July 2013

Spanish GDP falls 0.1%. Sweden also shrinks. Italy’s top court considering Silvio Berlusconi’s conviction and sentence for tax fraud. Alberto Nardelli: Four scenarios for Italy. Eurozone economic confidence improves, while US consumer confidence drops…

 


Powered by Guardian.co.ukThis article titled “Eurozone crisis: Berlusconi prosecutor seeks cut in public office ban – as it happened” was written by Graeme Wearden, for theguardian.com on Tuesday 30th July 2013 19.24 UTC

8.16pm BST

So, with the Italian supreme court closed for the night, I'll shut up shop here too.

Back tomorrow with more coverage from Rome, and the usual fare. Thanks, and goodnight. GW

8.03pm BST

Berlusconi court adjourns until Wednesday

The Supreme Court in Rome has just adjourned for the day.

Silvio Berlusconi's final appeal will resume on Wednesday, when his legal team led by Franco Coppi is expected to present their counter arguments.

As explained at 4.07pm, Berlusconi's case is made up of around 50 different point. This includes the argument that the former PM wasn't really in ful charge of Mediaset when the offences took place, as he was busy with his political career.

A verdict could come tomorrow, or we might be left wating until Thursday….

Updated at 8.26pm BST

8.00pm BST

A quick recap

A reminder of the importance of this case:

Today's appeal hearing at the Supreme Court (which could last until Thursday) is Silvio Berlusconi's final attempt to avoid a ban from public office and a jail term over a tax fraud conviction involving his Mediaset empire.

If the sentence is upheld, then political analysts fear Berlusconi's Freedom Party could pull its support for the fragile Italian coalition. That could bring down prime minister Enrico Letta.

So, why has the prosecutor recommended reducing the public office ban from five years to three? Reuters explains that the move was made on "technical legal grounds"

One piece of idle speculation did strike me: that by cutting the sentence, the prosecutors reduce the risk that judges will acquit Berlusconi or void the verdict and start the process again… That's just a personal thought.

Alternatively, they could simply be responding to the Berlusconi side's case. (updated for clarity).

Updated at 8.14pm BST

7.25pm BST

Reuters: Berlusconi prosecutor seeks cut in public office ban

Reuters' Rome bureau provides details of the latest development in Silvio Berlusconi's appeal — the fact that the prosecution has proposed that the public office ban should be cut:

An Italian public prosecutor on Tuesday asked the country's top court to reduce former Prime Minister Silvio Berlusconi's ban from public office for tax fraud to 3 years from 5, but to confirm a one year prison term.

The supreme court is hearing Berlusconi's last appeal in a case which could threaten the survival of Italy's shaky coalition government if his conviction is confirmed.

Berlusconi was sentenced to four years in jail by the lower court but this has been reduced to one year under a 2006 amnesty.

7.20pm BST

ANSA: the legal arguments

ANSA, the Italian news agency, has details of the early skirmishes in the Berlusconi court case:

The four-year conviction regards a system of inflated film-rights purchases at Berlusconi's Mediaset media empire and the use of offshore companies to create slush funds.

Prosecutors say this enabled Berlusconi to dodge taxes on around seven million euros in 2002 and 2003.

"There is a thread that is given from the continuity of the system starting from the period of its invention in the 1980s," Prosecutor Antonello Mura told the Cassation Tuesday. Mura said the aim was to "inflate costs for tax benefits and produce payments for the creation of substantial capital abroad". Berlusconi says he had nothing to do with these dealings or authorising them as he was too occupied with political matters.

He was premier at the time.

Franco Coppi, a member of Berlusconi's defence team, said that the "crime does not exist", adding that he was aiming to have the conviction overturned.

More here.

7.14pm BST

Open Europe's Vincenzo Scarpetta also flags up this latest development:

(reminder: Open Europe's analysis of the case is covered at 12.23pm)

7.01pm BST

A late newsflash from Rome, saying the Italian prosecutor has asked for Silvio Berlusconi's ban from public office to be reduced:

• ITALY TAX FRAUD CASE PROSECUTOR REQUESTS REDUCTION OF BERLUSCONI BAN FROM PUBLIC OFFICE TO 3 YEARS FROM 5 BUT CONFIRMATION OF PRISON SENTENCE 

Looking for more details now….

Updated at 7.03pm BST

6.19pm BST

AP: Berlusconi’s lawyer won’t make predictions, but…

Silvio Berlusconi's lawyer, Franco Coppi, during a break today.
Silvio Berlusconi’s lawyer, Franco Coppi, during a break today. Photograph: Claudia borgia/Demotix/Corbis

Associated Press reports that Silvio Berlusconi's lawyer, Franco Coppi, tried to avoid guessing the outcome of today's hearing. Not completely successfully.

Here's a flavour of its report from the Italian supreme court in Rome, as Berlusconi's appeal was being heard:

The tensely awaited decision, which could have an impact on Italy's fragile, three-month-old coalition government, is expected Wednesday or possibly Thursday, Berlusconi's lawyer Franco Coppi told reporters outside the courtroom.

Berlusconi's case is one of eight on the docket, and the last one to be heard.

"I'm superstitious and I don't make predictions," Coppi said during a break after the court spent two and a half hours summarizing the case, but he added: "I expect to win."

4.57pm BST

Back on the Cypriot haircut deal

Charles Forelle of the Wall Street Journal calculates that large depositors with over €100,000 in Bank of Cyprus are only getting back 15% of that 'unsecured' funds straight away, under the deal announced today (see 3.49pm):

Updated at 4.58pm BST

4.54pm BST

This handy graphic shows how the Greek bailout funds have been spent since its first bailout in 2010.

You'll note that a lot was used to cover maturing debt (the large purple slice), along with interest payments (red) and recapitalising the banks (grey/blue).

Very little was actually spent by the Athens goverment (primary deficit in blue, and 'other government needs' in green).

That's via Yiannis Mouzakis, a handy expert on the crisis based in Cyprus (who blogs as The Prodigal Greek).

4.40pm BST

Peugeot Citroen state aid aproved

Just in – the European Commission has (as rumoured last week) approved France's €7bn loan to the financing arm of struggling auto firm PSA Peugeot Citroen.

The EC did insist, though, that the loan was made at a higher price, to avoid competition concerns.

Commissioner Joaquin Almunia explained:

This is a balanced result which offers the PSA group the chance to make a new start on a sound basis.

4.32pm BST

Readers with an interest in economic history might like to know that the Bank of England has made various historical documents available online.

News Release – Historic Bank of England publications and documents now available online

It includes more than 80,000 ledgers, files and individual records. FT Alphaville's Joseph Cotterill has been trawling, and dredged up a few highlights already:

Updated at 4.32pm BST

4.07pm BST

Francesca Pascale, the girlfriend of Italian former Premier Silvio Berlusconi, leaves his residence in Rome, Tuesday, July 30, 2013. Berlusconi is waiting in his home in Rome for the decision that will change his political fate as Italy's highest court hears arguments in the former premier's fraud conviction.
Francesca Pascale, the girlfriend of Italian former Premier Silvio Berlusconi, leaving his residence in Rome today. Berlusconi remains there waiting for the court ruling. Photograph: Riccardo De Luca/AP

Nice piece in the Economist this afternoon on Silvio Berlusconi's court appeal hearing today.

Between a rock and a hard place

It points out that Berlusconi's defence is based on around 50 objections to the original conviction:

Central to their case is the argument that the billionaire media proprietor, who was prime minister at the time of the alleged offences in 2002 and 2003, was then not really in charge of Mediaset, his television empire.

That is the first of the ironies: his lawyers’ task would be a lot easier if, back in the 1990s when he entered politics, Mr Berlusconi had listened to his adversaries and ring-fenced his business interests from his political career.

If Berlusconi loses this final fight, "JH" writes, then prime minister Enrico Letta might have to ask his MPs to vote against the sentence – even though Berlusconi is a longtime opponent. If they refuse, the coalition could fall. At the least, it would enhance the prospects of Letta's rival, "the more telegenic, albeit less experienced, Matteo Renzi, the mayor of Florence".

One of the PdL’s lawmakers, Francesco Giro, told an interviewer as the court was assembling that Mr Berlusconi, though incurably optimistic, was “anxious”. He was not the only one.

3.59pm BST

3.47pm BST

Bank of Cyprus savers suffer 47.5% haircut

It's official. Large investors with more than €100,000 in Bank of Cyprus when the country collapsed into a bailout this year are surrendering 47.5% of that money in exchange for new shares in the company.

The Central Bank of Cyprus announced the news today. It put a positive spin on it, saying "significant progress" had been made in recapitalising BoC.

According to Reuters, the move means depositors will lose around €8bn.

And what of the rest? The Central Bank of Cyprus explained that 12% of deposits that were previously blocked will be released. The balance will be split into three deposits per customer, which will be locked for six, nine and 12 months each. However,…

BoC will have the option to renew the time deposits once for the same time duration

So in practice, savers might not get their hands on any of the money for a year, and could have to wait 24 months for the lot.

Here's the full statement:

Significant progress at Bank of Cyprus with the completion of the recapitalisation and the exit from resolution

And as this picture shows, anger over the Cypriot bailout is still visible:

A man walks past a of wall of a Bank of Cyprus branch which has graffiti on it reading in Greek: Troika get out in the Cypriot capital, Nicosia.
A man walks past a Bank of Cyprus branch which has graffiti on it reading in Greek: “Troika get out”. Photograph: Yiannis Kourtoglou/Demotix/Corbis

Updated at 5.49pm BST

3.16pm BST

Mixed news from America on the consumer confidence front — the headline measure calculated by the Conference Board fell ths month, to 80.3 from 82.1 in June.

US consumers, it seems, are growing more worried about the future. The expectations index slid to 84.7, from 91.1. That suggests growing worries about America's economic growth through the year, as fiscal cutbacks hit home.

The 'present situations' index, though, climbed to its highest level since May 2008.

3.00pm BST

Italian update

The lawyer of former Italian prime Minister Silvio Berlusconi, Franco Coppi (3rd L) walks out of the entrance of the Court of Cassation building, during a pause of the supreme court session which will decide whether to confirm former Italian Prime Minister Silvio Berlusconi's one-year prison sentence and five-year ban from politics in a long-running tax fraud case involving his media business interests, on July 30, 2013, in central Rome.  The final appeal hearing began on July 30 but one of Berlusconi's lawyers told reporters that the verdict may come only on July 31 or August 1.
The lawyer of former Italian prime Minister Silvio Berlusconi, Franco Coppi (3rd L) walks out of the entrance of the Court of Cassation building, during a pause of today’s supreme court session. Photograph: ANDREAS SOLARO/AFP/Getty Images

Back in Italy, its supreme court spent this morning hearing a summing up of the legal arguments in Silvio Berlusconi's tax fraud case.

They then called a lunch break – giving the crowds of reporters outside the court a glimpse of Berlusconi's legal team.

