturity and lower interest rates. Draghi, though, said that Ireland must meet its current repayment schedule:These bonds were taken out when Ireland was battling to stabilise its banking sector. It is now trying to swap these notes for new bonds, with a longer maturity and lower interest rates. Draghi, though, said that Ireland must meet its current repayment schedule:
We expect that future redemptions will be met according to the schedule to which the government has committed itself.We expect that future redemptions will be met according to the schedule to which the government has committed itself.
It is of the utmost importance that the commitments of the Irish state are met in line with standing contracts and agreements.It is of the utmost importance that the commitments of the Irish state are met in line with standing contracts and agreements.
Dublin's point, though, is that the high-yielding promissory notes simply force up its total borrowing costs and make it harder for Ireland to return to the markets. Also, Ireland's decision to nationalise its banking debts helped to protect the wider European banking sector, at the cost of huge debts for Irish taxpayers.Dublin's point, though, is that the high-yielding promissory notes simply force up its total borrowing costs and make it harder for Ireland to return to the markets. Also, Ireland's decision to nationalise its banking debts helped to protect the wider European banking sector, at the cost of huge debts for Irish taxpayers.
3.24pm: Mario Draghi's press conference didn't contain too many dramas. You can can see the European Central Bank president's opening statement here.3.24pm: Mario Draghi's press conference didn't contain too many dramas. You can can see the European Central Bank president's opening statement here.
It includes a warning that the eurozone recovery risks being hit by "a renewed intensification of tensions in euro area debt markets", which would also harm the wider economy. Further increases in commodity prices -- particularly oil -- is another danger.It includes a warning that the eurozone recovery risks being hit by "a renewed intensification of tensions in euro area debt markets", which would also harm the wider economy. Further increases in commodity prices -- particularly oil -- is another danger.
Draghi's statement concluded with a warning that his responsibility is to control inflation, not run the European economy:Draghi's statement concluded with a warning that his responsibility is to control inflation, not run the European economy:
It is up to national policy-makers to foster domestic developments which support the competitiveness of their economies.It is up to national policy-makers to foster domestic developments which support the competitiveness of their economies.
During the Q&A session, Draghi also made it clear that the ECB is not preparing to unwind its unconventional monetary policy yet (despite increasingly loud signals from Berlin). He said:During the Q&A session, Draghi also made it clear that the ECB is not preparing to unwind its unconventional monetary policy yet (despite increasingly loud signals from Berlin). He said:
Given the present conditions of output and unemployment, which is at historical high, any exit strategy talking for the time being is premature.Given the present conditions of output and unemployment, which is at historical high, any exit strategy talking for the time being is premature.
3.18pm: Apologies for that lengthy outage. The live blog suffered a technical wipeout just as the European Central Bank press conference began. Anyway, our technical experts have managed to fix it now (thanks guys!), so we're back in business.3.18pm: Apologies for that lengthy outage. The live blog suffered a technical wipeout just as the European Central Bank press conference began. Anyway, our technical experts have managed to fix it now (thanks guys!), so we're back in business.
Fortunately the comments below the line weren't affected.Fortunately the comments below the line weren't affected.
1.16pm: City experts agree that this morning's Spanish debt auction (as covered here) is a disappointment. Here's a round-up of some of the best reaction:1.16pm: City experts agree that this morning's Spanish debt auction (as covered here) is a disappointment. Here's a round-up of some of the best reaction:
Robin Bew, chief economist at The Economist Intelligence Unit, said the result showed that even the European Central Bank's recent offers of cheap loans* cannot cover up the economic malaise in Spain:Robin Bew, chief economist at The Economist Intelligence Unit, said the result showed that even the European Central Bank's recent offers of cheap loans* cannot cover up the economic malaise in Spain:
#Spain bond auction a bit lacklustre. ECB LTRO programme has limits in face of nerves over poor growth prospects#Spain bond auction a bit lacklustre. ECB LTRO programme has limits in face of nerves over poor growth prospects
— Robin Bew (@RobinBew) April 4, 2012— Robin Bew (@RobinBew) April 4, 2012

And here's some more comment via Reuters:
And here's some more comment via Reuters:
Achilleas Georgolopoulos, rate strategist at Lloyds:Achilleas Georgolopoulos, rate strategist at Lloyds:
The market is pessimistic about Spain. Domestic banks...failed to provide reasonable bids. Pressure on Spain will continue throughout the day. It won't stop now.The market is pessimistic about Spain. Domestic banks...failed to provide reasonable bids. Pressure on Spain will continue throughout the day. It won't stop now.
