May 28 2013

Francois Hollande: post-crisis generation need help now. Schäuble and Moscovici pledge help, but no firm new plan yet. Stock markets rally. US consumer confidence index at five year high…after French consumer confidence takes a tumble…

Powered by article titled “Hollande’s youth jobless warning, as strong US data fuels market rally – as it happened” was written by Graeme Wearden, for on Tuesday 28th May 2013 14.10 UTC

6.34pm BST

Closing summary

Time to wrap things up for the day. Here's a closing summary:

European politicians from across the region have pledged to take new steps to address the region's youth unemployment crisis, although details remain sketchy tonight.

In a speech in Paris, French president Francois Hollande warned that the post-crisis generation would "turn their backs" on the European project forever, unless leaders could reverse the rising tide of joblessness among young people .

Citizens are turning their backs on Europe and the construction of the European project.

It's the idea of Europe that is being challenged.

(see 11.35am for highlights, or watch the speech in the video above)

Hollande said the EU must agree the so-called Youth Guarantee, a proposal under which young people would be guaranteed a job or training within four months of leaving school (details at 12.03pm).

He also advocated expanding the Erasmus programme so apprentices, as well as university students, could be trained and educated in anothe country.

Several other finance ministers also pledged to do more to fight youth unemployment. Germany's Wolfgang Schauble agreed that the unity of Europe was at stake, while France's Pierre Moscovici said structural reforms could help get under 25s into jobs.

(see 10.10am onwards for details, and 12.39pm for a summary from Bloomberg).

But firm measures will probably have to wait until EU leaders meet in late June, and Angela Merkel holds a conference on the issue in Berlin on 3 July.

In other news…. the financial markets rallied sharply following strong US economic data, and the latest indications that central bankers won't halt their monetary easing measures soon.

In London, the FTSE 100 finished 107 points higher — see 5.26pm for closing prices and analyst reaction.

That followed a jump in US consumer confidence to a five-year high (see 3.06pm)….

…and the news that US house prices have risen at their fastest annual rate in almost seven years (see 2.29pm)

France's central bank governor warned that the country must cut spending. Christian Noyer also warned that the upcoming Financial Transaction Tax could harm the French banking sector (see 2.23pm)….

….while French consumer confidence tumbled unexpectedly, to its joint-lowest level in decades. (see 10.44am for details).

And the International Monetary Fund declared that it still has support in Christine Lagarde, its managing director, after her appearance at a special court last week. See 4.52pm for details.

• Italy sold two-year bonds at the lowest interest rates since the eurozone began. (see 12.47pm)

Polling data from Greece showed that New Democracy had widened its lead over the Syriza opposition (see 1.05pm)

While in the UK, a poll found that UKIP is on track to win the most votes in next year's European elections (see 1.28pm)

I'll be back tomorrow. Until then, thanks, and goodnight. GW

Updated at 6.39pm BST

6.03pm BST

Rajoy: we need action now on youth unemployment

Spanish prime minister Mariano Rajoy has called for more help on youth joblessness now.

Speaking at the Europe: Next Steps conference in Paris, Rajoy added that more effort is needed to help small firms access credit.

Reuters has the details of Rajoy's speech:

Spain's Rajoy said on Tuesday that both the European Investment Bank and European Central Bank should do more to help credit flow to small businesses.

Speaking at a conference on youth employment in Paris, Rajoy also said the European Union "should establish a mechanism to temporarily exclude from the national deficit, for the purposes of the excessive deficit procedure, the cost of exemptions granted from social security contributions when young people are hired."

Rajoy also welcomed the news that Angela Merkel will hold a conference on youth joblessness in Berlin on July 3:

Updated at 6.04pm BST

5.54pm BST

FT: Hollande speech shows concern is growing

French President Francois Hollande delivers his speech today. Photograph: CHARLES PLATIAU/AFP/Getty Images

The FT says Francois Hollande's speech on youth joblessness this morning (see 11.35am for highlights and video) was a sign of "growing political concern" about Europe's youth unemployment levels.

Here's a flavour:

We must act urgently – 6m youngsters are out of work in Europe … close to 14m are without work, study or an apprenticeship,” Mr Hollande said at a conference in Paris that brought together a number of EU finance and labour ministers.

He was speaking as France and Germany stepped up efforts to show they were working to tackle the problem, seen as a key element in flagging support for EU institutions and the continent’s political leadership.