Silvio Berlusconi's lawyer Franco Coppi, center, leaves the Court of Cassation building where Berlusconi's case on tax fraud will be decided, in Rome, Tuesday, July 30, 2013.
Silvio Berlusconi’s lawyer Franco Coppi, center, leaving the Court of Cassation building. Photograph: Gregorio Borgia/AP

Public prosecutor Antonello Mura was lined up to present his case after the break.

As flagged up earlier, Berlusconi's lawyers – and some legal experts – don't expect a verdict tonight.

2.17pm BST

US house prices up again

Strong housing data from America this afternoon, where prices continue to romp ahead.

The S&P/Case-Shiller index, covering 20 US cities. showed a 2.4% rise in house prices during May. That means a positively perky 12.2% year-on-year rise – the biggest annual increase since March 2006.

House prices in Dallas and Denver are now at record levels.

The San Francisco showed the biggest gains, up 4.3% in May. Atlanta, Chicago, San Diego, and Seattle also posted gains of more than 3%.

Analysts had expected an even bigger rise, of 12.4% year-on-year. But ithe broad picture remains upbeat

S&P/Case Shiller house price index, to May 2013
Photograph: S&P/Case Shiller

Updated at 2.27pm BST

1.48pm BST

And here's a couple of snaps of Greece's finance minister, Yannis Stournaras, during his upbeat interview with Reuters (see 1.27pm).

Greece's Finance Minister Yannis Stournaras walks in his office during an interview with Reuters in Athens July 29, 2013.
 Photograph: YORGOS KARAHALIS/REUTERS
Greece's Finance Minister Yannis Stournaras speaks during an interview with Reuters in Athens July 29, 2013.
Photograph: YORGOS KARAHALIS/REUTERS

Alas, no photos of the broken window…

1.27pm BST

The optimism of the Greek finance minister

Over in Greece, finance minister Yannis Stournaras has suggested the Greek government may avoid incurring a black hole in its bailout plan.

In a decidedly upbeat interview with Reuters, Stournaras argued that Greece's economy may actually perform better than its lenders predict.

A decent tourism season and a well-executed reform plan could mean Greece avoids the fiscal gap, of around 2% of GDP, which the Troika has predicted.

Stournaras argued that Greece's main threat is "political risk", not economic, due to MPs running out of enthusiam and patience for austerlty.

He said:

MPs just reflect the average man or woman in the street – they have to believe that there is light at the end of the tunnel. If they believe it they will continue voting the few necessary measures left over, if they don't they are not going to. This is the great risk.

Reuters also reports that Stournaras's office, in the centre of Athens, still sports a broken window thanks to "a bullet fired by angry anti-austerity demonstrators in 2010".

This 'feature' has also caught the eye of investors visiting Greece…

Updated at 1.30pm BST

12.23pm BST

Open Europe: Berlusconi case Q&A

It can be hard to keep track of Silvio Berlusconi's various legal travails. On top of the Mediaset tax fraud case under consideration today, he has also been convicted of breaching confidentiality in March 2013 over a leaked police wiretap, and also found guilty of underage sex charges in June.

Helpfully, Open Europe have published a guide to today's case:

Q&A: All you need to know about Berlusconi's tax fraud trial and its potential implications for the Italian government

It explains how the four-year prison sentence, if upheld, would need to be approved by the Senate, and that Berlusconi's age means most of the sentence would probably be annuled.

But Open Europe also warns that the political implications are unclear:

Several senior members of Berlusconi's party have evoked drastic retaliation (withdrawal from government, resignation en masse of Berlusconi's MPs and Senators, snap elections, and so forth).

The truth is Il Cavaliere would make the final decision – and his party would then almost certainly follow the leader. Sure enough, there would be the potential to trigger a political crisis in Italy.

12.01pm BST

Photos: Outside Rome’s supreme court

A couple more snaps from Rome, as judges at the supreme court consider Silvio Bersluconi's appeal:

A man holds up a picture of former Italian Prime Minister Silvio Berlusconi as he protests in front of Italy's supreme court building in Rome July 30, 2013.
A man holds up a picture of former Italian Prime Minister Silvio Berlusconi as he protests in front of Italy’s supreme court building in Rome today. Photograph: ALESSANDRO BIANCHI/REUTERS
Journalists gather outside the Court of Cassation building where former premier Silvio Berlusconi's case on tax fraud will be decided, in Rome, Tuesday, July 30, 2013.
Journalists gather outside the Court of Cassation building. Photograph: Gregorio Borgia/AP

11.42am BST

Italian debt auction unrattled by Berlusconi case

Berlusconi's court case drama did not alarm bond investors this morning at an auction of Italian debt.

Italy managed to raise its target of €6.75bn through selling new five and 10-year bonds without any obvious difficulty. Yields (or interest rates) dropped compared to the previous sale of this type.

Nick Spiro, sovereign bond expert at Spiro Sovereign Strategy, said the results showed that markets remain unconcerned over political risk in Italy, thanks to the potential support on offer from the European Central Bank

Mario Draghi, it seems, is more important than Silvio Berlusconi to Italy right now. Spiro writes:

Once again, the travails of Mr Berlusconi cast a long shadow over Italian politics. The "Berlusconi factor" seems to be a permanent fixture on Italy's political landscape. Yet the big difference between now and 2011 is that Italian politics is of scant concern to markets. 

Only a sudden collapse of Mr Letta's government is likely to trigger a sharp sell-off – and even this would almost certainly not be as severe as previous bond market routs if the reaction to February's inconclusive election is anything to go by. 

The reality is that the ECB's bond-buying programme, in spite of all its shortcomings, continues to suppress Spanish and Italian yields.

11.09am BST

Silvio Berlusconi's lawyer, Franco Coppi, has told journalists in Rome this morning that he doesn't expect a verdict today.

That's via Reuters, which adds that Coppi said the defence would not request that the case be postponed until September. The judges could still decide to do that on their own account, though.

Updated at 11.24am BST

10.55am BST

It appears that the Italian judges will not issue a verdict tonight, unless it is to postpone the whole process:

10.53am BST

Photo: the Italian court

Back to Italy, and here's a photo from outside the Court of Cassation building in Rome.

Police forces stand outside the Court of Cassation building where former Premier Silvio Berlusconi's case on tax fraud will be decided, in Rome, Tuesday, July 30, 2013.
Photograph: Mauro Scrobogna/AP

Police officers are in action as the judges settle down to consider Silvio Berlusconi's final appeal against his conviction, ban from public office and prison sentence for tax fraud (see opening post for the details).

Interestingly, shares in companies within Berlusconi's media empire are all up this morning, as trader Alessandro Aimone explains:

Perhaps investors anticipate a good result for the former PM. As Alberto Nardelli explained at 7.58am, the sentence could be overturned, or voided, or delayed….

10.41am BST

Eurozone economic sentiment improves – analysis

Eurozone Economic Sentiment
Eurozone Economic Sentiment Photograph: /EC

Eurozone economic sentiment is now at a 15-month high (see previous post), which reinforces the chances that the euro area will exit recession this quarter.

But with the main readings stuck in negative territory, or below the long-term average, the data also shows that the recovery will be tough.

Howard Archer of IHS Global Insight reckons the eurozone should eke out 'marginal growth' later this year.

All business sectors saw confidence rise in July, with the exception of construction, which consumer confidence rose to a 23-month high. Similarly most countries saw confidence pick-up including Germany, France, Italy and Spain.

However….

it is hard to see consumers generally lifting their spending markedly in the near term as their confidence is still limited despite improving appreciably to a 23-month high in July while they are still facing generally high unemployment and limited purchasing power (as limited wage growth and tight fiscal policy counters moderate inflation). The situation does vary markedly though between countries and German consumers are well placed to spend more.

10.09am BST

Eurozone confidence data released

Business and consumers across the eurozone are less pessimistic about the economic climate, according to data just published by the European Commission.

Economic sentiment across the eurozone rose to 92.5 in July, from 91.3 in June, the EC reported. Better, but (understandably) still below the 100-mark average.

The data generally showed an improving situation, although the picture is clearly still tough:

• The industrial climate reading rose to minus 10.6, from minus 11.2.

• Services sentiment picked up to minus 7.8, from minus 9.6

And consumers remained nervous, with a sentiment reading of minus 17.4, from minus 18.8.

9.59am BST

Elsewhere in the City this morning: BP's bn fund to compensate those hurt by the Deepwater Horizon disaster is running dry, with just 0m in the tank. Full story here.

9.57am BST

Customers use ATM machines outside a Barclays bank branch in London, Britain, 09 October 2012.
Barclays cash call…. Photograph: ANDY RAIN/EPA

Here's our full story on Barclays revealing a £12.6bn capital shortfall this morning, and announcing a £6bn rights issue:

Barclays pushed into £6bn cash call to plug capital gap

Barclays is asking shareholders for almost £6bn of cash as the bank's new management team races to comply with a demand by the Bank of England that it plug a £12.8bn capital shortfall.

As Antony Jenkins admitted on Tuesday the bank was increasing its provisions for mis-selling financial products by £2bn, he conceded that Barclays had been forced to change its plans as a result of the actions of the Bank of England, which showed the bank's finances were in a worse state than previously thought.

9.36am BST

Sweden in surprise contraction

The crisis in the eurozone may have hit Sweden, with the surprise news that its economy shrank in the last three months.

The Swedish statistics office dashed forecasts of a 0.1% rise in GDP by reporting a 0.1% contraction in the April-June period. That's a sharp deterioration on the 0.6% expansion in the first quarter of 2013.

The contraction means the Swedish economy has only grown by 0.6% over the last 12 months, down from 1.7% year-on-year three months ago.

Analysts urged caution, as these are only preliminary statistics.

As Robert Bergqvist of SEB put it:

The main reason for the weakening of the economy in second quarter is very weak external demand, and problems within the euro area.

On other hand, private consumption is fairly strong, and retail sales yesterday were also strong and that confirms the key growth driver is households, and private consumption.

9.00am BST

Graph: Spanish GDP

And this graph from the Instituto Nacional de Estadistica shows how Spain's economy has slumped over the last eight quarters:

Spanish GDP, quarter-on-quarter
Spanish GDP, quarter-on-quarter. Photograph: INE

8.49am BST

Ebrahim Rahbari, Citi analyst, is more downbeat about Spain's prospects, commenting:

We're not counting on a further improvement in the third quarter and are very sceptical of any statement that the recession in close to being over.

In an environment where there is more than 25 percent unemployment, a slightly positive GDP figure does not mean the recession has ended.

(via Reuters)

Updated at 12.37pm BST

8.20am BST

Economist Shaun Richards agrees that the Spanish GDP data is an improvement:

Updated at 8.21am BST

8.14am BST

Spanish GDP falls 0.1%: instant reaction

Kit Juckes of Société Générale tweets that the 0.1% drop in Spanish GDP in the last three months shows its economy is levelling out.