Annalisa Piazza, market economist at Newedge Strategy:
Annalisa Piazza, market economist at Newedge Strategy:
Market dealers seem to look at fundamentals now, with risks of a deep recession undermining the positive effects of the large ECB liquidity injection.Market dealers seem to look at fundamentals now, with risks of a deep recession undermining the positive effects of the large ECB liquidity injection.
Peter Chatwell, interest rate strategist at Credit AgricolePeter Chatwell, interest rate strategist at Credit Agricole
The results are a far cry from the blowout auctions we saw between December and February, which will no doubt be interpreted as the LTRO* bid having dried up.The results are a far cry from the blowout auctions we saw between December and February, which will no doubt be interpreted as the LTRO* bid having dried up.

* - Long-term refinancing operation, in which the ECB has lent around €1trn to the banking sector in two operations, last December and in March.
* - Long-term refinancing operation, in which the ECB has lent around €1trn to the banking sector in two operations, last December and in March.
12.47pm: No change from the European Central Bank.12.47pm: No change from the European Central Bank.
It has announced that the benchmark interest rate across the eurozone will remain at 1%. Here's the official statement.It has announced that the benchmark interest rate across the eurozone will remain at 1%. Here's the official statement.
The fun begins in 45 minutes when ECB president Mario Draghi holds a press conference.....The fun begins in 45 minutes when ECB president Mario Draghi holds a press conference.....
12.29pm: Fitch just reaffirmed Denmark's AAA rating, with a stable outlook, saying the country has recovered well from the global recession. Fitch added that it now has less concern about the Danish banking system, or the country's ability to peg the crown against the euro.12.29pm: Fitch just reaffirmed Denmark's AAA rating, with a stable outlook, saying the country has recovered well from the global recession. Fitch added that it now has less concern about the Danish banking system, or the country's ability to peg the crown against the euro.
11.58am: Unlike Spain, Portugal enjoyed some success in the bond markets today. Lisbon's IGCP debt agency sold €1bn of 18-month treasury bills at an average yield of 4.537%, sharply lower than the 5.993% paid in March 2011.11.58am: Unlike Spain, Portugal enjoyed some success in the bond markets today. Lisbon's IGCP debt agency sold €1bn of 18-month treasury bills at an average yield of 4.537%, sharply lower than the 5.993% paid in March 2011.
That previous weak auction helped to push Portugal into becoming the third eurozoen country to seek financial help (the first anniversary of this bailout falls this Saturday).That previous weak auction helped to push Portugal into becoming the third eurozoen country to seek financial help (the first anniversary of this bailout falls this Saturday).
Elisabeth Afseth of Investec told Reuters the Portuguese auction had gone well, but cautioned:Elisabeth Afseth of Investec told Reuters the Portuguese auction had gone well, but cautioned:
It's still very early to tell if Portugal will be able to return to bond markets in September next year.It's still very early to tell if Portugal will be able to return to bond markets in September next year.
11.47am: Spanish debt is taking more of a pummelling -- with its 10-year bond yields just breaking above the 5.7% mark (from below 5.5% before this morning's auction).11.47am: Spanish debt is taking more of a pummelling -- with its 10-year bond yields just breaking above the 5.7% mark (from below 5.5% before this morning's auction).
(That means the value of those bonds has fallen this morning, as investors perceive that Spanish debt is riskier).(That means the value of those bonds has fallen this morning, as investors perceive that Spanish debt is riskier).
11.36am: Over to Greece, where our correspondent, Helena Smith, says there is more alarming news on the tragic effects of growing poverty in the country where the debt crisis began.11.36am: Over to Greece, where our correspondent, Helena Smith, says there is more alarming news on the tragic effects of growing poverty in the country where the debt crisis began.
Helena writes:Helena writes:
In another sign of the human dimension Greece's debt drama is having, the nation awoke to two pieces of shocking news this morning – a man killing himself in front of the Greek parliament and the most damning proof yet that children are also paying a heavy price for the country's economic woes.In another sign of the human dimension Greece's debt drama is having, the nation awoke to two pieces of shocking news this morning – a man killing himself in front of the Greek parliament and the most damning proof yet that children are also paying a heavy price for the country's economic woes.
