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Eurozone crisis live: Europe heading for showdown over eurobonds at growth talks Eurozone crisis live: Europe heading for showdown over eurobonds at growth talks
(40 minutes later)
4.13pm: We've just uploaded the full transcript of our interview with Alexis Tsipras, in which the Syriza leader warns Helena Smith that Greece faces a humanitarian crisis unless it changes course (and a lot more besides....)
/> 		5.13pm: Fitch has just announced that it has put three Cypriot banks on rating watch negative, which could lead to a credit rating downgrade.
Fitch blamed the uncertainty over Greece's future, warning that Cypriot banks remain highly sensitive to heightened risks in Greece, especially if it quit the euro (as Cyprus's banking sector holds large amounts of Greek debt).
In the event that the new general elections scheduled for 17 June fail to produce a government with a mandate to continue with the EU-IMF programme of fiscal austerity and structural reform, an exit of Greece from EMU would be probable and this would likely result in widespread default on private sector as well as sovereign euro-denominated obligations.
The full statement is here.
5.01pm: European stock markets have put last week's selloff behind them, with most indices posting reasonably solid gains today despite the lack of real progress at last weekend's G8 summit.
Here are the closing numbers:
FTSE 100: up 36 points at 5304, + 0.7%
German DAX: up 59 points at 6331, + 0.85%
French DAX: up 19 points at 3027, + 0.64%
Spanish IBEX: down 42 points at 6524, - 0.65%
Italian FTSE MIB: down 36 points at 13012, - 0.3%.
The word in the City is that the recent rout in share prices went too far, but there's no feeling that the crisis is any closer to being resolved. David Jones of IG Index explains:
While it is usually relatively easy to come up with a rational reason as to why a market went up or down, it's not so clearcut today. It just seems that for one day, traders believe that the move which has wiped off around 500 points from the blue-chip index [the FTSE 1pp] this month has gone too far, for now at least.
4.37pm: We're getting some news snaps out of Berlin, where German finance minister Wolfgang Schäuble and his French counterpart Pierre Moscovici have been holding talks (see 1.49pm).
Moscovici told reporters that joint euro bonds will be a topic of discussion at Wednesday's meeting. Given the chorus of opposition voiced by German officials/ministers this morning, though, it's not yet clear how much progress we can expect. Moscovici also said he had enjoyed a "constructive exchange" with Schäuble (read into that what you like!).
For his part, Schäuble said that 'everything' will be discussed at the informal summit in Brussels in two day's time. No excuse for not making some progress, eh?....
4.13pm: We've just uploaded the full transcript of our interview with Alexis Tsipras, in which the Syriza leader warns Helena Smith that Greece faces a humanitarian crisis unless it changes course (and a lot more besides....)
3.54pm: In Greece, caretaker prime minister Panagiotis Pikramenos has been meeting with the various leaders of Greece's political parties. This has allowed him to guage views ahead of Wednesday's summit meeting in Brussels.3.54pm: In Greece, caretaker prime minister Panagiotis Pikramenos has been meeting with the various leaders of Greece's political parties. This has allowed him to guage views ahead of Wednesday's summit meeting in Brussels.
With Alexis Tsipras not attending (becuase of his trip to Paris, see 11.16am), the two leaders of the mainstream parties have seized the opportunity to push their own positions.With Alexis Tsipras not attending (becuase of his trip to Paris, see 11.16am), the two leaders of the mainstream parties have seized the opportunity to push their own positions.
Evangelos Venizelos, head of Pasok, told reporters he told Pikramenos that h must push the EU to release structural investment funds. Venizelos said Greece "constantly comes up against bureaucratic and legal obstacles". adding that he would welcome eurobonds as long as they cut Greece's borrowing costs (which they surely would).Evangelos Venizelos, head of Pasok, told reporters he told Pikramenos that h must push the EU to release structural investment funds. Venizelos said Greece "constantly comes up against bureaucratic and legal obstacles". adding that he would welcome eurobonds as long as they cut Greece's borrowing costs (which they surely would).
Antonis Samaras also spoke to the media, arguing that Greece "must benefit" as European leaders such as François Hollande push for growth. Samaras added, though, that:Antonis Samaras also spoke to the media, arguing that Greece "must benefit" as European leaders such as François Hollande push for growth. Samaras added, though, that:
To benefit, we have to stay inside the euro and win measures that will allow our economy to grow quickly and relieve Greek society.To benefit, we have to stay inside the euro and win measures that will allow our economy to grow quickly and relieve Greek society.
3.18pm: The US stock market is clawing back some of last week's losses in early trading, with the Dow Jones index up 67 points at 12,436, a gain of around 0.5%.3.18pm: The US stock market is clawing back some of last week's losses in early trading, with the Dow Jones index up 67 points at 12,436, a gain of around 0.5%.
