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You can find the current article at its original source at http://www.guardian.co.uk/business/2012/jun/21/eurozone-crisis-live-spanish-bank-stress-tests-bond-auction
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| Eurozone crisis live: All eyes on Spanish bank stress tests and bond auction | Eurozone crisis live: All eyes on Spanish bank stress tests and bond auction |
| (40 minutes later) | |
| 9.24am: The eurozone private sector has taken another turn for the worse, according to the latest PMI business surveys. The composite PMI - made up of both manufacturing and services - was at 46 in June, unchanged from May - indicating further contraction. The 50 mark divides expansion from contraction. Services came in at 46.8 versus 46.7 in May, a tad better but still shrinking, while manufacturing was worse at 44.8 against May's 45.1. | |
| The manufacturing and composite PMI readings are the lowest since June 2009, which doesn't bode well for the eurozone economies. | |
| 8.50am: Ilya Spivak, currency strategist at DailyFX, looks ahead to the eurozone finance ministers' meeting, the Spanish bond auction and the publication of the Spanish bank stress tests: | |
| Eurozone finance ministers begin a two-day meeting in Brussels. Coming on the heels of the G20 summit where EU policymakers faced heavy pressure from global leaders to step up crisis containment efforts, the sit-down may see the emergence of preliminary policy ideas. Concrete initiatives are likely to wait until the EU leaders' summit next week, but traders will nonetheless pay close attention to sideline commentary for early clues. | |
| Spain is also set to release the results of an audit meant to put a firm price tag on recapitalizing the country's banking sector. A number above or uncomfortably close to €100bn – the upper limit of the bailout Madrid secured last week – is likely to rekindle sovereign risk jitters. The results of a bond auction offering 2014, 2015 and 2017 paper today will serve as an instant barometer of the fallout, with a pick-up in average yields and/or particularly weak bid-to-cover readings likely to compound pressure on risky assets. | |
| 8.43am: The French manufacturing PMI, by contrast, improved slightly, whilst showing further contraction. It came in at 45.3 for June compared with 44.6 in May, and was better than expected. | 8.43am: The French manufacturing PMI, by contrast, improved slightly, whilst showing further contraction. It came in at 45.3 for June compared with 44.6 in May, and was better than expected. |
| And the situation in the French service industries also improved, with the PMI rising to 47.3 from 45.1 in May - but remaining in negative territory. | And the situation in the French service industries also improved, with the PMI rising to 47.3 from 45.1 in May - but remaining in negative territory. |
| 8.39am: The euro has tumbled to a session low of $1.26573, following the weak German manufacturing figures. | 8.39am: The euro has tumbled to a session low of $1.26573, following the weak German manufacturing figures. |
| 8.30am: The PMIs are out - well on Twitter anyway. Terrible German manufacturing PMI of 44.7 in June versus 45.2 in May, the weakest since July 2009. Service industries are still expanding, but also weaker, with the PMI at 50.3, down from May's 51.8. | 8.30am: The PMIs are out - well on Twitter anyway. Terrible German manufacturing PMI of 44.7 in June versus 45.2 in May, the weakest since July 2009. Service industries are still expanding, but also weaker, with the PMI at 50.3, down from May's 51.8. |
| The immediate reaction on Twitter was "horrid" and "yuck". | The immediate reaction on Twitter was "horrid" and "yuck". |
| 8.16am: Brent crude has hit the lowest level in 18 months, tumbling to $92 a barrel, amid fears over world demand. China's manufacturing sector continues to slow and the Fed's latest measures dashed hopes for more aggressive steps to boost the world's largest economy. | 8.16am: Brent crude has hit the lowest level in 18 months, tumbling to $92 a barrel, amid fears over world demand. China's manufacturing sector continues to slow and the Fed's latest measures dashed hopes for more aggressive steps to boost the world's largest economy. |
| An unexpected rise in US crude inventories last week also hit Brent, which has slid 28% since reaching a peak above $128 a barrel in March. | An unexpected rise in US crude inventories last week also hit Brent, which has slid 28% since reaching a peak above $128 a barrel in March. |
| China's factories contracted for the eighth month in a row in June with export orders the weakest since early 2009, according to the HSBC flash Purchasing Managers Index, the earliest monthly indicator of China's industrial activity. | China's factories contracted for the eighth month in a row in June with export orders the weakest since early 2009, according to the HSBC flash Purchasing Managers Index, the earliest monthly indicator of China's industrial activity. |
| "Obviously any indication that the Chinese economy is slowing more than expected will put further pressure on oil prices, and commodities," said Michael Creed, an economist at National Australia Bank. | "Obviously any indication that the Chinese economy is slowing more than expected will put further pressure on oil prices, and commodities," said Michael Creed, an economist at National Australia Bank. |
| 8.08am: European stock markets have opened lower, as expected. The FTSE 100 index in London is off 0.4%, or 23 odd points, at 5598. Germany's Dax has started the day 0.5% lower while France's CAC has shed 0.4%, Spain's Ibex has tumbled 1% and Italy's FTSE MiB has lost 0.6%. | 8.08am: European stock markets have opened lower, as expected. The FTSE 100 index in London is off 0.4%, or 23 odd points, at 5598. Germany's Dax has started the day 0.5% lower while France's CAC has shed 0.4%, Spain's Ibex has tumbled 1% and Italy's FTSE MiB has lost 0.6%. |