The man, a 77-year-old pensioner, died in Syntagma Square, the capital's central plaza, in front of disbelieving passers by. Greek media reports linked the death to the pensioner's fear of debts. "I am leaving so as not to pass on debts to my children," he was quoted as saying by the Newsit news portal, which reported that neighbours spoke of the tragic figure as "upstanding and polite."The man, a 77-year-old pensioner, died in Syntagma Square, the capital's central plaza, in front of disbelieving passers by. Greek media reports linked the death to the pensioner's fear of debts. "I am leaving so as not to pass on debts to my children," he was quoted as saying by the Newsit news portal, which reported that neighbours spoke of the tragic figure as "upstanding and polite."
The suicide has encapsulated the growing desperation of Greece's older generation whose pensions and benefits have been heavily cut by a government desperately trying to rein in run-away public finances.
Athens is under unprecedented pressure by its 'troika' of international creditors [the EU, ECB and IMF] to trim a public deficit that stood at just over 15% in 2009, when the crisis erupted, to 3% by 2015 when its latest package of rescue loans end.		The suicide has encapsulated the growing desperation of Greece's older generation whose pensions and benefits have been heavily cut by a government desperately trying to rein in run-away public finances.
Athens is under unprecedented pressure by its 'troika' of international creditors [the EU, ECB and IMF] to trim a public deficit that stood at just over 15% in 2009, when the crisis erupted, to 3% by 2015 when its latest package of rescue loans end.
The news coincided with the release of a report by the United Nations Children's Fund (UNICEF) which estimates that some 439,000 children now live under the poverty line in Greece – the equivalent of 23% of the total population compared to an average 20.5% in other European countries.The news coincided with the release of a report by the United Nations Children's Fund (UNICEF) which estimates that some 439,000 children now live under the poverty line in Greece – the equivalent of 23% of the total population compared to an average 20.5% in other European countries.
The report cited the growing number of cases of underfed children fainting in schools, saying poverty was more pronounced in single-parent families.The report cited the growing number of cases of underfed children fainting in schools, saying poverty was more pronounced in single-parent families.
The poverty levels are more stunning given Greece's dramatically declining population. Children as a proportion of the country's population have dwindled from 32% in 1961 to 17.4% in 2011, according to the report. More than a third of Greece's entire population are living under the poverty line compared to a fifth before the outbreak of the crisis.The poverty levels are more stunning given Greece's dramatically declining population. Children as a proportion of the country's population have dwindled from 32% in 1961 to 17.4% in 2011, according to the report. More than a third of Greece's entire population are living under the poverty line compared to a fifth before the outbreak of the crisis.
11.11am: The latest German industrial orders, just released, show that the country's manufacturers are suffering from falling demand from abroad.11.11am: The latest German industrial orders, just released, show that the country's manufacturers are suffering from falling demand from abroad.
Industrial orders rose by 0.3% month-on-month in February. That's much less than the 1.2% rise forecast by economists, but the picture is murky because January's plunge has been revised from -2.7% to -1.8%.Industrial orders rose by 0.3% month-on-month in February. That's much less than the 1.2% rise forecast by economists, but the picture is murky because January's plunge has been revised from -2.7% to -1.8%.
Within the data, there was a 3.8% drop in consumer goods orders. Foreign orders for consumable goods slumped by 5.7% month-on-month, while domestic orders were just 1.7% lower.Within the data, there was a 3.8% drop in consumer goods orders. Foreign orders for consumable goods slumped by 5.7% month-on-month, while domestic orders were just 1.7% lower.
There was a similar picture for capital goods (large orders, such as machinery) where total orders rose by 1.3% – with domestic orders 1.8% higher but spending from overseas up just 1%.There was a similar picture for capital goods (large orders, such as machinery) where total orders rose by 1.3% – with domestic orders 1.8% higher but spending from overseas up just 1%.
10.55am: In the reader comments below, jimriddle called the auction correctly:10.55am: In the reader comments below, jimriddle called the auction correctly:
Odds on that the spanish bond auction will be undersubscribed...Odds on that the spanish bond auction will be undersubscribed...
After yesterday, who'd want some of that?After yesterday, who'd want some of that?
