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| Eurozone crisis live: Markets wobble ahead of EU summit | Eurozone crisis live: Markets wobble ahead of EU summit |
| (40 minutes later) | |
| 9.32am: Breaking news from the Bank of England – the Monetary Policy Committee voted 8-1 against increasing quantitative easing again, at its meeting this month. | |
| Minutes just released showed that David Miles was the only member of the MPC to vote for more electronic money. But for several other members, the decision was "finely balanced". | |
| The committee voted 9-0 to leave interest rates unchanged at 0.5%. | |
| 9.29am: The euro sellof has continued - it just hit a new 21-month low of $1.2615 against the dollar. | |
| 9.10am: AFP is predicting a 'no-holds barred' debate in Brussels today, whem Angela Merkel and François Hollande tussle over how to develop measures to kickstart growth. | |
| There was one interesting development yesterday, when EU governments agreed to experiment with a new security called 'Project Bonds' -- commonly backed bonds that will fund pan-European infrastructure projects across borders. | |
| They are seen as a first step to full-blown eurobonds, and important because they will see European nations pay for work that will happen in another country - such as motorways, energy networks, and communications links. | |
| But although "Project Bonds" are pooled borrowing, they are not mutually backed. | |
| A 'high-ranking EU diplomat' told AFP that they're very different than Eurobonds, saying: | |
| Paris and Berlin understand each other completely: they're both called 'Bond', but these are very different animals. | |
| There's more on Project Bonds in the FT, and on CNBC. | |
| 8.50am: There were alarming scenes in Greece last night, where supporters of the neo-Nazi Golden Dawn party clashed with police during an anti-immigrant protest in the western port of Patras. | |
| Reports from the scene stated that the incident began after a local man was fatally stabbed, allegedly by an illegal migrant from Afghanistan. As we reported overnight, an initially peaceful protest outside an old factory inhabited by migrants turned violent when Golden Dawn supporters arrived at the scene - resulting in Greek police protecting those in the factory and firing teargas after stones were thrown. | |
| It's a worrying sign of the escalating tensions in Greece, and the pressure on law on order. Golden Dawn, of course, won 21 seats in this month's election, on a virulently anti-immigrant campaign. | |
| Theodora Oikonomides, who reported the clashes on Twitter last night, reports this morning that five people have been arrested. | |
| #Patra yesterday: 5 arrests 22 detentions 8 cops wounded. Police says main violence came from 350 Golden Dawn activists #rbnews v @doleross | |
| — Theodora Oikonomides (@IrateGreek) May 23, 2012 | |
| 8.41am: Analyst Gary Jenkins of Swordfish Research also isn't optimisic of much progress today, pointing out that the invitation letter from the EU President referred to "the longer term perspective". | |
| That means that the immediate crisis raging across Europe will only be raised at the end of the meeting, at the "coffee and mints stage of the evening". | |
| Jenkins adds: | Jenkins adds: |
| There is still a part of me that believes that somewhere in a dark corner of an office in Brussels a group of hyper intelligent EU officials are working on a contingency plan [in case Greece leaves the Eurozone and undertakes a disorderly default]. | There is still a part of me that believes that somewhere in a dark corner of an office in Brussels a group of hyper intelligent EU officials are working on a contingency plan [in case Greece leaves the Eurozone and undertakes a disorderly default]. |
| 8.36am: While Germany is unlikely to cave in to pressure over eurobonds today, Elisabeth Afseth of Investec reckon Berlin will eventually capitulate - and will look all the more daft when they do. | 8.36am: While Germany is unlikely to cave in to pressure over eurobonds today, Elisabeth Afseth of Investec reckon Berlin will eventually capitulate - and will look all the more daft when they do. |
| Germany risks appearing a bit like Jim Trott in the Vicar of Dibley, 'no, no, no, no, no…..yes'. It remains firmly against common bond issuance and measures to increase the lending power of the European Stability Mechanism (ESM) such as granting it a banking licence or lending directly to banks. All are likely proposal at today's leaders' meeting, and some way of boosting the firewall is required fairly soon. The OECD and the IMF both joined the chorus calling for greater fiscal liability-sharing yesterday. But the single currency probably has to be closer to the end of the cliff before Germany's 'no' turns to a 'yes'. | Germany risks appearing a bit like Jim Trott in the Vicar of Dibley, 'no, no, no, no, no…..yes'. It remains firmly against common bond issuance and measures to increase the lending power of the European Stability Mechanism (ESM) such as granting it a banking licence or lending directly to banks. All are likely proposal at today's leaders' meeting, and some way of boosting the firewall is required fairly soon. The OECD and the IMF both joined the chorus calling for greater fiscal liability-sharing yesterday. But the single currency probably has to be closer to the end of the cliff before Germany's 'no' turns to a 'yes'. |
| [If the Vicar of Dibley has passed you by, this video explains all.] | [If the Vicar of Dibley has passed you by, this video explains all.] |
| Investec are hopeful, though, that EU leaders will agree on ways to use infrastructure spending to enhance growth. | Investec are hopeful, though, that EU leaders will agree on ways to use infrastructure spending to enhance growth. |