Greece appears to have temporarily drifted out of the spotlight. After the worst week's trading in 2012, there's a feeling that the panic in recent days may have been premature (especially when Wall Street has got the Facebook IPO flop to worry about instead).Greece appears to have temporarily drifted out of the spotlight. After the worst week's trading in 2012, there's a feeling that the panic in recent days may have been premature (especially when Wall Street has got the Facebook IPO flop to worry about instead).
2.47pm: Developments in Spain today. Prime minister Mariano Rajoy has won an invitation to what was going to be a three-way meeting on growth between Angela Merkel, François Hollande and Mario Monti early next month to talk about growth.2.47pm: Developments in Spain today. Prime minister Mariano Rajoy has won an invitation to what was going to be a three-way meeting on growth between Angela Merkel, François Hollande and Mario Monti early next month to talk about growth.
The invitation came from Monti, but followed a bilateral meeting between Rajoy and Merkel in Chicago yesterday. Why should Spain be invited to join Germany, France and Italy? Our Madrid correspondent Giles Tremlett explains:The invitation came from Monti, but followed a bilateral meeting between Rajoy and Merkel in Chicago yesterday. Why should Spain be invited to join Germany, France and Italy? Our Madrid correspondent Giles Tremlett explains:
Firstly, because Spain is the next biggest eurozone economy. But also it may be that Merkel liked Rajoy and his pledge to stick to policies of austerity plus reforms, despite the fact that this has helped tip Spain back into recession.Firstly, because Spain is the next biggest eurozone economy. But also it may be that Merkel liked Rajoy and his pledge to stick to policies of austerity plus reforms, despite the fact that this has helped tip Spain back into recession.
Merkel has an ideological ally in conservative Rajoy, so he will be a useful person to have at the table as a counterweight to Hollande and, to a lesser degree, Monti.Merkel has an ideological ally in conservative Rajoy, so he will be a useful person to have at the table as a counterweight to Hollande and, to a lesser degree, Monti.
"The debate between austerity and growth makes no sense; growth needs structural reform and not spending what you don't have," Rajoy said in Chicago."The debate between austerity and growth makes no sense; growth needs structural reform and not spending what you don't have," Rajoy said in Chicago.
Privately Spanish ministers say they are happy for some growth money to come their way from Europe, but they do not want it for infrastructure spending. In the land of high-speed rail lines, empty new airports and underused motorways, they say, the money would be better spent on research and development or other useful investments that have had to be cut in the name of austerity.Privately Spanish ministers say they are happy for some growth money to come their way from Europe, but they do not want it for infrastructure spending. In the land of high-speed rail lines, empty new airports and underused motorways, they say, the money would be better spent on research and development or other useful investments that have had to be cut in the name of austerity.
Monti's mini-summit, which will set the tone for a full EU summit on growth at the end of June, is due to take place sometime before June 10.Monti's mini-summit, which will set the tone for a full EU summit on growth at the end of June, is due to take place sometime before June 10.
2.18pm: Even if François Hollande could win support for eurobonds at Wednesday's meeting, there's no way that such collective borrowing could be introduced quickly. Legal problems abound -- constitutional lawyers reckon that they are clearly illegal under German law as it stands, and existing EU treaties would also need to be rewritten before full-blown eurobonds were possible.2.18pm: Even if François Hollande could win support for eurobonds at Wednesday's meeting, there's no way that such collective borrowing could be introduced quickly. Legal problems abound -- constitutional lawyers reckon that they are clearly illegal under German law as it stands, and existing EU treaties would also need to be rewritten before full-blown eurobonds were possible.
The idea behind eurobonds is that euro states would issue debt underwritten by every member of the eurozone. That, supporters say, would allow weaker members to borrow at more affordable terms, and prevent them being forced out of the international financial markets.The idea behind eurobonds is that euro states would issue debt underwritten by every member of the eurozone. That, supporters say, would allow weaker members to borrow at more affordable terms, and prevent them being forced out of the international financial markets.
Opponents, though say there will encourage moral hazard (and deter 'profligate countries' from repairing their finances), and would still be ineffective without proper fiscal union across the eurozone (including fiscal transfers from richer areas to poorer ones, which is a long way from reality).Opponents, though say there will encourage moral hazard (and deter 'profligate countries' from repairing their finances), and would still be ineffective without proper fiscal union across the eurozone (including fiscal transfers from richer areas to poorer ones, which is a long way from reality).
There's a good breakdown of the pros and cons here.There's a good breakdown of the pros and cons here.