While KhakiSuit and Stomachtrouble both identified the 2020 Spanish bond as the key factor to watch:While KhakiSuit and Stomachtrouble both identified the 2020 Spanish bond as the key factor to watch:
As KhakiSuit explains:As KhakiSuit explains:
The six-month / two-year bond rates are - while not completely irrelevant - more subject to very short-term trading thinking.The six-month / two-year bond rates are - while not completely irrelevant - more subject to very short-term trading thinking.
If anything, rolling over your debt with such short-term bonds indicates to me that these countries know that the game will soon be up... They can't even afford the interest payments that longer-term bonds would yield.If anything, rolling over your debt with such short-term bonds indicates to me that these countries know that the game will soon be up... They can't even afford the interest payments that longer-term bonds would yield.

The yield on that 2020 bond, of course, rose to 5.338%, from 5.156%.
The yield on that 2020 bond, of course, rose to 5.338%, from 5.156%.
10.49am: My colleague Katie Allen has the full story on Britain's resurgent services sector, here.10.49am: My colleague Katie Allen has the full story on Britain's resurgent services sector, here.
10.26am: In the secondary bond market, Spanish bond yields keep rising. The yield on its 10-year bonds just rose above the 5.6% mark. This graph shows how they've been rising all morning, and accelerated in the last few minutes:10.26am: In the secondary bond market, Spanish bond yields keep rising. The yield on its 10-year bonds just rose above the 5.6% mark. This graph shows how they've been rising all morning, and accelerated in the last few minutes:
(with thanks to Yiannis Mouzakis, who has access to a more colourful Reuters terminal than I).(with thanks to Yiannis Mouzakis, who has access to a more colourful Reuters terminal than I).
That's some way below the levels seen last autumn, when Spanish yields threatened to hit the 7% level. But the calm created by the €1trn of cheap loans offered by the European Central Bank may have worn off.That's some way below the levels seen last autumn, when Spanish yields threatened to hit the 7% level. But the calm created by the €1trn of cheap loans offered by the European Central Bank may have worn off.
10.17am: The Spanish stock market has fallen to a four-month low, following this morning's disappointing bond auctions (see 9.49am for the details). Other European markets are also dropping.10.17am: The Spanish stock market has fallen to a four-month low, following this morning's disappointing bond auctions (see 9.49am for the details). Other European markets are also dropping.
Here's the latest:Here's the latest:
Spain's IBEX has fallen by 0.8% to 7722, a four-month low.
The German DAX is down 1.64% at 6864.
The French CAC is down 1.3% at 3362
The FTSE 100 is down 1.1% at 5772.		Spain's IBEX has fallen by 0.8% to 7722, a four-month low.
The German DAX is down 1.64% at 6864.
The French CAC is down 1.3% at 3362
The FTSE 100 is down 1.1% at 5772.
Josh Raymond of City Index summed up the mood, saying:Josh Raymond of City Index summed up the mood, saying:
The Spanish bond auction was fairly poor, with the indedbted country only able to sell €2.59bn when it had hoped to raise as much as €3.5bn, in the first real sign of confidence, or rather lack of, to the country's budgetThe Spanish bond auction was fairly poor, with the indedbted country only able to sell €2.59bn when it had hoped to raise as much as €3.5bn, in the first real sign of confidence, or rather lack of, to the country's budget
10.04am: Another blow to the eurozone – data just released showed that retail sales fell by 0.1% in February, and were 2.1% lower than a year ago.10.04am: Another blow to the eurozone – data just released showed that retail sales fell by 0.1% in February, and were 2.1% lower than a year ago.
9.58am: The cost of insuring Spanish debt against default has jumped following this morning's weak bond auction (see 9.49am).9.58am: The cost of insuring Spanish debt against default has jumped following this morning's weak bond auction (see 9.49am).
According to Gavan Nolan of Markit, Spanish credit default swaps have hit their highest level since last November, dragging Italian CDS with them.According to Gavan Nolan of Markit, Spanish credit default swaps have hit their highest level since last November, dragging Italian CDS with them.
Weak bond auction sends Spain CDS (453bps) to widest level since Nov 28. Italy (408bps, +26) also feeling the pain.Weak bond auction sends Spain CDS (453bps) to widest level since Nov 28. Italy (408bps, +26) also feeling the pain.
