This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/news/business-18328774#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa

The article has changed 7 times. There is an RSS feed of changes available.

Version 0 Version 1
Eurozone private sector 'contracts again' G7 crisis talks as eurozone storm clouds darken
(about 2 hours later)
The eurozone private sector contracted again in May, with activity levels at their lowest for almost three years, a survey has suggested. Finance chiefs of the G7 group of industrialised nations are due to hold emergency talks about the eurozone debt crisis later on Tuesday.
The Markit eurozone composite purchasing managers' index (PMI) fell to 46 in May from 46.7 in April. Any figure below 50 suggests contraction. It comes amid fresh worries about the eurozone's economy, underlined in data showing that private sector activity, including in Germany, fell in May.
With concern growing about Spain's economy, eurozone leaders are split over whether to launch common bonds.
But Germany repeated its position that fiscal union must precede eurobonds.
Wolfgang Schaeuble, Germany's finance minister, said in an interview with the Handelsblatt newspaper: "The government has always said that before we start talking about joint debt management, we need real fiscal union."
The subject of eurobonds, which would consolidate eurozone debt and help to bring down borrowing costs, was a divisive issue at a European Union summit last month.
G7 countries outside the eurozone fear Europe's failure to get to grip with its worsening financial position will drag on global recovery.
Speaking to reporters ahead of the G7 teleconference, Canada's Finance Minister, Jim Flaherty, said Europe was "the real concern right now".
'Three months left'
There was concern that some eurozone countries "have not taken sufficient action yet to address those issues of undercapitalisation of banks and building an adequate firewall", he told the Reuters news agency.
Spain's banking crisis and worries that Greece may be forced to leave the euro bloc have caused panic in the financial markets in the past few weeks. And now there are fears Cyprus may be forced to join Greece, the Republic of Ireland and Portugal in seeking a bailout.
Billionaire investor George Soros told a conference in Italy over the weekend that Europe had about "three months to save the euro", but that leaders did "not understand the nature of the crisis".
Many politicians, officials and economists believe that the creation of eurobonds is the way forward. And in France, Greece and elsewhere in Europe, there appears to be a backlash against austerity measures that many people complain are too severe.
However, Mr Schaeuble repeated Germany's firm resolve on both issues.
And on austerity, the finance minister said that countries must press ahead with budgetary cutbacks. "We cannot spare the affected countries the reform," he told Handelsblatt.
'Trust'
Mr Schaeuble said Spain was doing "everything right" with its reform measures, but acknowledged that the country was under severe pressure because of a rise in borrowing costs.
"We need to manage this... through close and trusting co-ordination," he said.
There were several unconfirmed reports over the weekend that Spain's prime minister, Mariano Rajoy, had been holding talks with European leaders about how to recapitalize the country's banks.
Spanish lender Bankia alone has asked for 23.5bn euros (£19bn) to help repair a balance sheet that has a vast exposure to the property market.
On Tuesday, Spain's Treasury Minister Cristobal Montoro said in a radio interview that at current borrowing rates, the financial markets were effectively shut to Spain.
"The risk premium says Spain doesn't have the market door open," he said on Onda Cero radio. "The risk premium says that, as a state, we have a problem in accessing markets when we need to refinance our debt."
The financial problems come as new data on Tuesday showed that the eurozone's economies appear to be slowing.
The Markit purchasing managers' index fell to 46 in May from 46.7 in April, its lowest level in almost three years. A figure below 50 indicates contraction.
'Weak demand'
German output fell for the first time in six months, while declines in Spain and France accelerated.German output fell for the first time in six months, while declines in Spain and France accelerated.
A drop in new business due to weak demand was the reason for the falls.
The eurozone's private sector has now contracted for four months in a row.The eurozone's private sector has now contracted for four months in a row.
The May figures indicate that "the economy is contracting at the fastest pace for around three years", said Markit's chief economist Chris Williamson.The May figures indicate that "the economy is contracting at the fastest pace for around three years", said Markit's chief economist Chris Williamson.
"Companies report business activity to have been hit by heightened political and economic uncertainty, which has exacerbated already weak demand, both in the euro area and further afield.""Companies report business activity to have been hit by heightened political and economic uncertainty, which has exacerbated already weak demand, both in the euro area and further afield."
He reiterated Markit's belief that the eurozone economy could contract by 0.5% in the current quarter, though "a steeper decline could be seen if the June data disappoint".
Job losses were reported for the fifth month in a row, although the rate of decline eased slightly.
The one bright note was the fact that cost pressures eased during the month, thanks to lower commodity prices and wage demands.
The service sector PMI for May was 46.7, down from 46.9 in April, hitting a seven-month low.
Of all the eurozone countries, only Germany reported growth in the sector.