| Investors are cashing on on a four-day rally after the Fed stopped short of announcing a new round of quantitative easing and China released more weak economic figures. | Investors are cashing on on a four-day rally after the Fed stopped short of announcing a new round of quantitative easing and China released more weak economic figures. |
| On bond markets, the Spanish ten-year yield has edged down to 6.755%, below the 7% danger mark, while the Italian equivalent is at 5.76%. | On bond markets, the Spanish ten-year yield has edged down to 6.755%, below the 7% danger mark, while the Italian equivalent is at 5.76%. |
| 7.45am: Here is today's agenda. Spain is in the spotlight again: it will attempt to sell €2bn of two-, three- and five-year bonds around 10am. The expectation is that it will get it all away, but at high yields. | 7.45am: Here is today's agenda. Spain is in the spotlight again: it will attempt to sell €2bn of two-, three- and five-year bonds around 10am. The expectation is that it will get it all away, but at high yields. |
| Two independent reports on the country's banking system are expected a few hours later, whereupon Mariano Rajoy's government will make a formal request for bank aid. How much of the offered €100bn will be needed? Some numbers that are being bandied around are in the region of €70bn. Certainly the IMF's estimate of €37bn three weeks ago looks to be wide off the mark. | Two independent reports on the country's banking system are expected a few hours later, whereupon Mariano Rajoy's government will make a formal request for bank aid. How much of the offered €100bn will be needed? Some numbers that are being bandied around are in the region of €70bn. Certainly the IMF's estimate of €37bn three weeks ago looks to be wide off the mark. |
| • Revised June manufacturing and services PMIs for Germany, France and eurozone • Finland votes on ESM at 8am • Spain holds €2bn bond auction around 10am • Spanish bank stress tests • Eurogroup press conference at 7pm • Greek cabinet to be unveiled | • Revised June manufacturing and services PMIs for Germany, France and eurozone • Finland votes on ESM at 8am • Spain holds €2bn bond auction around 10am • Spanish bank stress tests • Eurogroup press conference at 7pm • Greek cabinet to be unveiled |
| All times BST | All times BST |
| 7.35am: Well, this promises to be an interesting day. Welcome back to our rolling coverage of the eurozone debt crisis and world economy. | 7.35am: Well, this promises to be an interesting day. Welcome back to our rolling coverage of the eurozone debt crisis and world economy. |
| Greece has a new Conservative-led government under Antonis Samaras, but the US Federal Reserve's extension of Operation Twist last night seems to have fallen flat... To sum it up: Fed twists again, but no QE3 yet. | Greece has a new Conservative-led government under Antonis Samaras, but the US Federal Reserve's extension of Operation Twist last night seems to have fallen flat... To sum it up: Fed twists again, but no QE3 yet. |
| Andrew Taylor, market strategist at GFT, says: | Andrew Taylor, market strategist at GFT, says: |
| The Fed delivered what the majority of the market had priced in but seems now that it is here markets seem unsure of how it was supposed to help. | The Fed delivered what the majority of the market had priced in but seems now that it is here markets seem unsure of how it was supposed to help. |
| Traders who enjoyed a rally on the hopes of Operation Twist are only now calculating that its affects are minimal if anything at all. This programme was definitely not pulled out of the Fed's 'stimulatory' toolbox, in fact, it should have been in a box on the wall that says 'break glass if you are out of solutions'. | Traders who enjoyed a rally on the hopes of Operation Twist are only now calculating that its affects are minimal if anything at all. This programme was definitely not pulled out of the Fed's 'stimulatory' toolbox, in fact, it should have been in a box on the wall that says 'break glass if you are out of solutions'. |
| Spanish bond yields fell sharply yesterday in the wake of speculation that Europe's leaders were thinking about allowing bailout funds to buy bonds directly, even though German chancellor Angela Merkel poured cold water on the idea saying it was "purely theoretical". | Spanish bond yields fell sharply yesterday in the wake of speculation that Europe's leaders were thinking about allowing bailout funds to buy bonds directly, even though German chancellor Angela Merkel poured cold water on the idea saying it was "purely theoretical". |
| Michael Hewson, senior market analyst at CMC Markets UK, says: | Michael Hewson, senior market analyst at CMC Markets UK, says: |
| The idea will certainly be on the agenda at the start of today's two day EU finance ministers meeting, but it is a long way from being a work in progress, simply because the new ESM doesn't even exist yet. | The idea will certainly be on the agenda at the start of today's two day EU finance ministers meeting, but it is a long way from being a work in progress, simply because the new ESM doesn't even exist yet. |
| Markets are eagerly awaiting a Spanish bond auction of €2bn of two-, three- and five-year bonds later this morning, as well as two reports on Spanish banks that should shed light on how much of the mooted €100bn bailout will be needed to recapitalise the sector. The €37bn figure suggested by the IMF earlier this month certainly looks much too low. | Markets are eagerly awaiting a Spanish bond auction of €2bn of two-, three- and five-year bonds later this morning, as well as two reports on Spanish banks that should shed light on how much of the mooted €100bn bailout will be needed to recapitalise the sector. The €37bn figure suggested by the IMF earlier this month certainly looks much too low. |