— Gavan Nolan (@GavanNolan) April 4, 2012— Gavan Nolan (@GavanNolan) April 4, 2012
9.49am: Breaking news – Spain's bond auction has gone badly.9.49am: Breaking news – Spain's bond auction has gone badly.
The Spanish government sold much less than targeted – only managing to find buyers for €2.59bn worth of debt – well short of the maximum target of €3.5bn.The Spanish government sold much less than targeted – only managing to find buyers for €2.59bn worth of debt – well short of the maximum target of €3.5bn.
Spain was also forced to pay higher interest rates to sell the bonds on offer:Spain was also forced to pay higher interest rates to sell the bonds on offer:
At the auction, the average yield on bonds maturing in 2020 rose to 5.338%, compared to 5.156% at the previous auction of its type. That means that investors demanded a higher rate of return for buying the debt.At the auction, the average yield on bonds maturing in 2020 rose to 5.338%, compared to 5.156% at the previous auction of its type. That means that investors demanded a higher rate of return for buying the debt.
The yield on bonds maturing in 2016 jumped to 4.319% (from 3.376%), while the yield on bonds maturing in 2015 rose to 2.89% (from 2.44%)The yield on bonds maturing in 2016 jumped to 4.319% (from 3.376%), while the yield on bonds maturing in 2015 rose to 2.89% (from 2.44%)
Not great news for the Madrid government. The euro crisis has just ratcheted up a notch....Not great news for the Madrid government. The euro crisis has just ratcheted up a notch....
9.45am: Andrew Sentance, a former member of the Bank of England's monetary policy committee, points out that UK economic data has been consistently good since the Organisation for Economic Co-operation and Development claimed that Britain was back in recession:9.45am: Andrew Sentance, a former member of the Bank of England's monetary policy committee, points out that UK economic data has been consistently good since the Organisation for Economic Co-operation and Development claimed that Britain was back in recession:
A hat-trick for the #PMI with the services sector scoring a blinder: twitpic.com/95eet8. It is now OECD - 0 UK economy 6, since MondayA hat-trick for the #PMI with the services sector scoring a blinder: twitpic.com/95eet8. It is now OECD - 0 UK economy 6, since Monday
— Andrew Sentance (@asentance) April 4, 2012— Andrew Sentance (@asentance) April 4, 2012
9.35am: Britain's service sector surged ahead last month, beating economist forecasts and calming fears that the UK could suffer a double-dip recession.9.35am: Britain's service sector surged ahead last month, beating economist forecasts and calming fears that the UK could suffer a double-dip recession.
March's service sector PMI hit 55.3, up from 53.8 in February, showing that growth accelerated last month. That's the 15th month of growth in a row.March's service sector PMI hit 55.3, up from 53.8 in February, showing that growth accelerated last month. That's the 15th month of growth in a row.
According to Markit, who compiles the data, this indicates that the UK economy grew by as much as 0.5% in the first quarter of 2012.According to Markit, who compiles the data, this indicates that the UK economy grew by as much as 0.5% in the first quarter of 2012.
David Noble, chief executive of the Chartered Institute of Purchasing & Supply, commented:David Noble, chief executive of the Chartered Institute of Purchasing & Supply, commented:
The UK service sector has rounded off Q1 in confident fashion, with growth at its highest since Q2 2010, showing that fears of a double dip recession were unfounded.The UK service sector has rounded off Q1 in confident fashion, with growth at its highest since Q2 2010, showing that fears of a double dip recession were unfounded.
9.16am: Howard Archer of IHS Global Insight reckons that this morning's service sector data (see 9.03am) confirms that the eurozone economy shrank in the last three months. He writes:9.16am: Howard Archer of IHS Global Insight reckons that this morning's service sector data (see 9.03am) confirms that the eurozone economy shrank in the last three months. He writes:
The region is still facing major headwinds, notably including increased fiscal tightening in many countries, markedly rising unemployment overall, and increased oil prices.The region is still facing major headwinds, notably including increased fiscal tightening in many countries, markedly rising unemployment overall, and increased oil prices.
And while Eurozone sovereign debt tensions have been eased by the European Central Bank's actions and a second bail out for Greece, the problems are far from resolved. Meanwhile, relatively muted global growth is currently capping export ordersAnd while Eurozone sovereign debt tensions have been eased by the European Central Bank's actions and a second bail out for Greece, the problems are far from resolved. Meanwhile, relatively muted global growth is currently capping export orders
Bad news all round, then.Bad news all round, then.