1.49pm: The finance ministers of Germany and France will be meeting in Berlin today to try and hammer out a common position ahead of Wednesday's summit.1.49pm: The finance ministers of Germany and France will be meeting in Berlin today to try and hammer out a common position ahead of Wednesday's summit.
Wolfgang Schäuble and Pierre Moscovici have an unenviable task – the latter is tasked with catalysing a new growth agenda, while the former must hold the line against criticism that Germany is being inflexible and unsympathetic to the suffering in other parts of the eurozone. AFP have more details here.Wolfgang Schäuble and Pierre Moscovici have an unenviable task – the latter is tasked with catalysing a new growth agenda, while the former must hold the line against criticism that Germany is being inflexible and unsympathetic to the suffering in other parts of the eurozone. AFP have more details here.
The meeting comes at a particularly tricky time for Wolfgang Schäuble, whose chances of becoming the next head of the eurogroup (the commitee of eurozone finances ministers) may be shrinking.The meeting comes at a particularly tricky time for Wolfgang Schäuble, whose chances of becoming the next head of the eurogroup (the commitee of eurozone finances ministers) may be shrinking.
Germany's Spiegel reports today that Schäuble's ambitions could be scuppered, because "in Berlin he is seen as too European, while in Brussels he is considered too German". It adds:Germany's Spiegel reports today that Schäuble's ambitions could be scuppered, because "in Berlin he is seen as too European, while in Brussels he is considered too German". It adds:
In the debt crisis, Schäuble has developed the reputation of being a champion of German interests, one who dictates budgetary discipline to others while carefully watching over Germany's coffers. For this reason, his bid for the presidency of the Euro Group is viewed with great skepticism in most European capitals.In the debt crisis, Schäuble has developed the reputation of being a champion of German interests, one who dictates budgetary discipline to others while carefully watching over Germany's coffers. For this reason, his bid for the presidency of the Euro Group is viewed with great skepticism in most European capitals.
Many Greek citizens appear to hold Schäuble in particularly low regard, seeing him as the architect of their current austerity regime. His description of Greece as a 'bottomless pit' in February caused lingering pain. And yesterday, he was quoted as saying that the days of "muddle through as usual" in Greece are over. Not, perhaps, the best way to endear yourself to the Greek nation....Many Greek citizens appear to hold Schäuble in particularly low regard, seeing him as the architect of their current austerity regime. His description of Greece as a 'bottomless pit' in February caused lingering pain. And yesterday, he was quoted as saying that the days of "muddle through as usual" in Greece are over. Not, perhaps, the best way to endear yourself to the Greek nation....
1.00pm: No real dramas in the financial markets today. The main French, German and UK stock markets are all up between 0.6% and 0.9%, while Italy's FTSE MIB and Spain's IBEX are down around 1%.1.00pm: No real dramas in the financial markets today. The main French, German and UK stock markets are all up between 0.6% and 0.9%, while Italy's FTSE MIB and Spain's IBEX are down around 1%.
Banks shares have been feeling the pressure, with Banco Santander down 2.25% in Madrid today.Banks shares have been feeling the pressure, with Banco Santander down 2.25% in Madrid today.
City traders seem relieved that there have been no shocks in the eurocrisis yet (this has been the calmest morning for a while). Yusuf Heusen of IG Index remarked that:City traders seem relieved that there have been no shocks in the eurocrisis yet (this has been the calmest morning for a while). Yusuf Heusen of IG Index remarked that:
There might have been nothing of note from the G8 meeting over the weekend, but at least the world's leaders made the right noises about Greece staying in the euro. There has been no news from the eurozone's problem child, so for the moment at least everyone is content to put Greece to the back of their mind.There might have been nothing of note from the G8 meeting over the weekend, but at least the world's leaders made the right noises about Greece staying in the euro. There has been no news from the eurozone's problem child, so for the moment at least everyone is content to put Greece to the back of their mind.
12.36pm: France's proposal that the eurozone should begin offering eurobonds has been raised in Brussels today, at the regular midday press briefing.12.36pm: France's proposal that the eurozone should begin offering eurobonds has been raised in Brussels today, at the regular midday press briefing.
EC spokesman Amadeu Altafaj told reporters that such common borrowing could not happen until eurozone members have agreed closer fiscal union, saying:EC spokesman Amadeu Altafaj told reporters that such common borrowing could not happen until eurozone members have agreed closer fiscal union, saying:
Any form of common debt issuance requires a closer coordination of fiscal policies and moving toward a fiscal union, it is a prerequisite.Any form of common debt issuance requires a closer coordination of fiscal policies and moving toward a fiscal union, it is a prerequisite.