Updated at 8.14am BST

8.05am BST

Spanish GDP falls by 0.1%

Breaking: Spain's economy has now been shrinking for two full years.

Data just released by the Spanish National Statistics Institute showed that Spanish GDP fell by 0.1% between April and June. That's the eighth quarterly contraction in a row.

Encouragingly, though, the pace of decline has slowed — following the 0.5% contraction suffered in the first three months of 2013.

And on a year-on-year basis, the Spanish economy has shrunk by 1.7% — slightly better than the 1.8% economists had expected.

I don't think we can call it a green shoot of recovery – but perhaps the bitter frost is easing?

7.58am BST

Alberto Nardelli: Four scenarios

There are four possible scenarios of how the Supreme Court ruling over Silvio Berlusconi could play out, explains political analyst Alberto Nardelli.

• the ruling is postponed.

• Berlusconi’s lawyers ask for the ruling to be postponed – they have until Tuesday morning to put in a formal request. Risky, as it would freeze the statute of limitations.

• Berlusconi is acquitted – two possibilities in this scenario: 1) sentence is void and the appeal trial needs to start again (which could end with the statute of limitations kicking in (Sept. 2014)) and 2) full acquittal.

• the sentence is upheld – the key point here, which is missing from lots of media analysis I’ve read is the fact that the ban from public office needs to be rubber stamped by a Senate committee vote

Nardelli also suspects that a` final ruling might not come until Wednesday or Thursday.

Here's his full analysis:

Silvio Berlusconi Mediaset verdict – possible scenarios

Updated at 8.26am BST

7.42am BST

Italy waits for Berlusconi appeal ruling

A rally is held in front of the Court of Cassation of Rome in view of the Mediaset lawsuit that sees Silvio Berlusconi accused of tax fraud. Western Europe
A rally was held in front of the Court of Cassation of Rome yesterday by supporters of Silvio Berlusconi. Photograph: Fabrizio Lasorsa/Demotix/Corbis

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

Judgement Day is looming for Silvio Berlusconio, in a case that could have major implications for the stability of the Italian government, and perhaps the eurozone too.

Italy's supreme court will meet today to consider Silvio Berlusconi's final appeal against a 1-year jail sentence and 5-year ban from office for tax fraud. If the judges uphold the ruling, then the three-times prime minister – who has dominated the Italian system for two decades – would face ejection from politics.

And that prospect raises the threat that Berlusconi's People of Liberty party would pull the plug on Enrico Letta's shaky-looking coalition.

Tense times, with rumours swirling that the judges might take the pragmatic step of delaying a decision.

As my colleague Lizzy Davies explains from Rome:

If the judges agree with those verdicts, they are likely to enforce the requested sentence of four years in prison and a five-year ban on holding public office. The former is unlikely to cause the 76-year-old to lose much sleep as prisoners of his age rarely go to jail in Italy and, due to a 2006 amnesty law, he would be more likely to spend a year under some form of house arrest. But the latter could effectively end the political career of a man who, for better or worse, still plays a highly influential role in his country's affairs.

As head of the centre-right Freedom People (PdL) party, the main partner in centre-left prime minister Enrico Letta's government, Berlusconi is still capable of bringing down the coalition by withdrawing his support, should the moment suit him.

However, as the date of the cassation hearing has approached, speculation has mounted that the decision could be postponed.

Tense times – especially as legal experts are split on how long it will take to get the verdict… Here's Lizzy's full story.

It's looking like a busy day generally. There's plenty of economic data to shed new light on the state of the eurozone, including Spanish GDP data for the last three months (at 8am BST) and euro area consumer confidence and business confidence (at 10am BST).

It's also hectic in the City — with Barclays dominating attention with news that it is tapping shareholders for almost £6bn to improve its capital base. It's also announced that another £2bn is being set aside to cover compensation for consumer misselling….

Here's the statement from Barclays on its rights issue.

My collleagues are on the case with that story now….

I'll be tracking all the developments through the day….

Updated at 7.51am BST

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USA 

Five favorite Draghi quotes of the year. Eurogroup signs off Greece’s next aid tranche. 12 months on from the speech that calmed the crisis. But ex-ECB chief economist issues warning. New deputy governor at BoE announced. FOMC, ECB and BoE on tap next week…

 


Powered by Guardian.co.ukThis article titled “Eurozone crisis: Greek bailout payment approved on anniversary of Draghi’s ‘whatever it takes’ speech” was written by Graeme Wearden (until 2pm) and Katie Allen (now), for theguardian.com on Friday 26th July 2013 12.09 UTC

5.59pm BST

Funds for Greece, New Man at the BoE and a year of Whatever it Takes

Time to close the live blog for today and to thank you for reading and commenting. We will be back next week with more and in the meantime, here is a round-up of today's main events.

• It's 12 months to the day since Mario Draghi, European Central Bank president, said "the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough." And my colleague Graeme Wearden has details of the speech here as well as top "super Mario" quotes here.

• INSEE, the national statistics office, reported that French consumer confidence rose. Details here from 8.20am.

• Jürgen Stark, the ECB's former chief economist, marked the first anniversary of Draghi's 'whatever it takes' speech by predicting that the eurozone crisis will worsen in the autumn.

• EU finance officials agreed that Greece has met the conditions to unlock its €2.5bn aid payment. Coverage starts here at 9.44am.

• Portugal's government pledged to help its battered private sector return to growth with some tax-cuts next year.

• The UK Treasury announced that Sir Jon Cunliffe, career civil servant and key figure in the banking crisis, will take over as Bank of England deputy governor in November. Details here from 2.05pm and a profile by Phillip Inman.

• US consumer sentiment rose to a six-year high

• The IMF reported on the US economy, saying deficit reduction has been "excessively rapid" and at the same time stressed that in order to minimise financial market volatility, the Federal Reserve must be clear about when and how it will exit its loose monetary policy stance.

• The FTSE 100 recorded its first weekly fall in a month while the Dax also fell and the CAC40 rose.

• Markets await a week of central bank meetings.

5.25pm BST

Some forward guidance

Given the vogue for forward guidance we can't close this blog for the week without a bit of a look ahead to next week.

It could well be a choppy time for financial markets with policy announcements due from the European Central Bank, the Bank of England and the US Federal Reserve.

First up, on Wednesday, the Federal Open Markets Committee (FOMC) is not expected to make any policy changes. But its statement may have some guidance on tapering its quantitative easing (QE) scheme later this year. Most economists say September is the most likely month for the Fed to properly announce it is cutting its monthly bond purchases. Friday brings the closely watched non-farm payrolls report from the US – the latest data on unemployment and a key measure followed by the Fed.

Similarly, the Bank of England is seen as unlikely to change policy next week but given Mark Carney’s move to issue a statement alongside this month’s no change decision, bank watchers say there may well be one again in August. The bigger news, however, is likely to come from the quarterly inflation report on 7 August, when the Bank is expected to announce it will be embarking on a policy of ‘forward guidance’. Maybe next week will see forward guidance about the prospect of a forward guidance announcement…

Not everyone is ruling out a change in policy next week. Investec is forecasting more QE.

Investec economist Victoria Clarke comments:

For the record, our central case envisages no change in the 0.5% Bank rate and an uplift in the QE total to £425bn from £375bn at the meeting next week, with forward guidance following on 7 August.

Her rationale?

We would argue that Dr Carney may not face a better opportunity than he will have, in terms of the inflation projections, next week to give QE one final push to solidify UK recovery momentum. Hence, whilst we see it as a close call, we judge that on balance the MPC could be convinced to back more QE, with a £50bn tranche seen as a sufficient ‘escape velocity’ push. One final point to note, working in favour of QE next month, is that the MPC may also be mindful that the Fed looks set to begin tapering QE3 possibly as soon as September, and it may want to pre-empt any upward pressure to Gilt yields, beyond what might be achieved from forward guidance, with a burst of QE ahead of that time.

So there you have it. If they go for more QE then, you can say you read it here almost first.

And last but not least – especially on Draghi day, as my colleague and eurozone blogmeister Greame Wearden would have it – the ECB’s meeting next week is expected to end with no change in policy. In a Reuters poll, all but one of 70 economists said the ECB will hold refinancing and deposit rates steady.

James Ashley, senior economist at RBC Capital Markets says:

We expect a relatively uneventful ECB press conference next week with no changes in policy. We think President Draghi is unlikely to provide many further specifics on the newly adopted policy of ‘forward guidance’, but there may be more information forthcoming on the plans to ease SME financing conditions.

We remain of the view that the Governing Council is willing to ease policy further (both conventionally and ‘non-conventionally’) if the macro outlook warrants such a move, i.e., we think that the ECB is far from being ‘done’. However, in our view, developments over the past couple of months have generally been supportive of the ECB leaving its current settings unchanged at present. In other words, it is not intransigence that is keeping the ECB on hold, rather it is the (relative improvement in the) economic outlook.

4.56pm BST

FTSE breaks weekly winning streak

The FTSE 100 has closed down 0.5% on the day, a loss of 33 points, to 6554.8. That compares with 6630 at the start of the week and marks the first weekly fall in a month.

Nicki Lace, senior sales trader at CMC Markets UK comments:

Some reasonable earnings amongst blue chip firms in the UK this morning lent early support to the FTSE100 index, though early optimism gave way to profit taking shortly after the open.

While we are on on the subject of falling stocks, the team at Capital Economics have some sobering words about the general UK outlook:

The succession of sporting achievements, the sizzling summer and the Royal baby have supposedly lifted British spirits and fostered hopes that this improved sentiment will give an extra boost to the economic recovery. But a sober look at the statistics suggests that this economic optimism is unlikely to be justified.

Elsewhere, Germany's Dax is down 0.65% at 8244.9, France's CAC40 is up 0.32% at 3968.8 and on Wall Street the S&P 500 is down 0.62% at 1679.7.

4.23pm BST

BoE appointment: A key figure from the banking crisis

Sir Jon Cunliffe's appointment as Paul Tucker's successor at the Bank of England will, according to governor Mark Carney, bring an "important European and international perspective".

My colleagues Jill Treanor and Phillip Inman have been looking into the appointment of the career civil servant at a time of charged debate over the regulation of the UK's high street banks and the City, where regulation from Brussels is having an increasing influence.

They write:

The Bank of England has recruited one of the most influential figures during the 2008 banking crash to succeed Paul Tucker as head of the central bank's financial stability arm.

Sir Jon Cunliffe, a career civil servant who worked closely with former chancellor Gordon Brown at the height of the financial crisis, will succeed Tucker as deputy governor. The 60-year-old is currently the UK's most senior diplomat in Brussels.

Bank of England governor Mark Carney said Cunliffe's experience during negotiations at G8 and G20 summits will prove invaluable as Threadneedle Street seeks to influence the implementation of European and international financial rules.

The full story is here.