If you add today's service data to other PMIs earlier this week, you get a combined PMI of 49.1, down from 49.3 in February. That indicates a deeper contraction in March (the further below 50 the PMI, the sharper the rate of contraction).If you add today's service data to other PMIs earlier this week, you get a combined PMI of 49.1, down from 49.3 in February. That indicates a deeper contraction in March (the further below 50 the PMI, the sharper the rate of contraction).
9.03am: The latest services data from across the euro area has just been released, and is slightly better than expected. But it probably won't be enought to keep the eurozone out of recession.9.03am: The latest services data from across the euro area has just been released, and is slightly better than expected. But it probably won't be enought to keep the eurozone out of recession.
The final Eurozone services PMI data for March came in at 49.2, which is slightly better than expected but still means that the sector contracted last month (anything below 50 = falling activity).The final Eurozone services PMI data for March came in at 49.2, which is slightly better than expected but still means that the sector contracted last month (anything below 50 = falling activity).
Germany posted growth again, but at a four-month low, while France's service sector nudged a little higher. It was a darker picture in Italy and Spain, though, where service sector activity fell sharply.Germany posted growth again, but at a four-month low, while France's service sector nudged a little higher. It was a darker picture in Italy and Spain, though, where service sector activity fell sharply.
Here's a summary of March's service sector PMIs (which are based on interviews with purchasing managers across the region):Here's a summary of March's service sector PMIs (which are based on interviews with purchasing managers across the region):
Germany: 52.1 (down from 52.8 in February)
France: 50.1 (up from 50.0 in February)
Italy: 44.3 (up from 44.1 in February)
Spain: 46.3 (up from 41.9 in February)		Germany: 52.1 (down from 52.8 in February)
France: 50.1 (up from 50.0 in February)
Italy: 44.3 (up from 44.1 in February)
Spain: 46.3 (up from 41.9 in February)
8.45am: John Redwood, the eurosceptic Tory MP, has opined on yesterday's shortlisted nominations for the Wolfson Economics Prize (which offers £250,000 for the best way to handle the break-up of the eurozone).8.45am: John Redwood, the eurosceptic Tory MP, has opined on yesterday's shortlisted nominations for the Wolfson Economics Prize (which offers £250,000 for the best way to handle the break-up of the eurozone).
While Redwood reckons the five shortlisted entries were all 'innovative', he believes there is no hope of European leaders preparing for the end of the single currency in its current form.While Redwood reckons the five shortlisted entries were all 'innovative', he believes there is no hope of European leaders preparing for the end of the single currency in its current form.
Redwood writes:Redwood writes:
I detect no wish to plan an orderly exit for the most stressed countries today whilst the markets are temporarily calmed by the large injection of ECB money. I do not expect to wake up soon to negotiations over the creation of one or two new currencies with the complex Treaty changes that would require, nor for an emergency exit which they did not put in place in calmer times. No-one is clamouring for new currencies based on unscrambling an egg, with easter titles. Whilst an emergency exit is always a good idea in case a building catches fire, trying to knock one through when the fire has started might just fan the flames more quickly.I detect no wish to plan an orderly exit for the most stressed countries today whilst the markets are temporarily calmed by the large injection of ECB money. I do not expect to wake up soon to negotiations over the creation of one or two new currencies with the complex Treaty changes that would require, nor for an emergency exit which they did not put in place in calmer times. No-one is clamouring for new currencies based on unscrambling an egg, with easter titles. Whilst an emergency exit is always a good idea in case a building catches fire, trying to knock one through when the fire has started might just fan the flames more quickly.
Redwood also took a pop at the coverage given to young Jurre Herman, the Dutch boy who won €100 of vouchers for his proposal (and who is pictured on the front of The Times today).Redwood also took a pop at the coverage given to young Jurre Herman, the Dutch boy who won €100 of vouchers for his proposal (and who is pictured on the front of The Times today).
The media has decided to trivialise the whole topic by concentrating on a picture of a pizza drawn by a 10 year old.The media has decided to trivialise the whole topic by concentrating on a picture of a pizza drawn by a 10 year old.
You can see Herman's entry here.You can see Herman's entry here.