| 8.12am: Today's early selloff in the stock markets (see 8.08am) was triggered by an interview given by former Greek prime minister Lucas Papademos last night. | 8.12am: Today's early selloff in the stock markets (see 8.08am) was triggered by an interview given by former Greek prime minister Lucas Papademos last night. |
| Speaking to Dow Jones, Papademos appeared to warn that preparations for Greece to leave the eurozone are being drawn up. Here's the key quote from the story: | Speaking to Dow Jones, Papademos appeared to warn that preparations for Greece to leave the eurozone are being drawn up. Here's the key quote from the story: |
| Although such a scenario is unlikely to materialize and it is not desirable either for Greece or for other countries, it can not be excluded that preparations are being made to contain the potential consequences of a Greek euro exit. | Although such a scenario is unlikely to materialize and it is not desirable either for Greece or for other countries, it can not be excluded that preparations are being made to contain the potential consequences of a Greek euro exit. |
| This was enough to send the euro falling, and push the Dow Jones into negative territory (as Business Insider reported). But was it all a mistake? By 1am Greek time, Papademos was telling CNBC that there were no plans underway in Greece for a euro exit. Indeed, the former ECB vice-president was eager to sound reassuring, saying that "pressure on the banks has eased" in recent days. | This was enough to send the euro falling, and push the Dow Jones into negative territory (as Business Insider reported). But was it all a mistake? By 1am Greek time, Papademos was telling CNBC that there were no plans underway in Greece for a euro exit. Indeed, the former ECB vice-president was eager to sound reassuring, saying that "pressure on the banks has eased" in recent days. |
| Still, the euro remains under pressure at $1.267 this morning - proof perhaps that it doesn't take much to alarm traders right now.... | Still, the euro remains under pressure at $1.267 this morning - proof perhaps that it doesn't take much to alarm traders right now.... |
| 8.08am: European markets have fallen sharply at the start of trading, as Tuesday's optimism vanishes. | 8.08am: European markets have fallen sharply at the start of trading, as Tuesday's optimism vanishes. |
| FTSE 100: down 64 points at 5338, - 1.2% German DAX: - 1.3% French CAC: - 1.2% Spanish IBEX: down 97 points at 6560, -1.5% Italian FTSE MIB: down 227 points at 13228, - 1.7% | FTSE 100: down 64 points at 5338, - 1.2% German DAX: - 1.3% French CAC: - 1.2% Spanish IBEX: down 97 points at 6560, -1.5% Italian FTSE MIB: down 227 points at 13228, - 1.7% |
| That follows a grim day in Asia, with Japan's Nikkei falling almost 2%. | That follows a grim day in Asia, with Japan's Nikkei falling almost 2%. |
| Traders fear that today's EU summit will fail to make a significant leap forwards, which seems particularly likely as it's only an 'informal' summit. | Traders fear that today's EU summit will fail to make a significant leap forwards, which seems particularly likely as it's only an 'informal' summit. |
| Michael Hewson of CMC Markets warned that share prices are likely to keep falling: | Michael Hewson of CMC Markets warned that share prices are likely to keep falling: |
| Even though markets have rallied in the past couple day's further gains are likely to prove much more difficult especially given EU leaders track record for over promising and under delivering. The potential for disappointment therefore remains extremely high. | Even though markets have rallied in the past couple day's further gains are likely to prove much more difficult especially given EU leaders track record for over promising and under delivering. The potential for disappointment therefore remains extremely high. |
| 7.50am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis. | 7.50am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis. |
| Coming up today -- European leaders are heading to Brussels for an informal summit to discuss the financial crisis, and ways of boosting growth. Issues such as collective borrowing (eurobonds) and a beefed-up European firewall will be discussed, while the prospect of a Greek euro exit looms. | Coming up today -- European leaders are heading to Brussels for an informal summit to discuss the financial crisis, and ways of boosting growth. Issues such as collective borrowing (eurobonds) and a beefed-up European firewall will be discussed, while the prospect of a Greek euro exit looms. |
| Analysts fear that the talks will not yield much progress, with François Hollande and Angela Merkel likely to disagree on the best way to tackle the crisis. Indeed, the euro is back below $1.27, and Asian markets have fallen overnight. | Analysts fear that the talks will not yield much progress, with François Hollande and Angela Merkel likely to disagree on the best way to tackle the crisis. Indeed, the euro is back below $1.27, and Asian markets have fallen overnight. |
| Also on the agenda: the minutes of the Bank of England's last monetary policy meeting will be released at 9.30am, showing how many committee members voted for more quantitative easing. | Also on the agenda: the minutes of the Bank of England's last monetary policy meeting will be released at 9.30am, showing how many committee members voted for more quantitative easing. |
| And Germany will sell €5bn of bonds with a zero coupon this morning – which means investors would not get any interest payments on the debt. As I blogged yesterday, analysts fear this shows the financial system may be drifting off the rails … | And Germany will sell €5bn of bonds with a zero coupon this morning – which means investors would not get any interest payments on the debt. As I blogged yesterday, analysts fear this shows the financial system may be drifting off the rails … |