HSBC's economics team has sent through this reaction to the appointment:

From a policy perspective, Sir Jon's appointment could further strengthen links between the Treasury and the BoE – he spent the vast majority of his career at the Treasury. It is perhaps unsurprising that Mark Carney wanted someone familiar with the workings of Whitehall. After all, Central Banks are increasingly becoming embroiled in politics. Also, one could argue that more coordination between monetary and fiscal policies is precisely what is required in current times.

But too close a relationship with the politicians may not be a good thing, running the risk of a further erosion of central bank independence.

Sir Jon's experience at the Treasury means he should fit into the MPC relatively easily, not least because on many occasions between 2005 and 2007
he was the Treasury representative present at MPC meetings.

What is less clear is his knowledge of the complexities of large financial institutions and the financial system as a whole. As Deputy Governor for Financial Stability, a key skill is an understanding of the workings of banks and other financial institutions. On this, Sir Jon is perhaps more of an unknown quantity.

4.11pm BST

IMF urges taper clarity from the Fed

The IMF has wound up its latest inspection of the US economy – the so-called Article IV consultation – and has messages for the Fed and the government.

The International Monetary Fund's executive board says deficit reduction has been "excessively rapid" and at the same time stresses that in order to minimise financial market volatility, the Federal Reserve must be clear about when and how it will exit its loose monetary policy stance.

The assessment is available here. Highlights (with our own bolding up of key phrases, not the IMF's) from the Executive Board Assessment:

Executive Directors welcomed the improvement in the underlying conditions of the U.S. economy, which bodes well for a gradual acceleration of growth, while noting that the balance of risks to the outlook remains tilted to the downside.

Directors generally concurred that the fiscal deficit reduction in 2013 is excessively rapid, and that the automatic spending cuts (“the sequester”) not only reduce growth in the short term but could also lower medium-term potential growth. They stressed the importance of adopting a comprehensive and back-loaded medium-term plan entailing lower growth in entitlement spending and higher revenues. Together with a slower pace of deficit reduction in the short run, this fiscal strategy would help sustain global growth, place the U.S. fiscal position on a sustainable path over the medium term, and support the reduction of global imbalances…

Directors broadly agreed that accommodative monetary policy continues to provide essential support to the recovery, but cautioned that its financial stability implications should be carefully assessed…

Directors noted that the Federal Reserve has a range of tools to manage the normalization of monetary policy, but that there are significant challenges involved in unwinding accommodation, including risks of market reactions leading to excessive interest rate volatility that could have adverse global implications. They stressed that effective communication on the exit strategy and a careful calibration of its timing will be critical for reducing these risks.

3.48pm BST

Strauss-Kahn faces pimping charges

Ex-IMF chief Dominique Strauss-Kahn, who is to be tried for pimping.
Ex-IMF chief Dominique Strauss-Kahn, who is to be tried for pimping. Photograph: MIGUEL MEDINA/AFP/Getty Images

From consumer sentiment to aggravated pimping. News reaches us now that former IMF boss Dominique Strauss-Kahn is to be tried on charges of pimping.

News wires are quoting DSK's lawyer and prosecutors following an inquiry into sex parties attended by the man who had his hopes for the French presidency dashed by a spectacular fall from grace.

Reuters reports:

Prosecutors in the northern city of Lille said investigating judges had determined that Strauss-Kahn, 64, who has been under investigation in the case since 2012, should be judged by a criminal court.

The decision came as a surprise after a public prosecutor had recommended in June that the inquiry be dropped without trial.

"We're not in the realm of the law, we're in ideology. We're sending someone to court for nothing," said Henri Leclerc, one of Strauss-Kahn's lawyers.

The so-called Carlton affair, named after a hotel in Lille, involves sex parties that Strauss-Kahn has acknowledged attending. He says he was unaware that the women who participated were prostitutes.

Strauss-Kahn is charged with "aggravated pimping." Pimping under French law is a broad crime that can encompass aiding or encouraging the act of prostitution. Strauss-Kahn was charged with the more serious form because it allegedly involved more than one prostitute.

The crime carries a maximum term of 10 years in prison and a fine of 1.5 million euros ( million).

3.22pm BST

US consumer sentiment at 6-year high

Some forecast-beating news from America, where consumer confidence has climbed to its highest since before the global financial crisis.

The rise came as consumers in the world's largest economy felt better about the current economic climate, though they expected to see a slower rate of growth in the year ahead.

The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment climbed to 85.1 from 84.1 in June, comfortably beating expectations for 84 in a Reuters poll. It was the highest level since July 2007.

Survey director Richard Curtin says:

This high level of confidence points toward a continued expansion of consumer spending in the year ahead.

3.05pm BST

Running man

We are working on getting an up to date picture of the Bank of England's new deputy governor, Sir Jon Cunliffe (details of the appointment here from 2.05pm onwards.)

In the meantime, from the Flickr feed of the UK Representation to the EU, we have this action shot of the new man.

Sir Jon Cunliffe running the Brussels Sport Relief Mile in 2012.
Sir Jon Cunliffe running the Brussels Sport Relief Mile in 2012.

2.58pm BST

Wall Street falls at open

US stocks are lower shortly after the opening bell on Wall Street, while in Europe, Germany's Dax is down as is the FTSE 100 in London, but France's CAC40 is up.

In the US:

The Dow Jones industrial average is down 0.44% at 15487

The S&P 500 is down 0.36% at 1684 

The Nasdaq is down 0.31% at 3594

Analysts highlight that there has been a slew of earnings reports to digest in the US. Andre Bakhos, director of market analytics at Lek Securities in New York tells Reuters:

As investors absorb many earnings reports this morning, they are also questioning, 'Can we get through the 1,700 (on the S&P 500)? Can we get a push beyond this round number?'

I still think the short-term weakness will just provide more buying opportunities for investors that have missed the boat.

2.36pm BST

Some austerity warnings from Ireland

Now to Ireland, where our correspondent Henry McDonald has been looking at the Irish Central Bank's quarterly bulletin. He writes from Dublin:

There is no rest even for the EU's austerity poster-child, Ireland.
Even though the Republic's citizens have unlike the Greeks, taken a position of grin and bear it, the Irish Central Bank warns today that the Fine Gael-Labour government should continue its austerity drive.

In its latest quarterly bulletin on the Irish economy, the Central
Bank advises that planned €5.1bn to be taken out of the Republic's economy in budgets 2014 and 2015 needs to be adhered to if the country is to maintain the confidence of international investors.

And the Central Bank in Dublin has revised down its growth forecasts for the Irish economy. It is expecting gross domestic product growth of 0.7% for 2013 with a modest pick-up to 2.1% in 2014.

The Central Bank's warning comes amidst signs of green shoot recovery in Ireland's economic situation. Hundreds of new jobs were created this week in the hi-tech and pharmaceutical sectors while house prices in Dublin have started to climb – albeit from a very low base following the property crash.

Updated at 2.37pm BST

2.30pm BST

Treasury smoothie

Heather Stewart on our economics team sends us this on Cunliffe:

Sir Jon Cunliffe is a consummate Treasury smoothie, who is very well known to three of the four man selection panel for the deputy governorship – senior mandarins Sir John Kingman, Tom Scholar, and Nick Macpherson.

Getting on with the Treasury is arguably an asset in the financial stability role, since tension between the two institutions were a key failing during the banking crisis; and Cunliffe's international experience as G8/G20 sherpa will be invaluable in the international negotiations that are critical in reforming financial regulation.

But with an ex-Goldman banker at the helm in Threadneedle Street, it may raise fears that the Bank will take a more emollient line with the City than during Mervyn King's tenure.

Updated at 2.31pm BST

2.17pm BST

Carney rings in the changes

Reacting to the Bank of England appointment, Jill Treanor, our City editor, says:

To me Cunliffe's appointment will raise speculation about the future of Andy Haldane, a long-standing official at the Bank and an outspoken critic of the banking industry. Mark Carney, the new governor of the Bank, is known to have had a say on who would replace Paul Tucker so the appointment of an outsider – albeit an experienced civil servant – will raise speculation that he his keen to instill further change in Threadneedle Street.

2.15pm BST

The new deputy

Newly appointed Bank of England deputy governor Sir Jon Cunliffe, pictured here in 2007 in his role as UK Second Permanent Secretary for the Treasury.
Newly appointed Bank of England deputy governor Sir Jon Cunliffe, pictured here in 2007 in his role as UK Second Permanent Secretary for the Treasury. Photograph: JOSE GIRIBAS/BLOOMBERG NEWS

We will have more shortly from our team on what this new appointment means for the Bank of England and its financial stability work.

In the meantime a bit more from the Treasury announcement that Sir Jon Cunliffe has been appointed deputy governor.

As the Bank’s Deputy Governor for Financial Stability, Sir Jon Cunliffe will play a crucial role in ensuring the safety and stability of the UK’s financial sector and will sit on the Bank’s Court of Directors, the Financial Policy Committee, the Monetary Policy Committee, the Board of the Prudential Regulation Authority, and will represent the Bank on a number of national and international bodies…

Sir Jon, aged 60, has been appointed for a five year term (renewable once) with effect from November 1 2013.

Sir Jon has been the UK’s Permanent Representative to the European Union since January 2012, covering policy issues including negotiations on the banking union and a number of financial services dossiers.

Between 2007 and 2011, he was the Prime Minister’s Adviser on Europe and Global Economic Issues. As part of this role he was the G20 and G8 ‘Sherpa’, including during the 2009 UK Chairmanship of the G20, where the post-crisis international financial regulation strategy was agreed.

Prior to this, he held a number of positions at HM Treasury and in the UK Government, including Second Permanent Secretary at HM Treasury with responsibility for the directorate that covered macroeconomic, international and financial sector policy, and Managing Director of the Finance Regulation and Industry Directorate at HM Treasury.

Chancellor George Osborne says:

With his extensive experience in economic and financial policy, and very strong record of service at the highest levels of government in this country and internationally, Sir Jon Cunliffe will be an outstanding Deputy Governor of the Bank of England.

Sir Jon will be instrumental in ensuring the success of the Bank’s enhanced responsibilities for financial stability. His deep experience in engaging with the European Union will be instrumental in ensuring Britain’s financial services are well represented and protected. I wish him well in his new role.

Tucker, announced he was stepping down on 14 June after missing out on the governor job to Canadian Mark Carney. Here is how the Guardian covered it.

Updated at 3.23pm BST

2.05pm BST

Sir Jon Cunliffe appointed BoE deputy governor

2.03pm BST

… and a new role for BoE’s Tucker

And our economics correspondent Heather Stewart highlights where the departing Bank of England deputy governor, Paul Tucker, is headed

2.01pm BST

New BoE deputy governor?

Good afternoon. Katie Allen here taking over from Graeme Wearden. A quick bit of news from Robert Peston at the BBC on a possible imminent announcement from the Bank of England:

Updated at 2.01pm BST

1.57pm BST

Portugal ‘planning tax cuts’

With its political crisis behind it, Portugal's government is pledging to help its battered private sector return to growth with some tax-cuts next year.