8.34am: Spanish goverment debt traded in the secondary bond market has come under a bit of pressure this morning, ahead of the bond auction due around 9.30am BST.8.34am: Spanish goverment debt traded in the secondary bond market has come under a bit of pressure this morning, ahead of the bond auction due around 9.30am BST.
That has pushed up the yield (the measure of the interest paid by the debt) on its five-year bonds by 13 basis points to 4.39%. That's the highest level since January 11th.That has pushed up the yield (the measure of the interest paid by the debt) on its five-year bonds by 13 basis points to 4.39%. That's the highest level since January 11th.
The 10-year bond yield is also a little higher, above 5.5%.The 10-year bond yield is also a little higher, above 5.5%.
Investors may be concerned by the news that Spain's debts will hit their highest level for two decades in 2012.Investors may be concerned by the news that Spain's debts will hit their highest level for two decades in 2012.
As my colleague Katie Allen wrote last night:As my colleague Katie Allen wrote last night:
Despite announcing its most austere budget for more than 30 years last week, Spain's government admitted on Tuesday that the debt-to-GDP ratio will jump to 79.8% in 2012 from 68.5% last year.Despite announcing its most austere budget for more than 30 years last week, Spain's government admitted on Tuesday that the debt-to-GDP ratio will jump to 79.8% in 2012 from 68.5% last year.
Ministers put the rising ratio, which will still be below the European average, down to high interest payments, Spain's contribution to the Greek bailout and the cost of support for its own banks and regional authorities.Ministers put the rising ratio, which will still be below the European average, down to high interest payments, Spain's contribution to the Greek bailout and the cost of support for its own banks and regional authorities.
8.17am: As expected, shares have fallen in early trading in Europe. The German Dax dropped 0.8% at the open, with France's CAC down 0.5%. In the London, the FTSE 100 has lost 22 points, or 0.38%, to 5815.8.17am: As expected, shares have fallen in early trading in Europe. The German Dax dropped 0.8% at the open, with France's CAC down 0.5%. In the London, the FTSE 100 has lost 22 points, or 0.38%, to 5815.
The talk in the City is that traders are disappointed by last night's minutes from the Federal Reserve's most recent meeting. Just two of the 10 members of Fed's Open Market committee felt that the US economy was so fragile that it needed new stimulus methods.The talk in the City is that traders are disappointed by last night's minutes from the Federal Reserve's most recent meeting. Just two of the 10 members of Fed's Open Market committee felt that the US economy was so fragile that it needed new stimulus methods.
That indicates that more quantitative easing (creating new electronic money to buy bonds) is off the agenda. Previous injections of QE have helped to drive shares higher, so some investors had hoped for another dose.That indicates that more quantitative easing (creating new electronic money to buy bonds) is off the agenda. Previous injections of QE have helped to drive shares higher, so some investors had hoped for another dose.
On the other hand, of course, it's good news that most members of the FOMC think America's recovery is taking hold. But notOn the other hand, of course, it's good news that most members of the FOMC think America's recovery is taking hold. But not
As Gary Jenkins of Swordfish Research commented:As Gary Jenkins of Swordfish Research commented:
What a strange world we live in when any hint of a pause in monetary easing is regarded as negative for risk assets, rather than as an indication that economic growth is making any further stimulus redundantWhat a strange world we live in when any hint of a pause in monetary easing is regarded as negative for risk assets, rather than as an indication that economic growth is making any further stimulus redundant
The market still seems somewhat addicted to central bank assistance which makes me think that this crisis still has a long way to go.The market still seems somewhat addicted to central bank assistance which makes me think that this crisis still has a long way to go.
And as reader jamesmitch points out in the comments below, the Fed has already mopped up an awful lot of US debt since the financial crisis began:And as reader jamesmitch points out in the comments below, the Fed has already mopped up an awful lot of US debt since the financial crisis began:
Next time you read about the ECB bailing out some eurozone country; or about the Bank of England going for another round of Quantitative Easing, compare what you read with this number: total Fed holdings of US debt are now (4Q 2011) $10.45 trillion.Next time you read about the ECB bailing out some eurozone country; or about the Bank of England going for another round of Quantitative Easing, compare what you read with this number: total Fed holdings of US debt are now (4Q 2011) $10.45 trillion.