Mr Hollande separately met French and German finance and labour ministers to discuss a joint initiative he said would culminate in a meeting of all EU labour ministers in Berlin in early July.

But the FT added that (as I tried to explain at 12.03pm) most of the measures outlined by Mr Hollande and the various ministers have already been "widely canvassed" by EU leaders and the commission.

More here: François Hollande raises alarm over Europe’s young jobless

Updated at 5.55pm BST

5.26pm BST

European stock markets rally – what the analysts say

Traders Dan Ryan, left, and Gordon Charlop work on the floor of the New York Stock Exchange Tuesday, May 28, 2013
Traders Dan Ryan, left, and Gordon Charlop work on the floor of the New York Stock Exchange today. Photograph: Richard Drew/AP

Europe's stock markets have closed with strong gains across the board. In London the FTSE 100 jumped more than 100 points as it recovered some of last week's losses.

Here's the closing prices

• FTSE 100: up 107 points at 6762, + 1.62%

• German DAX: up 97 points at 8480, +1.16%

• French CAC: up 55 points at 4050, +1.39%

• Spanish IBEX: up 147 points at 8511, +1.77%

• Italian FTSE MIB: up 360 points at 17519, +2.1%.

And on Wall Street, the Dow Jones and the S&P 500 are both up around 1%.

City traders are attributing the rally to two factors.

1) the strong US data this afternoon (house prices rising at their fastest level since 2006 and a five-year high for consumer confidence)

2) the latest signals from central bankers that the stimulus package isn't over (see 8.50am for details of supportive comments from the Bank of Japan and the European Central Bank).

This morning's bleak French consumer confidence data (see 10.44am), hasn't dented the rally — on the grounds that bad news means central banks won't tighten monetery policy….

Here's a selection of analyst comment this evening:

Chris Beauchamp, market analyst at IG

What a difference a weekend makes. Last week markets seemed to have assumed the world, or at least QE, was coming to an end. After a few days away, however, investors have come back with a far more positive outlook. In part they are being helped on their way by supportive comments from the Bank of Japan, which is still tightly-wedded to its easing à la outrance policy.

However, perhaps the most important factor is the growing distance from last week’s Fed minutes. Time has dulled the impact, and investors feel that they can be more relaxed about the hawkish views of a few policymakers. If last week was the dip, then it was shorter than that expected by the even the most positive of traders.

May is almost out, and the ‘go away and sell’ thesis still hasn’t kicked in.

Michael Hewson of CMC Markets

Despite there being very little evidence of a turnaround in economic fundamentals in Europe we’ve seen a complete about turn in sentiment after the sharp losses seen at the end of last week as investors pile back into equity markets on little more than continued central bank support from the Bank of Japan, and expectations of future support from the ECB after comments from ECB member Peter Praet that there was still scope to reduce rates further.

…Poor consumer confidence data from France and a sharp slide in German import prices has fuelled expectations of further easing from the ECB at next week’s rate meeting. While these expectations of further ECB generosity has helped confidence in risk assets there is no getting away from the fact that Europe’s two largest economies continue to diverge away from each other.

Consumer confidence in France sits at its lowest levels since 2008, in complete contrast to Germany where it’s at its highest levels since September 2007, with no expectation that EU leaders have any idea of what to do about it.

Viktor Nossek, head of research at Boost ETP

The FTSE 100 emerged from the Bank Holiday weekend with a bang. Thursday's sharp drop was a distant memory as the UK's flagship index brushed aside any remaining concerns.

Exceptionally strong house price and consumer confidence data from the States will only feed the feel-good factor surrounding the FTSE. On Tuesday it felt like we made another major step towards the symbolic 7000 mark.

Despite years of weak domestic demand, UK equities are looking increasingly attractive. Britain's blue chips have adjusted to the weaker demand in the economy, repaired their balance sheets and restored their dividend-paying capability.

All this despite Britain's meagre rate of GDP growth. But these days, a strong economy is no longer a prerequisite for strong profits.

4.52pm BST

IMF board backs Christine Lagarde

Just in, the executive board of the International Monetary Fund has declared that it has confidence in managing director Christine Lagarde, after a special French court decided not to place her under investigation.

Here's the full statement:

As we have said before, it would not be appropriate to comment on a case that has been and is currently before the French judiciary.

However, the Executive Board has been briefed on this matter, including on the outcome of the recent hearings before the Court of Justice of the Republic in Paris, and has reaffirmed its confidence in the Managing Director’s ability to effectively carry out her duties.