Reuters Lisbon bureau has the story:

Portugal's government on Friday promised gradual cuts in corporate taxes from early 2014 as part of fiscal reform to boost investment and help drag the bailed-out economy out of its deepest recession since the 1970s.

Austerity measures under the 78-billion euro bailout have led to a steep rise in company bankruptcies and pushed unemployment to record levels of around 18 percent.

"The main economic priority is the attraction of local and foreign investment, and the reform of the corporate tax system is crucial," said Antonio Pires de Lima, Portugal's new economy minister, told reporters.

Portugal's turmoil this month has shown the limits of Mario Draghi's pledge. The threat that its coalition government might collapse, sinking its bailout programme, sent bond yields soaring briefly. Political instability (along with social unrest) is beyond Draghi's remit.

Also, it's worth noting that Portugal didn't appear in the graph of easing bond yields I posted from the WSJ at 9.20am. It's 10-year bond yield has been more dramatic in recent weeks:

Portugal's 10-year bond yields over last year
Photograph: Thomson Reuters

And at that point, I'm handing over to my colleague Katie Allen – have good weekends, all. GW

1.09pm BST

Draghi’s pledge, what the analysts say (2)

Are we giving Draghi too much credit for dampening the eurocrisis fires?

Stephen Lewis, chief economist at Monument Securities, points out that while the ECB has been talking a good game, the Federal Reserve has actually been acting – with its bn per month bond-buying programme.

The Fed's actions have helped push up eurozone bond prices (and thus pushed down borrowing costs, or yields), as investors look for decent returns on their money.

Lewis points out the IMF warned yesterday that the eurozone crisis could flare up again if the Fed bungles the process of 'tapering' QE. He writes:

Mr Draghi’s trick with the OMT has attracted most of the credit for the easing in conditions but the Fed’s action was instrumental in generating the liquidity to drive the compression of yield-spreads in Europe. The IMF’s fear, evidently, is that this process would fizzle out or reverse if the Fed were to cut back on the flow of liquidity.

On the previous occasions when the Fed scaled back or terminated asset-buying programmes, there had been little prior seepage of Fed-generated liquidity into euro zone bonds. Even the quest for yield was not then strong enough motive to overcome investors’ wariness of the zone’s problems. So, what is different this time, at least as far as the euro zone is concerned, is that QE has interacted with the Draghi pledge to propel capital values to levels that the IMF does not believe would be sustainable on the basis of fundamentals alone.

And if those peripheral bond yields do start rising again, countries may consider tapping Draghi's OMT programme…

Updated at 1.09pm BST

12.54pm BST

Draghi’s pledge, what the analysts say (1)

Jane Foley of Rabobank points out that 'forward guidance' has become more fashionable since the 'whatever it takes' speech:

Draghi’s pledge has long since been associated with calming the tension in the EMU through the second half of last year and beyond. As a result this brief statement has won a prominent position in the central bankers’ hall of fame and arguably stirred up interest in the use of forward guidance by central banks.

Despite his success, Draghi cannot claim to be an innovator in the use of forward guidance, she adds:

Central banks such as the RBNZ (Reserve Bank of New Zealand), Norges Bank and Riksbank have been very frank in outlining policy expectations for many years. The BoC has employed forward guidance heavily since 2009. The Fed started to use forward guidance explicitly in August 2011, although it had periodically used a less forceful form earlier in the decade. In its purest form forward guidance is aimed at exerting control over the level of short-term market rates, which in turn has a strong implication for currency markets.

To this end the Norges Bank and Riksbank regularly provide guidance on the anticipated path of policy rates. Earlier this week the RBNZ left no one in any doubt about what it meant by the statement that “we expect to keep the OCR unchanged through the end of the year”.

12.40pm BST

In the City….

Europe's financial markets are pretty quiet after Japan's Nikkei took a near 3% tumble overnight.

The Nikkei was hit by a weakening dollar, which pushed up the yen and sparked fresh fretting on the merits and vibrancy of Abenomics.

After a strong few weeks, the FTSE 100 is on track to post a weekly loss.

The biggest riser on the FTSE 100 is publishing giant Pearson, up 8% on the news that it may sell its financial intelligence business:

Pearson puts FT Group's Mergermarket up for sale

Rolls-Royce is the biggest faller, down 4.75% after a strong day yesterday, followed by BSkyB which also released results this morning:

BSkyB annual results: Now TV 'day pass' sales hit 50,000

FTSE 100: down 16 points at 6571, – 0.26% [having ended last week at 6630]

German DAX: down 41 points at 8257, – 0.5%

French CAC: up 21 points at 3977, +0.5%

Spanish IBEX: up 76 points at 8358, + 0.9%

Italian FTSE MIB: down 15 points at 16416, – 0.1%

And in the currency markets, the euro isn't showing much bumblebee vigour — down 0.02% at .3273.

Updated at 12.41pm BST

12.09pm BST

EU Commissioner Viviane Reding has tweeted Mario Draghi a 'well done' message, alongside a reminder that politicians need to use the window of opportunity he created:

12.09pm BST

Just remembered that the Financial Times beat us to the punch, running their piece on the Draghi speech on Monday afternoon. Good stuff too. Here's a flavour:

The ECB president calls OMT the “most successful monetary policy measure undertaken in recent times” but has kept the finer details of the programme under wraps.

It is reminiscent of an early scene in the classic 1971 film Dirty Harry. The protagonist, played by Clint Eastwood, confronts a wounded bank robber who is reaching for his shotgun and tells him that the .44 Magnum pointed at his head is the world’s most powerful handgun, but then professes to have lost track of whether he had fired all six bullets in the chamber or just five. The question for the bank robber, and market participants tempted to test the ECB’s resolve, is “do you feel lucky, punk?”

So far, like the bank robber, they have not tested their luck.

More here: Draghi’s ‘Dirty Harry’ act keeps euro crisis at bay

11.47am BST

Five great Mario Draghi quotes of the last year

Mario Draghi, President of the European Central Bank, ECB as he addresses a press conference in Frankfurt am Main, central Germany. The crisis of the euro zone in 2012 brought dramatic months.
Photograph: DANIEL ROLAND/AFP/Getty Images

Mario Draghi is a quotable chap, and has provided a few choice lines over the last 12 months.

Everyone remembers the "whatever it takes" pledge (see opening post), so here are a few other favourites, starting with one from the landmark speech a year ago today.

Explaining the need for structural reforms in the eurozone – July 2012

The euro is like a bumblebee.

This is a mystery of nature because it shouldn’t fly but instead it does. So the euro was a bumblebee that flew very well for several years. And now – and I think people ask “how come?” – probably there was something in the atmosphere, in the air, that made the bumblebee fly. Now something must have changed in the air, and we know what after the financial crisis. The bumblebee would have to graduate to a real bee. And that’s what it’s doing.

Promising not to repeat Germany's 1920's money-printing exploits – Ocober 2012

Because of inflation, my family lost a large part of its savings at that time. You can therefore rest assured that I am personally and not only professionally committed to delivering price stability.

On the decision to impose a levy on insured Cypriot bank depositors – April 2013

That was not smart, to say the least, and it was quickly corrected the day after in a Eurogroup teleconference.

You have a pecking order, and ideally uninsured depositors should be the very last category to be touched.

Asked if the ECB would issue a mea culpa over its role in Greece's first bailout – June 2013

Well, not really…

We cannot forget that four or five years ago, when the discussions about the adjustment in Greece were taking place, the climate was, in general, much worse. There was a fear of contagion there and very high volatility. That is, in a sense, where the fragmentation of the euro area really started. So, it is always very hard to pass ex post judgement on what happened four years ago. Having said that, rather than looking backwards, why do we not look forward and take stock of the extraordinary progress made and the positive path that has been taken?

After being questioned on the legal basis for his OMT bond-buying programme – July 2013

You have been very good at making a dull question a sexy one, but in fact it is not a question that really comes first in our priorities. Rather, the answer to your question is not one of our priorities now.

So when OMT is ready to be activated the documentation will be published.

Updated at 11.52am BST

11.35am BST

10.57am BST

EC spokesman Simon O'Connor also flags up that several national parliaments need to give their approval to the Greek loans. That should be a formality now that the eurogroup officlals are happy that Greece has hit its targets…

10.48am BST

Greece's struggle to satisfy its lenders isn't over, either. Kathimerini reports that the troika are demanding further measures.

That includes selling its stake in the country's third-largest bank, and keeping its unpopular property tax in place for longer.

Here's the story:

Greece has to sell Eurobank to foreign investor, might keep emergency property tax under terms of new bailout deal

According to documents seen by Kathimerini, Greece will have to keep the emergency property tax next year if the government is unable to create a new, single tax on property by the end of September. If ready in time, the new levy will have to raise 2.7 billion euros in 2014. There is also a reference to the possibility of the property transfer tax being scrapped next year, in which case the government will have to increase revenues from other property taxes. The transfer tax brings in about 200 million euros each year.

The pact between Greece and its lenders also foresees the sale of a substantial share in Eurobank, which has assets of almost €80bn, to a foreign strategic investor by the end of March 2014 at the latest. The government will have to find the investor by the end of October so due diligence can begin the following month.

Autumn is going to be interesting…

10.21am BST

Relief in Brussels that EU officials have finally agreed that Greece has qualified for its next aid payment:

In total, this bailout tranche is worth €5.8bn. €2.5bn comes from the European bailout facility (EFSF), and another €1.5bn from the income accrued on Greek bonds held EU institutions.

The International Monetary Fund is due to lend another €1.8bn.

10.11am BST

Greece gets green light for bailout tranche

Official confirmation that EU finance officials have agreed that Greece has met the conditions to unlock its €2.5bn aid payment.

European Commission spokesman Simon O'Connor tweets the news:

Those 'national procedures' include clearance by a German parliament committee, I believe.

Relief for Athens.

To win the next slice of bailout money, Antonis Samara's government had to agree various actions with its Troika of lenders – including the details of tens of thousands of job cuts – and then win a parliamentary vote last week.

MPs were then hauled back to parliament yesterday to overturn various "exemptions" to the layoffs, to ensure Greece hit its targets.

Updated at 10.13am BST

10.02am BST

Nothing official from the Eurogroup on the Greek bailout payment yet, though – the press office are promising more details shortly…

9.51am BST

The decision on Greece's bailout payment has been made, Bloomberg reports….

Updated at 9.51am BST

9.44am BST

Decision on Greek aid payment due soon

Senior euro-area finance officials are holding a conference call this morning to decide today whether Greece has done enough to receive its next aid payment.

They are expected to give the nod to the €2.5bn loan tranche, after Greek MPs voted through amendments that mean it will hit its targets for civil service layoffs.

As one official put it to Reuters:

All prior actions were implemented. This means we can approve.