Another sign that Wednesday's summit may not achieve a great deal?....Another sign that Wednesday's summit may not achieve a great deal?....
12.13pm: Phrase of the day: "Cam-Mer-Kozy economics".12.13pm: Phrase of the day: "Cam-Mer-Kozy economics".
That's Ed Miliband's new term for the austerity-first approach to the crisis followed by the UK, Germany and France. The Labour leader dropped the phrase into a speech this morning, in which he criticised David Cameron for not recognising the need for growth.That's Ed Miliband's new term for the austerity-first approach to the crisis followed by the UK, Germany and France. The Labour leader dropped the phrase into a speech this morning, in which he criticised David Cameron for not recognising the need for growth.
Miliband said:Miliband said:
Over the last few days [Cameron] has found himself beached somewhere between President Obama and President Hollande and Chancellor Merkel, not quite sure where he is.Over the last few days [Cameron] has found himself beached somewhere between President Obama and President Hollande and Chancellor Merkel, not quite sure where he is.
This is largely what you'd expect an opposition party to be saying. More alarming for Cameron is the growing criticism from his own party....This is largely what you'd expect an opposition party to be saying. More alarming for Cameron is the growing criticism from his own party....
London Mayor Boris Johnson has stirred things up as only he can (Boris could have a fine career promoting electric whisks). Writing in the Daily Telegraph today, Johnson said it was "frankly unbelievable" for the UK to be urging Europe to bring in closer fiscal union:London Mayor Boris Johnson has stirred things up as only he can (Boris could have a fine career promoting electric whisks). Writing in the Daily Telegraph today, Johnson said it was "frankly unbelievable" for the UK to be urging Europe to bring in closer fiscal union:
It is like seeing a driver heading full-tilt for a brick wall, and then telling them to hit the accelerator rather than the brake.It is like seeing a driver heading full-tilt for a brick wall, and then telling them to hit the accelerator rather than the brake.
Eurosceptic Douglas Carswell agrees, saying Britain's response to the crisis has "as much credibility as a Greek bond".Eurosceptic Douglas Carswell agrees, saying Britain's response to the crisis has "as much credibility as a Greek bond".
11.45am: There's little confidence today that Wednesday's informal summit will generate a major breakthough in the eurozone crisis (with Germany already rejecting eurobonds this morning).11.45am: There's little confidence today that Wednesday's informal summit will generate a major breakthough in the eurozone crisis (with Germany already rejecting eurobonds this morning).
Martin Koehring of the Economist Intelligence Unit reckons there's been a change in rhetoric in the debate about the euro zone crisis in recent days, but fiscal consolidation remains the EU 's first priority. Koehring said:Martin Koehring of the Economist Intelligence Unit reckons there's been a change in rhetoric in the debate about the euro zone crisis in recent days, but fiscal consolidation remains the EU 's first priority. Koehring said:
The euro zone's main emphasis is set to remain on structural reforms to labour and product markets to boost employment and investment in the medium term.

Meanwhile, in terms of boosting confidence in debt markets, there is also unlikely to be a radical shift.		The euro zone's main emphasis is set to remain on structural reforms to labour and product markets to boost employment and investment in the medium term.

Meanwhile, in terms of boosting confidence in debt markets, there is also unlikely to be a radical shift.
So no eurobond deal....So no eurobond deal....
There are reports that Mario Monti's has proposed eurozone-wide deposit guarantees to calm fears of bank runs. Elisabeth Afseth of Investec agrees that it's a tiocal issue, but warns that the crisis may now be too serious:There are reports that Mario Monti's has proposed eurozone-wide deposit guarantees to calm fears of bank runs. Elisabeth Afseth of Investec agrees that it's a tiocal issue, but warns that the crisis may now be too serious:
Depositors' concern may be as much over a break-up of the single currency as it is about the soundness of any particular bank or indeed its sovereign. Other measures that may be considered at this week's meeting are granting the ESM a banking licence to allow it to borrow from the ECB and boost its capacity through leverage and allowing it to directly fund bank recapitalisations.Depositors' concern may be as much over a break-up of the single currency as it is about the soundness of any particular bank or indeed its sovereign. Other measures that may be considered at this week's meeting are granting the ESM a banking licence to allow it to borrow from the ECB and boost its capacity through leverage and allowing it to directly fund bank recapitalisations.
Germany is likely to oppose expanding or extending criteria of rescue funds.Germany is likely to oppose expanding or extending criteria of rescue funds.
11.16am: Alexis Tsipras, leader of Greece's Syriza coalition, is conducting a flying visit to France and Germany this week.11.16am: Alexis Tsipras, leader of Greece's Syriza coalition, is conducting a flying visit to France and Germany this week.