Last week, Lagarde was questioned for two days over her role in a controversial €400m payment given to French businessman Bernard Tapie while she was France's finance minister.

Following the hearing, the court decided not to place Lagarde under formal investigation. Instead the IMF chief – who has denied any impropriety – will be an "assisted witness" in the case. That means she will testify in the inquiry, but is not under suspicion of any offence.

More details here.

France's Christine Lagarde speaks to the press as she leaves the French Republic Justice Court on May 24, 2013 in Paris.
France’s Christine Lagarde speaking to the press as she leaves the French Republic Justice Court last Friday night. Photograph: JACQUES DEMARTHON/AFP/Getty Images

4.31pm BST

Marketwatch Graphics has pulled together this graph showing how US house prices are now growing at their fastest pace since before the credit crunch.

As flagged up at 2.29pm, new data released today showed prices are 10.9% higher across 20 US cities.

4.11pm BST

US Treasury bonds are dropping in value, the mirror image of shares on Wall Street.

That has pushed up the yield (interest rate) on 10-year US debt by 10 basis points to around 2.11% (ie, from 2.01% overnight).

Updated at 4.11pm BST

4.02pm BST

Moody’s hikes outlook on US banks

The good news keeps coming, for America at least. Moody's just raised its rating on the US banking system to stable, from negative, for the first time since the financial crisis struck in 2008.

3.10pm BST

That strong US consumer confidence data has sent shares on Wall Street even higher, with the Dow Jones industrial average now up 201 points at 15504.

The US dollar is also gaining against other currencies, flags up the FT's Alice Ross:

Updated at 3.30pm BST

3.06pm BST

US consumer confidence at five-year high

More strong economic data from the US — the monthly consumer confidence index has jumped to a five year high.

The US consumer confidence index came in at 76.2, up from 69 last month. Economists had expected much smaller rise, to 71.

And the expectations index, showing how upbeat people were about the future, also posted a strong rise – to 82.4 from 74.3.

Lynn Franco, director of economic Indicators at The Conference Board (which compiled the data) said Americans are "considerably more upbeat" about future economic and job prospects.

Back-to-back monthly gains suggest that consumer confidence is on the mend and may be regaining the traction it lost due to the fiscal cliff, payroll-tax hike, and sequester.

Updated at 3.35pm BST

2.41pm BST

Stock market rally continues as Wall Street opens

Stock markets are rallying strongly today, with the FTSE 100 now up by 120 points, or 1.8%, at 6775 as Wall Street opens.

The prospect of ongoing central bank help, and the better-than-expected US house price data (see 2.29pm), appear to be a heady cocktail for the markets.

In New York the Dow Jones index is up 150 points, or around 1%, while the Italian stock is up over 2%.

Here's the latest prices:

Stock market prices, May 28 2013
Photograph: Thomson Reuters

Reaction to follow….

2.29pm BST

US house prices index beats forecasts

US house prices are rising at their fastest pace in nearly seven years, according to the latest piece of upbeat American economic data.

The S&P/Case Shiller index of house prices in 20 cities showed prices rose by 10.9% in March, compared with a year ago, beating analyst forecasts.

Prices were 1.1% higher month-on-month.

2.23pm BST

French central bank governor warns on spending and FTT

While Francois Hollande was speaking in Paris this morning, France's central bank governor was calling for new spending cuts.

Christian Noyer used his annual report to the French government to warn that France must take difficult decisions on public expenditure and its welfare system.

Noyer warned that:

Over a certain threshold, which our country has probably crossed, any increase in public spending and debt has extremely negative effects on confidence.

…adding that "a profound change in public policy" is needed if the France economy is to deliver strong and lasting growth that creates jobs.

And on welfare spending, Noyer's message was clear — it must be cut.

Welfare spending accounts for around 30% of GDP and the country’s social deficit path is unsustainable as it stands.

Giving in to the temptation to keep raising social contributions leads to an increase in labour costs, which ultimately weighs on activity and jobs: the best way to deal with the problem is by tackling spending as this would erode the cost competitiveness, which is already insufficient.

You can read the whole letter here (pdf).

Towards the end, Noyer also warned that Europe's plans for a Financial Transaction Tax must be carefully defined. Otherwise, France faced "the risk of destroying entire segments of our financial industry…" he wrote.