9.32am BST

Kit Juckes of Société Générale wishes us all a happy "Whatever it takes" anniversary:

The euro has held together, no-one has left, spreads are tighter, PMI is back up, sun is shining and even the Spanish unemployment rate has fallen. Mario gets A* for originality and effort, if nothing else.

However, he has two concerns about the impact of Draghi's speech:

Firstly that by divorcing markets from the Euro Zone's woes, Mr Draghi tempts politicians into thinking everything is OK. And secondly, like any nuclear deterrent, OMT is fine as long as it remains unused.

It's a shame Jurgen Stark's in Handelsblatt saying it WILL be needed in due course.

9.20am BST

The Draghi squeeze

This graph, from the Wall Street Journal, shows the gap between the borrowing costs of 'safe' countries and 'risky' ones has narrowed since Mario Draghi's speech a year ago today (see opening post).

Eurozone 10-year bond yields over last 12 months
Photograph: WSJ

More here: Measuring Mario Draghi’s Promises 1 Year On

9.13am BST

Former ECB economist sees crisis flaring up again

Jurgen Stark
Photograph: Handelsblatt

There's always a party pooper. Jürgen Stark, the ECB's former chief economist, has marked the first anniversary of Draghi's 'whatever it takes' speech by predicting that the eurozone crisis will worsen in the autumn.

Stark told Germany's Handelsblatt newspaper that:

I think the crisis will come to a head in late autumn. We are entering a new phase of crisis management.

Stark dramatically quit the ECB two years ago in (apparent) protest at its early moves to support eurozone governments. He agreed that Draghi's speech had calmed the crisis, but fears the effect won't last.

The London speech impressed the markets. .But whether that's a sustainable reassurance, I doubt.

And for that reason, Stark reckons that the ECB will eventually be forced to pull the trigger on its OMT programme and actually start buying some government bonds — and possibly even support France…

More here: "Die Euro-Krise wird sich im Spätherbst zuspitzen“

8.39am BST

French consumer confidence, the details…

There are signs in today's consumer confidence data (see also 8.20am) that French households are feeling a little more upbeat.

INSEE reported that households’ opinion about the past general economic situation in France increased by 2 points on its index.

And their view of the general economic situation in the months ahead "noticeably rose" by 6 points, having deteriorated continuously since January:

French consumer confidence, to July 2013
French consumer confidence, to July 2013 Photograph: /INSEE

While this graph shows how the wider consumer confidence reading hit its three month high:

French consumer confidence, to July 2013
Photograph: INSEE

8.20am BST

French consumer confidence rises

Some early good news for Mario Draghi to toast as the ECB hangs the bunting up – optimism among consumers in France has risen to a three month high.

INSEE, the national statistics office, reported that Frence consumer confidence rose to 82, beating economist predictions of 79. In another piece of good news for Paris, June's record low of 78 was revised up to 79.

Morale is clearly low, given the long-term average is 100. But it could add weight to the claims from French ministers that the country is pulling out of recession.

8.05am BST

One year on from Draghi’s pledge

European Central Bank (ECB) President Mario Draghi takes part in the European Parliament's Economic and Monetary Affairs Committee in July 8, 2013.
A good year….. ECB president Mario Draghi. Photograph: YVES HERMAN/REUTERS

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

What a difference a year makes. It's 12 months to the day since Mario Draghi, European Central Bank president, made perhaps the most telling intervention since the eurozone crisis began.

Just 23 words. That's all it took to start the process of calming bond yields and strengthening the single currency. And the magic formula, delivered in London, was:

Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.

The speech is online here.

Out of that pledge came the ECB's Outright Monetary Transactions (OMT) programme – the promise to buy unlimited quantitites of government bonds from a country struggling to keep borrowing.

Now, OMT may not have been activated (and Draghi remains engagingly evasive about when we'll actually see the legal tramework for his pet project), but it's very existence has bought time for eurozone governments.

Whether they've spent it wisely enough, we're yet to learn….

But the impact of Draghi's statement is clear in the markets today, in the lower borrowing costs enjoyed by the eurozone's peripheral members.

Spain, for example. It's 10-year bonds were changing hands at yields (interest rates) of around 7.5% before Draghi dropped his bombshell. Today? Just 4.6%.

Spanish 10-year bond yields, to July 26 2013
Spanish 10-year bond yields over the last two years. Photograph: Thomson Reuters

As Michael Herzum at fund manager Union Investment, put it to Reuters, Draghi's speech in London was "the game changer" — allowing investors to stop fretting that the eurozone was about to rip itself apart.

It took the systemic risk out of the market by significantly reducing the likelihood of a break-up of the euro zone.

(more here)

But there are a problems a mere central banker can't easily tackle – such as structural economic flaws or record unemploment.

As the Wall Street Journal puts it:

Mr. Draghi’s speech was a game changer for markets, but it did little to restore economic growth or bring jobs to the euro zone. Unemployment is a record-high 12.2% and euro zone GDP hasn’t expanded since late 2011. Spanish and Italian small businesses still pay far higher interest rates on loans than their German counterparts.

“Verbal intervention isn’t enough, you have to do more,” said BNP Paribas economist Ken Wattret. The ECB could purchase large amounts of private-sector assets to stimulate lending but appears reluctant to do so, he said.

Still, with the eurozone hopefully pulling itself out of recession, Draghi can look back on a job well done.

I'll be tracking all the developments through the day as usual….

Updated at 8.12am BST

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In the trading room today: Will the Week ahead Make or Break the USD Trend? In preparation for a sequence of crucial economic data from the world’s largest economy, we explain why the week ahead could become pivotal for the future direction of the greenback and explore the outlook for the USD, we list the Top 10 economic events that will move the markets in the week ahead, we examine the consensus forecasts for the upcoming economic data, we analyze the latest trend developments in the EUR/USD currency pair, we note the pullback in the GBP/USD pair, we keep an eye on the range in the USD/JPY currency pair, we highlight the market’s reaction to the Reserve Bank of New Zealand interest rate announcement, the German Ifo Index, the UK GDP and the US Jobless Claims, we discuss new forecasts from BNP Paribas and UBS, and prepare for the trading session ahead.

The UK economy grows at a faster pace by 0.6% q/q in the second quarter of 2013. Construction up 0.9%, services up 0.6%. George Osborne’s view. The chancellor meets the night shift. Spanish jobless rate finally falls…

 


Powered by Guardian.co.ukThis article titled “UK economic growth accelerates to 0.6%, as IMF issues eurocrisis warning – as it happened” was written by Graeme Wearden, for theguardian.com on Thursday 25th July 2013 14.04 UTC

5.50pm BST

Closing summary

Chancellor of the Exchequer George Osborne meets staff at Tesco's National Distribution Centre near Rugby.
Chancellor of the Exchequer George Osborne meeting staff at Tesco’s National Distribution Centre near Rugby. Photograph: Stefan Rousseau/PA

Time to clock-off for another day. Here's a quick reminder of the key points…

Britain's economic recovery has picked up pace. Growth in the second quarter of 2013 has been estimated at 0.6%, twice as rapid as in the first three months of this year.

The Office for National Statistics reported that every section of the economy grew. However, the UK economy remains 3.3% smaller than before the financial crisis struck in 2008.

• Highlights start at 9.30am.

• Key charts from 10.02am

City economists were encouraged by the data, with some predicting stronger growth later this year. Business leaders, though, warned that more needs to be done to guarantee the recovery (see 10.30am onwards)

Chancellor George Osborne said the figures showed Britain is moving in the right direction. See 9.49am for details, and 1.12pm for video

There are also a few photos of Osborne meeting nightshift workers at 8.50am

Elsewhere…..

ª The International Monetary Fund warned that more needs to be done to nurse the eurozone back to health and avoid the crisis in the region flaring up again. See 3.03pm onwards.

• Greek MPs have approved legislation that should mean it receives its next aid tranche soon. See 4.25pm

Spanish unemployment has fallen for the first time in two years. However, the jobless rate shows that more than one in four adults are still out of work, and analysts warned that seasonal factors and migration were behind the change. See 4.58pm.

Back tomorrow for more live-blogging action, probably more centred on the eurozone after today's focus on the UK.

Until then, thanks and goodnight…. GW

5.47pm BST

Britain's improved economic growth didn't generate much cheer in the City, where shares ended lower – the FTSE 100 dropped 32 points to 6587.

More details here: Shire hits new record after update but FTSE 100 fades as rally runs out of steam

4.57pm BST

4.56pm BST

This morning's drop in Spanish unemployment has been welcomed by politicians and firms, although ministers admit that the jobless rate remain far too high:

Spain's unemployment rate fell for the first time in two years and some of the country's biggest firms said on Thursday business was looking up, boosting the government's claim the economy is climbing out of recession.

The dip in the jobless figures – to 26.3% in the second quarter from 27.2% in the first – nonetheless highlighted how far the country still needs to travel on the road to full recovery. Economy minister Luis de Guindos called the figures "totally unacceptable".

More here: Spain's unemployment rate falls

While this analysis piece from Open Europe is also worth a read:

Let's have a look beyond the (rather encouraging) headline figures on Spanish unemployment

It points out that the drop in unemployment can be attributed to seasonal factors, an increase in people dropping out of the labour market, and migration out of the country.

Spanish job rate
Photograph: Open Europe

Updated at 5.12pm BST

4.49pm BST

Across to Cyprus, and Open Europe flags up that deposits in its banking sector appear to have fallen again last month.

Cypriot deposit leakage continued in June

Cyprus bank deposits
Photograph: Open Europe

It's a slightly confusing picture, due to the ongoing restructuring of the Cypriot banking sector, but as Open Europe explains:

Ultimately, money continues to leak out despite the capital controls or people continue to rapidly wind down their savings. Neither presents a pleasant prognosis for the future of the Cypriot economy.

As we have said before the real test will come when the capital controls are finally removed, although that does not seem to be on the horizon in the near future.

4.45pm BST

IMF: round-up

The BBC has a good take on this afternoon's warning from the International Monetary Fund (see 3.03pm onwards):

IMF calls for further action to solve eurozone crisis

The International Monetary Fund has called for more action to end the crisis in the eurozone.

The IMF wants greater progress made on repairing the balance sheets of banks, so that lending can be kick-started

While the Daily Telegraph flags up that the IMF also worried that the eurozone could be hit when the US Federal Reserve starts slowing its stimulus package:

IMF fears Fed tapering could 'reignite' euro debt crisis

The report warned that the onset of a new tightening cycle in the US had already led to major spill-over effects in the eurozone, pushing up bond yields across the board.
Early tapering by the Fed "could lead to additional, and unhelpfu, pro-cyclical increases in borrowing costs within the euro area. This could further complicate the conduct of monetary policy and potentially damage area-wide demand and growth. Financial market stresses could also quickly reignite," it said.