The radical left-wing leader is trying to build alliances with European figures who share his believe that Europe's austerity drive is wrong, and should be replaced with a new growth drive.The radical left-wing leader is trying to build alliances with European figures who share his believe that Europe's austerity drive is wrong, and should be replaced with a new growth drive.
Tsipras is visiting Paris first, where he will meet with far-left leader Jean-Luc Melenchon, and Pierre Laurent, president of the European left party. The trio are expected to hold a press conference later today.Tsipras is visiting Paris first, where he will meet with far-left leader Jean-Luc Melenchon, and Pierre Laurent, president of the European left party. The trio are expected to hold a press conference later today.
Tomorrowl, Tsipras will meet Klaus Ernst, the co-leader of the German left-wing party Linke, and Gregor Gysy, the chair of the German left's parliamentary group, in Berlin.Tomorrowl, Tsipras will meet Klaus Ernst, the co-leader of the German left-wing party Linke, and Gregor Gysy, the chair of the German left's parliamentary group, in Berlin.
Tsipras has said that he hopes his trip will reassure Europe that he is not a dangerous extremist, but actually the leader of a "pro-European force".Tsipras has said that he hopes his trip will reassure Europe that he is not a dangerous extremist, but actually the leader of a "pro-European force".
10.48am: We now have official word from Berlin that Germany is not about to cave in over eurobonds, despite François Hollande's plan to push for them at Wednesday's meeting in Brussels (see 8.22am for the details).10.48am: We now have official word from Berlin that Germany is not about to cave in over eurobonds, despite François Hollande's plan to push for them at Wednesday's meeting in Brussels (see 8.22am for the details).
A government spokesman told a regular press conference in Berlin that:A government spokesman told a regular press conference in Berlin that:
Euro bonds are not the tool to overcome the present crisis and our position has not changed.Euro bonds are not the tool to overcome the present crisis and our position has not changed.
So, that's the third rejection of eurobonds from Germany this morning - following similar comments from deputy finance minister Steffen Kampeter and ECB board member Jörg Asmussen.So, that's the third rejection of eurobonds from Germany this morning - following similar comments from deputy finance minister Steffen Kampeter and ECB board member Jörg Asmussen.
10.18am: UK banks are strong enough to survive if Greece quit the eurozone, but should keep strengthening themselves to ride out a crisis that is changing 'hour by hour'.10.18am: UK banks are strong enough to survive if Greece quit the eurozone, but should keep strengthening themselves to ride out a crisis that is changing 'hour by hour'.
That's the message from Michael Cohrs, a member of the Bank of England's Financial Policy Committee (FPC) , who also told us that the Committee is on "alert stations" for the crisis to intensify.That's the message from Michael Cohrs, a member of the Bank of England's Financial Policy Committee (FPC) , who also told us that the Committee is on "alert stations" for the crisis to intensify.
My colleague Jill Treanor reports:My colleague Jill Treanor reports:
"British banks are ready for Greece," Cohrs said. "They have thought about their direct exposures to Greece and they have marked them to appropriate levels, their liquidity is strong and they have enough capital to withstand shocks from Greece. If it goes further it's not clear, and that is why we have been encouraging them to raise more capital because nobody knows where it will stop or it won't stop.""British banks are ready for Greece," Cohrs said. "They have thought about their direct exposures to Greece and they have marked them to appropriate levels, their liquidity is strong and they have enough capital to withstand shocks from Greece. If it goes further it's not clear, and that is why we have been encouraging them to raise more capital because nobody knows where it will stop or it won't stop."
You can read more of the interview (Cohrs's first since joining the FPC), here.You can read more of the interview (Cohrs's first since joining the FPC), here.
10.00am: A political spat is breaking out in the UK over David Cameron's warning to the Greece electorate (see 8.15am)10.00am: A political spat is breaking out in the UK over David Cameron's warning to the Greece electorate (see 8.15am)
Ed Balls, Labour's shadow chancellor, accused Cameron of exacerbating the eurozone crisis by "posturing" over Greece. Balls also criticised the G8 leaders for not making more progress at last weekend's summit.Ed Balls, Labour's shadow chancellor, accused Cameron of exacerbating the eurozone crisis by "posturing" over Greece. Balls also criticised the G8 leaders for not making more progress at last weekend's summit.
Speaking on Radio 4's Today Programme, Balls said:Speaking on Radio 4's Today Programme, Balls said:

I don't think David Cameron's posturing helps at all, I think it just makes it worse.
I don't think David Cameron's posturing helps at all, I think it just makes it worse.