As the Telegraph's Phil Aldrick points out, Sir Mervyn King claimed last week that there was no support for the FTT among European central bankers he'd spoken to.

Here's more coverage of the Noyer letter:

Telegraph: France's central bank head warns FTT could 'destroy' jobs

Reuters: ECB's Noyer says France must target spending

Wall Street Journal: Noyer Urges Hollande to Cut Spending, Mull Welfare Cuts

2.07pm BST

European Council president Herman Van Rompuy has added his voice to the chorus insisting that action will be taken on youth unemployment.

Speaking at the European Parliament this lunchtime, Van Rompuy pledged to "put the fight against unemployment high on our agenda" at the next EU summit in June (prompting the obvious reposte – why wasn't it there already?)

Van Rompuy said the European Council meeting is an opportunity for leaders to support the Youth Guarantee, under which all young people would be guaranteed training, further education or employment within four months of leaving school (part of the plan outlined by Francois Hollande this morning).

This should be operational by January 2014, he said.

Van Rompuy also echoed Hollande's point that Europe's young people are looking for serious progress on the issue:

We must rise to the expectations of the millions of young people who expect political action.

More here (pdf).

1.28pm BST

Open Europe/Comres poll
Open Europe/Comres poll

Speaking of opinion polls, a new survey by Open Europe/ComRes has found that Britain's UKIP party are on track to win the most votes in next year’s European elections.

The pol showed that UKIP would come first overall with 27%, closely followed by Labour on 23%. The Conservatives would come third with 21%.

The survey also found more UK citizens would vote to leave the EU (41%) than stay (37%) if an in-out referendum was held today

However, the picture changes if David Cameron achieves 'a significant return of powers' from Brussels to Westminster. Then, 47% of voters believe they'd vote to stay in the European Union,while 32% would still vote to leave.

More details here (pdf).

1.05pm BST

Greek polling data: New Democracy extends lead

Support for Greece's governing New Democracy party has risen in recent weeks, according to an opinion poll published this morning.

The survey, for Mega TV by GPO, showed that New Democracy is backed by 21.3% of voters, a 1.8% lead over the left-wing Syriza party.

Two other polls released over the weekend also put ND ahead of Syriza, with a lead of up to 2.8%. That, according to Greece's Kathimerini, is the widest lead since ND took power in a three-party coalition almost a year ago.

GPO's poll also found that the neo-Nazi Golden Dawn party remains in third place. Here's the full details:

• New Democracy: 21.3%

• Syriza: 19.5%

• Golden Dawn: 10.4%

• Pasok: 6.7%

• Independent Greeks: 6.4%

• KKE: 5.8%

• Democratic Left: 5.1%

• Antarsya: 1.8%

• New Greece: 1%

Updated at 3.43pm BST

12.47pm BST

Italy sold two-year bonds at the lowest interest rate since the euro was created this morning.

It marks a remarkable change of fortune since its future in the eurozone was in doubt 18 months ago. Today's auction was helped by speculation that the European Commission will propose ending its excessive deficit procedure against Italy tomorrow (details here)

Reuters has more details of the auction:

Rome sold €2.5 of zero-coupon bonds maturing Dec. 2014 at 1.11%, down from 1.17% at a similar sale one month ago.Italy also issued €987m of inflation-linked BTPei bonds maturing Sept. 2018, paying a yield of 1.83%.

Investors are cautiously returning to high-yielding debt after they cashed in on Italian and Spanish bonds last week on expectations the U.S. Federal Reserve may scale back its asset buying programme in the next few meetings.

12.39pm BST

Bloomberg’s take

Bloomberg sums up this morning's events thus:

Germany and France said companies in struggling euro-area countries need cheaper credit to create jobs and ease youth unemployment, as Europe’s two biggest economies seek a joint response to the debt crisis.

German Finance Minister Wolfgang Schaeuble, his French counterpart, Pierre Moscovici, and Werner Hoyer, who heads the Luxembourg-based European Investment Bank, all singled out higher company financing costs in southern Europe as an obstacle to economic recovery at a meeting in Paris today.

“An Italian or Spanish small or medium-size enterprise doesn’t fund its investments at the same rate as a German company,” Moscovici said. “The channels of financing aren’t working.” Schaeuble said soaring youth unemployment in the region undermines European unification.

More here: Franco-German Youth Jobs Push Seen Hinging on Company Credit

12.34pm BST

Italy joins Germany and France in backing more action

Italian Labour minister Enrico Giovannini has agreed that Europe must stop abandoning its young people.