4.25pm BST

Greek MPs approve civil service job cuts amendment

A woman makes a transaction at an ATM of a Piraeus Bank branch as a man waits for his turn in Athens July 25, 2013.
A Piraeus Bank branch in Athens today. Photograph: YORGOS KARAHALIS/REUTERS

The Greek parliament has approved an amendment to its legislation bringing in job cuts across the public sector, which paves the way to unlocking its next aid tranche worth €2.5bn.

The move means Greece will hit its target of transferring 4,200 workers into its new labour pool, where they could be forced to accept a new job or be laid off.

Greece's lenders had been concerned about certain 'exemptions' which meant some workers were able to avoid being transferred to the pool. Finance ministry insiders had said that this only affected around 80 people, mainly those with university quailfications or disabilities.

Kathimerini reports;

The legislation passed on Thursday overrides a law passed last week that protects civil servants with postgraduate degrees and those with disabilities or other social needs from being forced into a labor reserve, where they have eight months to find other jobs in the public sector or face dismissal.

Eurogroup finance ministers are now expected to approve the bailout payment on Friday. Yesterday, it said Greece had met 21 of the 22 pre-conditions on the aid tranche. Today's vote should complete the set.

Updated at 5.14pm BST

3.29pm BST

The IMF also pointed to the eurozone youth jobless crisis in today's assessment of the region, saying that despite recent progress….

growth remains elusive and high unemployment persists, especially among youth.

And while politicians such as Francois Hollande are talking positively about Europe's prospects (see 1.06pm), the IMF fears any deterioration in conditions could be serious. The eurozone, it said, has little slack to cope with new problems:

Because policy space is limited, public debt ratios are very high (and still rising), and economic slack is already substantial, further negative shocks—domestic or external shocks—could severely impact growth.

3.03pm BST

IMF issues eurozone crisis warning

The eurozone crisis isn't over, and the European Central Bank needs to take fresh action now to prevent the situation deteriorating.

That's the key message from the International Monetary Fund this afternoon, as it publishes its latet assessment of the eurozone areas.

The IMF predicted that austerity programmes being implemented across the region could wipe betwen 1% and 1.25% off annual growth this year, and recommended countries should slow down.

Fiscal adjustment should be paced to avoid an excessive drag on growth.

The IMF also called for the ECB to inject more liquidity into the financial system, though massive cheap loans to the banking sector. This would repeat the Long-Term Refinancing Operations (LTRO) conducted at the end of 2011 and early 2012, credited with staving off a more severe credit crunch.

The IMF said "additional unconventional monetary support" could help reverse the current situation where it is harder and more expensive for firms in Southern Europe to borrow than the North.

It said:

Taking its current approach forward, the ECB should ensure term funding needs for weak but solvent banks through an additional LTRO of sufficient tenor.

The eurozone's stronger banks have actually been repaying their existing LTRO loans, which the ECB sees as an encouraging development….

The headquarters of the European Central Bank (ECB) on January 8, 2013 in Frankfurt am Main.
The headquarters of the European Central Bank in Frankfurt. Photograph: Hannelore Foerster/Getty Images

Updated at 3.12pm BST

2.33pm BST

Greek gloom

Today's winds of economic optimism haven't reached Greece today, with two economic surveys showing that the country where the eurozone crisis began is still suffering.

Greek household disposable income has dropped by an alarming 6.2% year-on-year,, continuing a trend which began three years ago.

Disposable income in Greece, to Q1 2013
Disposable income levels (blue) and consumption spending (red) in Greece since the start of 2006. Photograph: l/ELSTAT

And Greek bank deposits have begun falling again, as consumers and companies dip into their reserves to keep afloat.

Data released by the Greek central bank showed a 0.5% drop in deposit levels to €162.65bn. Savings levels had been rising since last summer as confidence rose in Greece following the trauma of 2012, but that trend could be reversing….

Updated at 2.51pm BST

2.05pm BST

Alexander: Don’t get too excited

Danny Alexander
Photograph: Sky News

Danny Alexander, chief secretary to the Treasury, has been touring the media studios discussing today's growth data.

And the decent growth didn't prevent Alexander from taking a pop at the previous government, when asked about the situation on Radio 4's World At One:

Here's the quotes:

These figures are encouraging.

It's good news, not just that there's been growth but in every sector we have seen improvement.

But I'd also say we shouldn't get over-excited because this country has got a long way to go to not just to clear the financial mess that we inherited from the previous government but to rebuild our competitiveness and to make sure that we do have the conditions in this country for businesses to thrive.

He then scampered to repeat the message on Sky News, where business leaders were warning that the Treasury is failing to encourage and stimulate investment.

Alexander said he wasn't aware of a report that the UK languishes in 159th place when countries are ranked by investment as a share of GDP, but would look into it.

We're a helpful lot at Guardian Towers, so politely suggest the chief secretary checks out The Economist, who covered it here: Let’s try to catch up with Mali

1.12pm BST

Video: George Osborne on today’s data

Here's a video clip of George Osborne discussing today's economic growth figures, and Britain's passage "from rescue to recovery".

The chancellor says he is encouraged that all sectors of the economy grew in the last quarter (details at 9.43am onwards), and repeated the need to rebalance Britain away from the financial sector.

The clip also includes footage of Osborne touring factories and M6 motorway improvement work last night.

Updated at 1.49pm BST

1.06pm BST

Hollande: Eurozone recession probably over


French President Francois Hollande speaks during the “Brdo Process” leaders’ meeting at Brdo Castle, in Brdo Pri Kranju north of Ljubljana, on July 25, 2013. Photograph: BERTRAND GUAY/AFP/Getty Images

The UK isn't the only place enjoying better economic data this week. Over in Europe, the president of France has declared that the eurozone recession is probably over.

Speaking in Slovenia, Francois Hollande said:

Indicators published in the last few days look as if we have reason to believe we have overcome the recession, but it is still fragile.

Hollande may have been thinking of yesterday's survey of private sector firms in the euro area, which showed growth for the first time in 18 months.

He also said there was "no reason to sound the alarm" over Slovenia's banks, whose bad loan problems have led to speculation that the country may require a bailout.

Hollande is in Slovenia for a meeting of Balkan leaders to discuss integration into the European Union, and unresolved issues from the conflict of the 1990s.


The presidents of Albania Bujar Nishani, Croatia Ivo Josipovic, France Francois Hollande, Slovenia Borut Pahor and Kosovo Atifete Jahjaga pose for a group photo prior to the meeting “Brdo Process” at Brdo Castle, in Brdo Pri Kranju today. Photograph: BERTRAND GUAY/AFP/Getty Images

12.40pm BST

11.58am BST

Larry Elliott: GDP growth is no great shakes

Our economics editor, Larry Elliott, argues that today's GDP data is "tinged with disappointment", as the UK has bounced back more Tiggerishly after previous slumps.

Larry writes:

Compared to its miserable performance over the past few years, 0.6% growth looks impressive. But in the longer term it is no great shakes. Historically, the economy has grown by around 2.25%-2.5% a year on average, so the second quarter was smack in line with that trend.

But after recessions, national output has tended to rise strongly as it makes up for the ground lost during the downturn. Given that the level of GDP is still 3.3% below its previous peak, quarterly growth rates of 1% would be more normal for this stage of the cycle. The year-on-year growth rate of 1.4% is also below par.

More here: George Osborne's 0.6% growth is good but unspectacular

Updated at 12.09pm BST

11.35am BST

Key event

The news that UK growth is accelerating will "shape the national conversation" about the economy, reckons Nick Robinson, the BBC's Politics editor.

But with real wages lagging well behind inflation, attention may shift from headline growth to living standards.

Robinson writes:

There'll be no more talk of dips – double let alone treble – as people speak of recovery and not recession.

That will have an impact on political psychology – giving Tory MPs another reason to smile on their sun loungers this summer and allowing George Osborne to believe that he has finally put that "omnishambles" Budget behind him.

However, Ed Balls and Labour will be quick to remind us that a recovery in one measure of national economic output is not the same as a recovery in living standards. Average real incomes fell by 3% last year and the independent Institute for Fiscal Studies believes they will fall again as wages are squeezed, benefits and tax credits cut and inflation increases.

The politics of 'growth versus austerity' will slowly transform into the politics of who will improve 'living standards for all'.

Duncan Weldon, the TUC's senior policy officer, makes a similar point:

The latest data shows that take-home pay is only up by around 1% year-on-year, while the retail prices index of inflation is running at 3.3%.

11.28am BST

11.25am BST

Britain is finally getting back on its feet, reckons Nida Ali, economic advisor to the EY ITEM Club, but issues such as youth unemployment must be addressed. 

The headline GDP figures were bang in line with expectations, driven by private sector expansion, signalling underlying momentum in the economy. This is very encouraging and qualifies as the right kind of growth that we have been lacking over the past couple of years.

Ali predicts that Britain will achieve growth of "more than 1% this year".

Although the consumer sector will probably play a major role in the recovery, we also expect momentum to build in business investment and exports, which should give way to stronger growth of over 2% in 2014. But with a number of weak areas in the economy, such as high youth unemployment, disappointing wage growth and low productivity, we still have a long way to go.

Updated at 11.29am BST

11.18am BST

Today's preliminary estimate of 0.6% growth is only the ONS's first stab at calculating GDP in the last quarter, as it's only based on data from April and May.

It may well be revised in the weeks ahead, as Ben Chu of the Independent flags up:

11.12am BST

BCC: UK firms are more upbeat

Plenty of optimism over at the British Chambers of Commerce, which represents UK companies.

John Longworth, the BCC's director general, reckons business confidence is rising, with many bosses planning to hire more staff later this year.

Firms are feeling upbeat and are capable of expanding. More and more are adopting a ‘have a go’ attitude when it comes to exporting, which is really encouraging as this will go a long way to driving growth further still.

But strong, sustained growth requires efforts from the government too, as businesses need an enterprise-friendly environment for the economic to go from good to great. New and existing exporters need more support to help them diversify into fast-growing markets, and access to finance for dynamic, growing businesses must be made more available.

10.58am BST

IoD: Headwinds and tailwinds

The Institute of Directors predicts that UK growth could pick up pace in the current quarter, but warns that inflation and the eurozone crisis could scupper the recovery.

Graeme Leach, the IoD's chief economist, commented:

The GDP figures are encouraging and will help to further build business and consumer confidence. For the first time since the financial crisis the economy looks and feels as if there is a tailwind behind it. We are optimistic that the current rate of quarterly growth can be maintained through the second half of 2013 and into 2014. Indeed, if one looks to the current broad money supply (the amount of cash and bank deposits) as a leading indicator of economic activity, quarterly growth might actually accelerate slightly over the next 6 months.