Spain and Italy are huge. Our country, our companies, are exposed to them. There is no plan to stop contagion to Spain and Italy. If that happens it is absolutely catastrophic for Britain, Europe and the world and we have come out of a summit with no plan and Britain still supporting the [Angela] Merkel view that we don't need a plan.Spain and Italy are huge. Our country, our companies, are exposed to them. There is no plan to stop contagion to Spain and Italy. If that happens it is absolutely catastrophic for Britain, Europe and the world and we have come out of a summit with no plan and Britain still supporting the [Angela] Merkel view that we don't need a plan.
When not watching penalty shootouts, G8 leaders managed to agree an official communique which said the top priority was to "promote growth and jobs," while also stating that "the right measures are not the same for each of us" (which rather sounds like Merkel digging her heels in).When not watching penalty shootouts, G8 leaders managed to agree an official communique which said the top priority was to "promote growth and jobs," while also stating that "the right measures are not the same for each of us" (which rather sounds like Merkel digging her heels in).
9.37am: France's new foreign minister has "done a Cameron" and told the Greek people that next month's election is a vote on their future within the eurozone.9.37am: France's new foreign minister has "done a Cameron" and told the Greek people that next month's election is a vote on their future within the eurozone.
Laurent Fabius told French radio station Europe1 this morning (via Dow Jones):Laurent Fabius told French radio station Europe1 this morning (via Dow Jones):
If [Greek voters] want to stay in the euro, and I think a majority of them want that, they cannot vote for parties that eventually make them exit from the euro zoneIf [Greek voters] want to stay in the euro, and I think a majority of them want that, they cannot vote for parties that eventually make them exit from the euro zone
What's at stake is whether Greeks stay in euro or not....What's at stake is whether Greeks stay in euro or not....
This is becoming a theme – European leaders offering 'helpful advice' to Greece. Clearly the underlying message is that voting for Syriza (the Coalition for the Radical Left that surged to second place in this month's election) is a dangerous gamble.This is becoming a theme – European leaders offering 'helpful advice' to Greece. Clearly the underlying message is that voting for Syriza (the Coalition for the Radical Left that surged to second place in this month's election) is a dangerous gamble.
My colleague Helena Smith met with Syriza's leader, Alexis Tsipras, last week During the interview, Tsipras argued forcefully that his party did not want to break up the eurozone, saying:My colleague Helena Smith met with Syriza's leader, Alexis Tsipras, last week During the interview, Tsipras argued forcefully that his party did not want to break up the eurozone, saying:
We are not against a unified Europe or monetary union.We are not against a unified Europe or monetary union.
We don't want to blackmail, we want to persuade our European partners that the way that has been chosen to confront Greece is totally counter-productive. It is like throwing money at a bottomless pit.We don't want to blackmail, we want to persuade our European partners that the way that has been chosen to confront Greece is totally counter-productive. It is like throwing money at a bottomless pit.
But Tsipras also remained adamant that Greece's current austerity plan is is misguided and lacks legitimacy, and must be torn up. And given there is no legal way to exit the eurozone, Syriza argues that Greece, not the rest of Europe, ultimately holds the trump cards.But Tsipras also remained adamant that Greece's current austerity plan is is misguided and lacks legitimacy, and must be torn up. And given there is no legal way to exit the eurozone, Syriza argues that Greece, not the rest of Europe, ultimately holds the trump cards.
9.19am: Jörg Asmussen, Germany's representative on the executive board of the European Central Bank, issued his own warning shot this morning that eurobonds will not be accepted now.9.19am: Jörg Asmussen, Germany's representative on the executive board of the European Central Bank, issued his own warning shot this morning that eurobonds will not be accepted now.
Asmussen also said that the eurozone fiscal pact needs to be ratified "quickly", rather than opened up again, as European leaders such as François Hollande are demanding.Asmussen also said that the eurozone fiscal pact needs to be ratified "quickly", rather than opened up again, as European leaders such as François Hollande are demanding.
Speaking ahead of Wednesday's informal summit, Asmussen said the fiscal pact must not be renegotiated or watered down, but added that it could still be complemented with new growth measures.Speaking ahead of Wednesday's informal summit, Asmussen said the fiscal pact must not be renegotiated or watered down, but added that it could still be complemented with new growth measures.
Those measures could be financed by the European Investment Bank through 'project bonds' (borrowing to pay for infrastructure), Asmussen said, but that are not the same as eurobonds, he added.Those measures could be financed by the European Investment Bank through 'project bonds' (borrowing to pay for infrastructure), Asmussen said, but that are not the same as eurobonds, he added.
Another indication that Wednesday's meeting is going to be rather punchy – and that leaders may struggle to make real progress (again).

Asmussen also said it was crucial that Europe's new bailout fund, the ESM, is in place by 1 July.		Another indication that Wednesday's meeting is going to be rather punchy – and that leaders may struggle to make real progress (again).