Like Germany's Wolfgang Schäuble and France's Pierre Moscovici (see 10.10am onwards), Giovannini told the Europe: Next Steps conference that radical new action was now needed.

Giovannini said:

We have to rescue an entire generation of young people who are scared. We have the best-educated generation and we are putting them on hold. This is not acceptable.

Words alone, though, aren't much good to the 5.7 million young people out of work in the EU.

Francois's Hollande's speech (see 11.35am) remains the clearest 'vision' of a New Deal, but it does appear that the actual agreement may have to wait until late June. Or possibly even 3rd July, when Angela Merkel hosts a conference on the issue in Berlin.

As Reuters puts it:

While all agreed on the urgency needed to tackle youth unemployment, ministers offered no concrete plans, insisting Europe must be pragmatic and work on various strands.

Updated at 12.35pm BST

12.21pm BST

Former Italian PM Mario Monti just gave a speech at the Europe: Next Steps conference in Paris. He welcomed signs that EU leaders are giving greater attention to structural reforms, rather than just insisting on fiscal discipline.

The Berggruen Institute tweeted some of Monti's other key lines:

12.10pm BST

Charts: The youth unemployment crisis

This chart from the EC shows how youth jobless rates vary across Europe, with Greece and Spain both suffering rates over 50%.

Youth joblessness across the EU
Photograph: European Commission

And this chart grabbed from Bloomberg TV shows the highs and lows (Portugal's 38% is slightly obscured)

Youth unemployment across Europe
Photograph: Bloomberg TV

12.03pm BST

Youth guarantee explained

The European Commission released a memo this morning, outlining its own efforts on youth unemployment. Perhaps stung by events in Paris?

The memo (click here) includes full details of the Youth Guarantee which Francois Hollande says must be brought in swiftly (see 11.35am).

The EC explains:

The Youth Guarantee, based on experience in Austria and Finland, seeks to ensure that all young people up to age 25 receive a quality offer of a job, continued education, an apprenticeship or a traineeship within four months of leaving formal education or becoming unemployed.

It is based on succesful programs in Austria and Finland.

The full cost of the scheme, though, has been estimated at €21bn. That's more than three times the €6bn currently set aside, but a fraction of the economic cost of youth unemployment.

The EC reckons that unemployment benefit, lost productivity and lost tax revenue from youth joblessness comes to €153bn per year.

In addition, for young people themselves, being unemployed at a young age can have a long-lasting negative ‘scarring effect’. These young people face not only higher risks of future unemployment, but also higher risks of exclusion, of poverty and of health problems.

The memo also outlines how the Erasmus scheme is already being expanded, with a 40% increase in its budget, to allow more young people to study abroad.

11.35am BST

Video: Francois Hollande outlines New Deal

The "Europe – Next Steps" conference in Paris began with a keynote speech from Francois Hollande, in which the French president outlined his vision of a new strategy for youth unemployment.

Hollande warned that the millions of young people across Europe out of work and education are looking to their leaders for a response based on solidarity.

Hollande dubbed them the "post-crisis generation", who will "for ever after, be holding today's governments responsible for their plight".

Here's the key section (from 8 minutes, in the video embedded above)

Remember the postwar generation, my generation. Europe showed us and gave us the support we needed, the hope we cherished. The hopes that we we could get a job after finishing school, and succeed in life.

Can we be responsible for depriving today's young generation of this kind of hope?

Imagine all of the hatred, the anger, it's not anger that we're talking about in fact, it goes more than that. We're talking about a complete breakdown of identifying with Europe.

What's really at stake here is, not just 'lets punish those in power'. No. Citizens are turning their backs on Europe and the construction of the European project.

It's the idea of Europe that is being challenged.

Hollande then outlined three key areas for the New Deal which he hopes to see agreed by European leaders at the next EU summit in late June

1) EU leaders would commit to spending the €6bn assigned to fight youth unemployment "very quickly", rather than letting the money sit around.

Those areas with 25% youth unemployment or higher should get 'accelerated spending', he added.

2) EU leaders should implement a "security system" for young people who leave school without a job. After 4 months they would be able to find a job, or additional training, or an internship, or an apprenticeship.

It's a great idea, this is what we call the Youth Guarantee. But do we have the ability to implement this objective? Well, we have no choice, we have to do it now.