8.10am: This morning's German factory orders data for February (due at 10am BST) will show whether Europe's manufacturing powerhouse stumbled last month as the eurozone slid towards recession.8.10am: This morning's German factory orders data for February (due at 10am BST) will show whether Europe's manufacturing powerhouse stumbled last month as the eurozone slid towards recession.
A month ago, data for January was surprisingly bad, with German factory orders unexpectedly declining due to falling demand from overseas for 'big-ticket' items such such as machinery.A month ago, data for January was surprisingly bad, with German factory orders unexpectedly declining due to falling demand from overseas for 'big-ticket' items such such as machinery.
Jeremy Cook, chief economist at World First, reckons the German factory orders could actually be more important than the European Central Bank's meeting:Jeremy Cook, chief economist at World First, reckons the German factory orders could actually be more important than the European Central Bank's meeting:
Personally think that GER Factory Orders will be a more interesting watch than the ECB today...Personally think that GER Factory Orders will be a more interesting watch than the ECB today...
— World First (@World_First) April 4, 2012— World First (@World_First) April 4, 2012
7.57am: There's plenty of economic data to keep up busy this morning, as well as the Spanish bond auction and the ECB meeting.7.57am: There's plenty of economic data to keep up busy this morning, as well as the Spanish bond auction and the ECB meeting.
Here's today's agenda:Here's today's agenda:
• Auction of Spanish bonds maturing in 2015, 2016 and 2020: from 9.30am BST / 10.30am CET
• Eurozone service sector PMI for March: 9am BST / 10am CET
• UK services sector PMI for March: 9.30am BST
• Eurozone retail sales data: 10am BST / 11am CET
• German factory orders in February: 11am BST / noon CET
• European Central Bank decision on monetary policy: 12.45pm BST / 1.45pm CET
• European Central Bank press conference: 1.30pm BST / 2.30pm CET
• US ISM non-manufacturing data for March: 3pm BST / 10am EST		• Auction of Spanish bonds maturing in 2015, 2016 and 2020: from 9.30am BST / 10.30am CET
• Eurozone service sector PMI for March: 9am BST / 10am CET
• UK services sector PMI for March: 9.30am BST
• Eurozone retail sales data: 10am BST / 11am CET
• German factory orders in February: 11am BST / noon CET
• European Central Bank decision on monetary policy: 12.45pm BST / 1.45pm CET
• European Central Bank press conference: 1.30pm BST / 2.30pm CET
• US ISM non-manufacturing data for March: 3pm BST / 10am EST
7.50am: Good morning, and welcome back to our rolling coverage of the eurozone debt crisis.7.50am: Good morning, and welcome back to our rolling coverage of the eurozone debt crisis.
It should be quite a busy day. Coming up: Spain faces an early test of its new austerity budget when it attempts to sell €3.5bn of government bonds. This morning's auction should show whether Madrid retains the support of the financial markets – after admitting yesterday that its debts will rise sharply to a 20-year high in 2012.. Last week's general strike is still fresh in the memory.It should be quite a busy day. Coming up: Spain faces an early test of its new austerity budget when it attempts to sell €3.5bn of government bonds. This morning's auction should show whether Madrid retains the support of the financial markets – after admitting yesterday that its debts will rise sharply to a 20-year high in 2012.. Last week's general strike is still fresh in the memory.
Also, the European Central Bank is holding its monthly meeting to set monetary policy – a chance to hear Mario Draghi's views on the current situation. The ECB is not expected to bow to pressure to begin unwinding its loose monetary policy, and should also leave interest rates unchanged.Also, the European Central Bank is holding its monthly meeting to set monetary policy – a chance to hear Mario Draghi's views on the current situation. The ECB is not expected to bow to pressure to begin unwinding its loose monetary policy, and should also leave interest rates unchanged.
A rush of economic statistics this morning will show how Europe's services sector fared last month, following Monday's gloomy manufacturing data.A rush of economic statistics this morning will show how Europe's services sector fared last month, following Monday's gloomy manufacturing data.
And in the financial markets, traders expect shares to fall, after the minutes of the Federal Reserve's last meeting (released last night), suggested that the Fed was unlikely to conduct more efforts to stimulate the US economy soon.And in the financial markets, traders expect shares to fall, after the minutes of the Federal Reserve's last meeting (released last night), suggested that the Fed was unlikely to conduct more efforts to stimulate the US economy soon.