Asmussen also said it was crucial that Europe's new bailout fund, the ESM, is in place by 1 July.
8.55am: A German government minister swiftly rejected France's proposal that eurobonds should be introduced now.8.55am: A German government minister swiftly rejected France's proposal that eurobonds should be introduced now.
In a sign that Wednesday's summit meeting could be combative, deputy finance minister Steffen Kampeter insisted earlier this morning that Germany would not accept collective borrowing until the underlying problems in the eurozone were fixed.In a sign that Wednesday's summit meeting could be combative, deputy finance minister Steffen Kampeter insisted earlier this morning that Germany would not accept collective borrowing until the underlying problems in the eurozone were fixed.
Speaking after French president Hollande announced that he will propose eurobonds at Wednesday's meeting, Kampeter told Deutschlandfunk radio that eurobonds would be:Speaking after French president Hollande announced that he will propose eurobonds at Wednesday's meeting, Kampeter told Deutschlandfunk radio that eurobonds would be:
the wrong prescription at the wrong time, [causing] the wrong side effects.the wrong prescription at the wrong time, [causing] the wrong side effects.
Kampeter added:Kampeter added:
We have always said that as a first step we need solidity in European finances, and that is the fiscal compact.We have always said that as a first step we need solidity in European finances, and that is the fiscal compact.
The battle is joined...The battle is joined...
8.50am: European stock markets are a mixed picture this morning. The three biggest markets are a little higher, but shares have contined to fall in Spain and Italy.8.50am: European stock markets are a mixed picture this morning. The three biggest markets are a little higher, but shares have contined to fall in Spain and Italy.
FTSE 100: up 21 points, or 0.4%, at 5288
German DAX: up 9 points, ot 0.16%, at 6281
French CAC: up 10 points, or 0.35%, at 3018
Spanish IBEX: down 35 points, or 0.5%, at 6531.
Italian FTSE MIB: down 82 points, or 0.6%, at 12973		FTSE 100: up 21 points, or 0.4%, at 5288
German DAX: up 9 points, ot 0.16%, at 6281
French CAC: up 10 points, or 0.35%, at 3018
Spanish IBEX: down 35 points, or 0.5%, at 6531.
Italian FTSE MIB: down 82 points, or 0.6%, at 12973
8.33am: As well as eurobonds (see 8.22am), EU leaders are also likely to discuss whether the European bailout fund should be allowed to recapitalised struggling banks directly, at Wednesday's informal summit.8.33am: As well as eurobonds (see 8.22am), EU leaders are also likely to discuss whether the European bailout fund should be allowed to recapitalised struggling banks directly, at Wednesday's informal summit.
This would provide a new way of supporting Spain's battered banks. The idea has been rejected by Berlin, but is popular with many other players in the crisis in - including the International Monetary Fund.This would provide a new way of supporting Spain's battered banks. The idea has been rejected by Berlin, but is popular with many other players in the crisis in - including the International Monetary Fund.
A third option on the table is whether to allow the European Central Bank to buy unlimited quantities of sovereign debt issued by weaker members of the eurozone (Italy and Spain, primarily), to restore market confidence.A third option on the table is whether to allow the European Central Bank to buy unlimited quantities of sovereign debt issued by weaker members of the eurozone (Italy and Spain, primarily), to restore market confidence.
City analysts aren't convinced that leaders will make significant progress in Brussels.City analysts aren't convinced that leaders will make significant progress in Brussels.
Michael Hewson of CMC Markets commented:
Michael Hewson of CMC Markets commented:
These measures are likely to continue to be resisted by Germany despite the urgency of the situation in Europe. The fact is that even if these measures were agreed, which remains unlikely, they would be impossible to implement quickly given that some of them would need unanimous approval as well as constitutional approval in some cases, which could take months.These measures are likely to continue to be resisted by Germany despite the urgency of the situation in Europe. The fact is that even if these measures were agreed, which remains unlikely, they would be impossible to implement quickly given that some of them would need unanimous approval as well as constitutional approval in some cases, which could take months.
8.22am: European leaders are set to discuss a series of proposals to address the crisis, including eurobonds and new powers to recapitalise struggling banks, at an informal summit on Wednesday.8.22am: European leaders are set to discuss a series of proposals to address the crisis, including eurobonds and new powers to recapitalise struggling banks, at an informal summit on Wednesday.
The gathering, in Brussels, is likely to put more pressure on Angela Merkel to bow to pressure on issues such as collective borrowing.The gathering, in Brussels, is likely to put more pressure on Angela Merkel to bow to pressure on issues such as collective borrowing.