3) Hollande proposed opening up the Erasmus scheme, under which university students could study overseas. He wants all young people to get the opportunity:

All young people, regardless of their educational background, would be able to go and continue learning new skills in another European country.

Hollande also said small firms need to be given more help to get credit, particularly in crisis-hit countries, and urged the European Investment Bank must release funds to SMEs swiftly.

He concluded by warning that Europe faces "an emergency when it comes to youth unemployment". Hollande explained that he and Angela Merkel were in agreement over the issue, and would keep developing their "bilateral project to create more jobs for young people in Europe.

And he finished by expressing hope that EU leaders will agree wide-ranging new measures at their summit in June, which is followed by a meeting of European labour ministers in early July.

Updated at 11.48am BST

10.44am BST

Graph: French consumer confidence

This graph from Reuters underlines the seriousness of today's drop in French consumer confidence.

As well as a near-five year low, this month's reading of 78 is the joint lowest reading at least three decades:

French consumer confidence vs GDP
Photograph: Thomson Reuters

10.33am BST

Cue much milling around in Paris:

10.32am BST

Wolfgang Schäuble rounded up the first panel session in Paris (see 9.24am onwards) with a call to European youth not to lose faith.

Europe is our future. We do not have a better future than Europe.

Schäuble also denied that Europe should just copy America's approach to employment and investment:

10.23am BST

The head of the European Investment Bank, Werner Hoyer, agreed with Wolfgang Schäuble and Pierre Moscovici that youth unemployment is a threat to the European project.

Speaking on the same panel, Hoyer said the EIB had billions of euros of extra funding for projects that would benefit Europe, particularly the youth situation.

Updated at 10.27am BST

10.10am BST

Schäuble and Moscovici on youth unemployment

Wolfgang Schauble
Wolfgang Schäuble.

Germany's Wolfgang Schäuble has warned that the youth unemployment crisis threatens European stability.

Speaking at the EU: Next Steps conference in Paris, the Germany finance minster warned that EU leaders would "lose the battle for European unity" if they do not win the battle over youth unemployment.

Schäuble said the crisis in the eurozone had been stabilised, but not solved, cautioning:

We cannot keep a generation on hold

Schäuble said small firms had a crucial role to play in getting more young people into work, if they could show more innovation.

But he also warned against setting the “wrong incentives” with new aid policies, says structural reforms are needed to make Europe more competitive, adding:

Europe has twice as high social welfare costs as its competitors.

He was followed by France's Pierre Moscovici, who agreed that Europe's future was at risk:

Pierre Moscovici
Pierre Moscovici Photograph: /EU Next Steps conference

Moscovici told the conference that toung people are asking whether they should stay in Europe or not. He added:

We want Europe to be a continent where youth feels comfortable.

Moscovici agreed that Europe does need "structural reforms", adding:

We are not afraid of structural reforms in France.

So, a firm commitment to new measures on youth unemployment, but no actual details of this New Deal. Yet, anyway…

Michel Sapin, France's Labor minister, told the conference that the big decisions will be taken at an EU summit in a month's time:

Updated at 10.23am BST

9.42am BST

Live audio feed from Paris

Here's a live audio feed from the Europe: Next Steps conference, complete with an English translation:

Updated at 10.48am BST

9.34am BST

Karine Berger MP
Karine Berger MP this morning.

French socialist MP Karine Berger says European leaders needs to fix the youth unemployment crisis fast.

Speaking on Bloomberg TV a few moments ago, Berger warned that:

Otherwise, thousands of young people in Europe will be hurt forever.

Berger agreed that the structure of the labour markets need to be changed, to help young people into employment:

We need to find growth, and we need to find structural solutions.

Easier said than done, of course. Reforming labour markets is notoriously tricky politically, as it typically means making it easier to dismiss workers or to force them to take new jobs.

9.24am BST

Watch the Paris Conference here

The 'New Deal' on youth joblessness will be discussed at a conference in Paris today called Europe: Next Steps, at the Institut d'Etudes Politiques de Paris.

It's being streamed live here: Europe: les prochaines étapes

Updated at 10.47am BST

9.08am BST

French consumer confidence slides

We've had grim economic data from France this morning, where consumers are more pessimistic than any time in nearly five years.

The French monthly consumer confidence reading fell to 79, the lowest reading since July 2008, from 83 last month (where the long term average is 100).