France's new president, François Hollande, has already identified the battleground, telling reporters after the G8 summit ended that he will present clear proposals to stimulate the European economy.France's new president, François Hollande, has already identified the battleground, telling reporters after the G8 summit ended that he will present clear proposals to stimulate the European economy.
Hollande said:Hollande said:
I will outline all growth proposals at this informal meeting on May 23....I will outline all growth proposals at this informal meeting on May 23....
Within this packet of proposals there will be Eurobonds and I will not be alone in proposing them. I had confirmation on this at the G8.Within this packet of proposals there will be Eurobonds and I will not be alone in proposing them. I had confirmation on this at the G8.
The meeting is meant to allow leaders to discuss possible growth measures, but the escalating crisis has given the talks new impetus -- and encouraged supports of eurobonds to push for their introduction again.The meeting is meant to allow leaders to discuss possible growth measures, but the escalating crisis has given the talks new impetus -- and encouraged supports of eurobonds to push for their introduction again.
As the FT puts it:As the FT puts it:
Their resurrection is the latest sign François Hollande's election in France has shifted the terms of the eurozone crisis debate, giving advocates of such measures – who include José Manuel Barroso, president of the European Commission, and Mario Monti, Italian prime minister – a powerful new ally.Their resurrection is the latest sign François Hollande's election in France has shifted the terms of the eurozone crisis debate, giving advocates of such measures – who include José Manuel Barroso, president of the European Commission, and Mario Monti, Italian prime minister – a powerful new ally.
It also reflects the growing belief among some leaders that instability in Greece necessitates revisiting the crisis procedures to ensure they are sufficient to deal with a Greek eurozone exit.It also reflects the growing belief among some leaders that instability in Greece necessitates revisiting the crisis procedures to ensure they are sufficient to deal with a Greek eurozone exit.
Merkel has argued that eurobonds (where a euro-member's borrowing is guaranteed by the rest of the eurozone) cannot be introduced until there is closer fiscal union across the region. Those on the other side of the argument warn, though, that time is too short.Merkel has argued that eurobonds (where a euro-member's borrowing is guaranteed by the rest of the eurozone) cannot be introduced until there is closer fiscal union across the region. Those on the other side of the argument warn, though, that time is too short.
8.15am: Good morning, and welcome to our rolling coverage of the Eurozone financial crisis.8.15am: Good morning, and welcome to our rolling coverage of the Eurozone financial crisis.
Coming up ... we'll be tracking all the latest developments in Greece, where election fever is in full cry.Coming up ... we'll be tracking all the latest developments in Greece, where election fever is in full cry.
Financial markets are digesting last weekend's G8 summit – where world leaders failed to make a 'big leap forward' in addressing the eurozone crisis.Financial markets are digesting last weekend's G8 summit – where world leaders failed to make a 'big leap forward' in addressing the eurozone crisis.
Overnight, David Cameron has weighed in on the Greek elections – saying voters must choose between meeting their commitments, or leaving the eurozone.Overnight, David Cameron has weighed in on the Greek elections – saying voters must choose between meeting their commitments, or leaving the eurozone.
Speaking at the Nato summit in Chicago, Cameron warned:Speaking at the Nato summit in Chicago, Cameron warned:
It's not for me to say what Greek parties should and shouldn't stand on and how the Greek elections should work. But it's very important that everyone is clear that the choice Greece faces is maintaining its commitments and maintaining itself in the eurozone, or deciding that is not the path it wants to take. What would be bad for Greece, bad for Europe and bad for the world is if we just allowed the can to be kicked further down the road with an inconclusive outcome. What's required is decisiveness, strong action by all governments. This is a moment of clarity.It's not for me to say what Greek parties should and shouldn't stand on and how the Greek elections should work. But it's very important that everyone is clear that the choice Greece faces is maintaining its commitments and maintaining itself in the eurozone, or deciding that is not the path it wants to take. What would be bad for Greece, bad for Europe and bad for the world is if we just allowed the can to be kicked further down the road with an inconclusive outcome. What's required is decisiveness, strong action by all governments. This is a moment of clarity.
"There needs to be a resolution because it's the lack of resolution that's leading to a lack of confidence."There needs to be a resolution because it's the lack of resolution that's leading to a lack of confidence.
We've seen mixed trading in Asia overnight, after Friday's heavy selloff, and traders in London don't expect a strong recovery today.We've seen mixed trading in Asia overnight, after Friday's heavy selloff, and traders in London don't expect a strong recovery today.
Also on the agenda, Belgium, the Netherlands, Germany and France are all selling government debt this morning.Also on the agenda, Belgium, the Netherlands, Germany and France are all selling government debt this morning.