9.05am BST

Mike van Dulken of Accendo Markets suggests that today's markets rally shows the City is more relaxed about the US Federal Reserve's plans, after last week's flap over when it will start to slow its own quantitative easing operation:

Updated at 9.12am BST

8.50am BST

Markets rally again

In London, the FTSE 100 has jumped by 100 points, or 1.5%, this morning as investors return their desks after the bank holiday weekend.

That follows a calmer day's trading in Japan, where the Nikkei finished 1.2% higher – clawing back some of last week's dramatic losses.

Other European markets are also rallying, with Germany's DAX and the French CAC up around 0.7%, while the Spanish and Italian markets are both 1.5% higher.

Traders seem to be content that central banks will maintain their stimulus measures for a while longer.

Early this morning, Bank of Japan board member Ryuzo Miyao said the BoJ would remain firm, despite the market turmoil of recent days. Miyao argued that investors should not be spooked by rising Japanese bond yields.

Even when there is upward pressure on long-term interest rates due to expectations for economic recovery, monetary policy will continue to put downward pressure on interest rates and therefore strongly support economic recovery.

And yesterday, the European Central Bank's Jorg Asmussen said the ECB wouldn't tighten policy soon:

Our monetary policy is expansive and will remain so as long as necessary. But to keep rates low for too long would create new risks.

A man walks by an electronic stock board of a securities firm in Tokyo, Tuesday, May 28, 2013.
An electronic stock board in Tokyo, where the Nikkei finished 169 points higher, up 1.2%. Photograph: Itsuo Inouye/AP

8.34am BST

The New Deal – what we know

Some details of this 'New Deal' for youth unemployment have emerged in the media in recent days.

Here's a few articles:

Bloomberg: Franco-German Youth Jobs Push Seeks to Damp National Differences

Germany and France plan to present a joint blueprint today to address soaring youth unemployment as Europe’s two biggest economies seek to find common ground in response to the euro region’s financial crisis.

“Almost 6 million unemployed young people — these are dramatic figures,” German Labor Minister Ursula von der Leyen said in an ARD television interview on May 26. “These young people need an answer now.”

The Telegraph: 'New Deal' to tackle Europe's mass youth unemployment

The "New Deal for Europe" will free up EU resources to pay for language courses and fund jobseekers' flights around the continent in search of work.

Germany is increasingly concerned about the need to rescue the country's image, and show greater solidarity with southern Europeans suffering a prolonged economic crisis.

EurActiv: Commission denies Germany's 'dangerous' criticism of youth jobs fight

As Germany and France meet today over a joint youth employment initiative, EU officials have rebuffed as “groundless” and “dangerous” criticism from the German finance minister that the Commission is failing to address joblessness, EurActiv Germany reports.

Ministers from both countries will unveil in Paris the initiative blueprint and allow the European Investment Bank to unlock billions of euros in loans to companies to create jobs for young people.

The proposals have been called a “New Deal for Europe” and echo the drive by President Franklin D. Roosevelt to cut United States unemployment in the 1930s, the Rheinische Post reported this month.

But sources say German Finance Minister Wolfgang Schäuble has angered the president of the European Commission, José Manuel Barroso. Schäuble’s complaint that the Commission has been ineffective in its approach towards fighting youth unemployment has not gone down well amongst other EU officials either.

Updated at 8.35am BST

8.16am BST

A New Deal for joblessness

Good morning, and welcome to our rolling coverage of key events in the eurozone and across the global economy and the financial markets.

Europe's youth unemployment crisis takes centre-stage today as Germany and France announce plans for a "New Deal" for the millions of young people out of work across the region.

Almost one in four young people are out of work in the eurozone, and the scale of the problem appears to have shaken politicians into action.

German finance minister Wolfgang Schäuble, and his French counterpart Pierre Moscovici, will meet in Paris today to agree a package of measures to address youth unemployment.

The plan is expected to focus on countries with the highest jobless rates, such as Greece and Spain. It could include creating more apprenticeships to get young people into the workplace – an area where Germany excels already – and more funding for small firms to help them hire young people.

It could also provide support for jobseekers to move across the eurozone to find work.

The scheme is also expected to involve the European Investment Bank and tap a €6bn fund set aside to address youth unemployment in the EU budget.

But will the scheme be ambitious enough to tackle a problem that is creating a lost generation and, many fear, threating social cohesion across the region?

I'll be tracking events in Paris through the day, along with other important developments across Europe and beyond.

Updated at 8.29am BST © Guardian News & Media Limited 2010

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