Second quarter GDP growth of 0.6% is in line with trend growth but not above it. Consequently there is little reason to expect an imminent change in monetary policy by the MPC. The figures won’t have changed views on the size of the output gap and the amount of spare capacity in the economy. The MPC will also be aware that despite the tailwind to growth from the money supply, significant headwinds remain. Key headwinds include the squeeze on household income from inflation running ahead of earnings, bank balance sheet reduction and the ever present threat of a return of the euro crisis.

10.52am BST

David Cameron tweets that today's data shows Britain is moving in the right direction:

Surely it's the hardworking people who are building the economy, prime minister?

10.47am BST

BNP Paribas: well balanced growth

David Tinsley of BNP Paribas says today's data shows "relatively well balanced growth" in the last three months:

Within services, distribution, hotels and restaurants rose a very solid 1.5%. That was the stand-out area of strength, most other sub-sectors averaged around 0.5/0.6%.

Overall this is a decent but not spectacular performance for the UK economy. The level of output remains 3.3% below its previous peak, which highlights there is still much work to do.

10.30am BST

Reaction (1)

Here's a round-up of the best comment and reaction from economists and City experts on Twitter:

Updated at 10.30am BST

10.23am BST

Balls: It’s still a slow recovery

Ed Balls, shadow chancellor, has responded to the news that Britain's recovery picked up speed last quarter:

After three wasted and damaging years of flatlining, this economic growth is both welcome and long overdue. But families on middle and low incomes are still not seeing any recovery in their living standards. While millionaires have been given a huge tax cut, for everyone else life is getting harder with prices still rising much faster than wages.

“This is also the slowest recovery for over 100 years. In America, where President Obama has acted to support rather than strangle the recovery, their economy has grown nearly three times faster than the UK since autumn 2010. Simply to catch up all the ground we have lost under David Cameron and George Osborne we would need growth of 1.3 per cent each quarter over the next two years.

Real risks remain. So instead of more complacency from the Chancellor, we need action to catch up all the lost ground and secure a strong and sustained recovery that everybody can benefit from.

10.10am BST

My colleague Heather Stewart writes:

Britain's recovery picked up pace in the second quarter, official figures have confirmed, with GDP expanding by 0.6%.

George Osborne, the chancellor, welcomed the fresh evidence that the economy has moved, as he has put it, "out of intensive care".

"Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend," he said, "but there is still a long way to go and I know things are still tough for families.

More here: UK GDP growth of 0.6% shows 'Britain is on the mend,' says George Osborne

10.07am BST

Chart: Service sector lead the way

As suspected, most of the growth in the last three months has come from the service sector:

UK GDP by sector
Photograph: ONS

This reflects the fact that services still makes up around three-quarters of the overall economy.

A recap on the individual growth rates:

• Services: +0.6%

• Production: +0.6%, including +0.4% for manufacturing

• Construction: +0.9%

• Agriculture: +1.1%

10.02am BST

Chart: GDP over the last decade

Chief statistician Joe Grice made the point earlier that UK GDP is still 3.3% below its alltime peak in 2008.

This chart shows why — a massive tumble in output when the financail crisis struck, followed by patchy growth from the start of 2010.

UK GDP
Photograph: ONS

9.49am BST

Osborne: We’re holding our nerve

Chancellor George Osborne, doubtless invigorated by his adventures last night (photos), has welcomed the GDP data.

Osborne said:

Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend – but there is still a long way to go and I know things are still tough for families.

So I will not let up in my determination to make sure we put right all that went wrong in our economy.

Unlike the unbalanced economy before the crisis, we are going to make sure that everyone benefits from this recovery.

9.46am BST

And on a year-on-year basis, UK GDP is 1.4% higher than after the second quarter of last year.

However, we need to be cautious — as Q2 2012 contained an extra bank holiday for the Queen’s Diamond Jubilee, hitting output.

9.43am BST

Firing on all cylinders

All four main industrial groupings within the UK economy – agriculture, production, construction and services – grew in the second quarter of 2013. That means the economy is firing on 'all cylinders', in City jargon.

9.39am BST

Download the report

You can see the the data yourself on the Office for National Statistics website, here: Gross Domestic Product Preliminary Estimate, Q2 2013

9.38am BST

Good news, but nothing special

Britain's growth of 0.6% over the last three months is in line with City forecasts. It's twice as strong as the 0.3% rise in GDP recorded in the first three months, and is likely to cheer the government.

Our economics editor, Larry Elliott, comments that it's "good but unspectacular". If it continued over a whole year then it would mean annual growth of just under 2.5% — which would have been unspectacular in ther years before the financial crisis struck.

9.35am BST

Key event

UK GDP. Q2 2013
Photograph: ONS

9.33am BST

Questions – why has the construction sector grown so well, 0.9%, in the last three months?

Joe Grice won't speculate, but agrees that it's a stronger performance for the industry after a difficult time.

9.31am BST

Joe Grice of the ONS explains that Britain's economy is still 3.3% below its pre-recession peak.

9.30am BST

UK GDP DATA RELEASED

BREAKING: Britain's economy grew by 0.6% in the second quarter of 2013. That's in line with estimates.

The service sector grew by 0.6%,

Manufacturing grew by 0.4%

Construction grew by 0.9%.

9.28am BST

Joe Grice, chief economist at the ONS
Photograph: BBC News 24

Tension is building as the Office for National Statistics prepares to announce its first estimate of GDP growth, in just a few moment time.

Joe Grice, the ONS's chief economist, is sat at the press conference in London ready to deliver the big news….

Updated at 2.35pm BST

9.13am BST

Just over 15 minutes to go until we get the first estimate of UK growth for the last three months….

A 0.6% rise in GDP (the consensus view in the City) would mean that the economy has expanded by 1.4% over the last year (unless previous data is revised). That's a lacklustre annual growth rate.

Kit Juckes of Societe Generale reckons it won't be enough to persuade the Bank of England to start tightening monetary policy:

Year-on year growth of 1.4% is only good when we comapre it to the recent past or to the Euro Zone. And bear in mnd, we saw quarters with 0.6 or 0.7% growth in both 2012 and 2011, but we also saw quarterly falls. This may be marginally better than stagnation but won't alter the prospect of super-easy money being in place for a super-long time.

8.50am BST

Photos: Osborne meets the night shift

Chancellor George Osborne prepared for this morning's GDP data by spending last night visiting some of Britain's army of night workers in and around Birmingham.

He visited a Warburton's bakery, met with construction workers toiling on the M6 motorway, and toured Tesco's National Distribution Centre near Rugby, apparently to learn about how the UK economy runs at night.

Chancellor of the Exchequer George Osborne meets staff at Warburtons Bakery in Wednesbury near Birmingham.
Upper crust? Osborne meets staff at Warburtons Bakery in Wednesbury near Birmingham. Photograph: Stefan Rousseau/PA
Chancellor of the Exchequer George Osborne meets workers  on a section of the M6 motorway near Birmingham where he saw a road management scheme being constructed whilst the road was closed
Photograph: Stefan Rousseau/PA
Chancellor of the Exchequer George Osborne meets staff at Tesco's National Distribution Centre near Rugby.
Tesco’s National Distribution Centre near Rugby. Photograph: Stefan Rousseau/PA

Updated at 8.52am BST

8.41am BST

Service sector leads the way?

Where is Britain's growth coming from? The UK government has made plenty of noise about creating the 'March of the Makers", but economists reckon that the dominant services sector is driving the recovery.

Marc Ostwald of Monument Securities predicts:

Retail spending is seen contributing just 0.1 ppt to today's report, and construction output has been sluggish, with Services presumably assumed to have done most of the 'heavy lifting'.

8.37am BST

Dr Gerard Lyons, economic adviser to Boris Johnson, the Mayor of London, cautions against getting too excited about today's UK GDP figures.

8.28am BST

Spanish jobless rate finally falls

There are signs of recovery in Spain, too, this morning.

Its unemployment rate has fallen for the first time since it entered recession almost two years ago, but remains alarmingly high. The jobless rate dropped to 26.3% in the second quarter of this year, from 27.2% in January-March.

The total number of people out of work dropped to 5.98m, from 6.20m, while the employment total increase by 149,000 to 16.8m.

The south of the country continues to suffer the greatest unemployment rates, as this image shows:

Updated at 8.34am BST

8.08am BST

UK growth figures awaited

Chancellor of the Exchequer George Osborne meets staff at Tesco's National Distribution Centre near Rugby.
Chancellor of the Exchequer, George Osborne, meeting staff at Tesco’s National Distribution Centre near Rugby on Wednesday. Photograph: Stefan Rousseau/PA

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

Are things looking up for the British economy? We'll find out this morning, when growth figures for the second quarter of 2013 are released.

City economists expect to see a rise in GDP, of perhaps 0.6%, which would be twice as strong as the growth in the first three months of this year, when Britain avoided falling back into recession.

That would be welcome news to a country that's suffered weak growth, or worse, over the last few years. A strong performance is certain to be hailed by the government as vindication for its economic strategy.

As the Guardian explains this morning:

The Treasury will try to maintain a cautious posture, but start to put the political squeeze on the shadow Treasury team by claiming its dire predictions of mass unemployment have been proved untrue.

The shadow chancellor, Ed Balls, in the US for talks with the Obama administration, has already prepared the ground for the change of economic gear by highlighting the continued squeeze on living standards.

The UK will be the first major economy to estimate growth for the April-June period. In GDP forecasting (as in sport), Britain typically beats most other countries so the data will be a handy – if perhaps inaccurate – guide to economic conditions:

A healthy rise in UK GDP could add to the optimism created yesterday by the latest survey of European firms, which suggested the eurozone may finally be leaving recession.

The GDP data is released by the Office for National Statistics at 9.30am BST sharp, followed by a press conference in London.

I'll be covering the news and reaction in the liveblog, along with other key developments in the UK, the eurozone, and beyond through the day.

Updated at 8.28am BST

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Eurozone private sector returns to growth. Graph: why recession may be over. Stronger data from Germany and France… But not China. America’s manufacturing sector is picking up pace, with US factory sector PMI coming in at 53.2, up from June’s 51.9…

 


Powered by Guardian.co.ukThis article titled “Eurozone ‘pulling out of recession’; Greece one step from bailout cash – as it happened” was written by Graeme Wearden, for theguardian.com on Wednesday 24th July 2013 15.03 UTC

5.46pm BST

And that's a good moment to stop. I'll be back tomorrow, when the big event of the morning will probably be the first estimate of UK GDP for the second quarter of 2013.

Until then, thanks, and goodnight. GW

5.41pm BST

French jobless levels hits new record high

The number of people out of work in France has hit a new record high, dampening optimism generated by this morning's PMI data*.

France's jobless total rose by 14,900 in June to 3.279 million, a rise of 0.5%, the Labour Ministry reported. It means president Francois Hollande has yet to meet his pledge to get unemploment falling before the start of 2014.

Reuters has more details:

Though young people are the hardest hit by the jobs crisis, with 555,800 registered out of work in June, that number was down 0.3 percent from May, the labour ministry data showed.

The jobs crisis has become one of the biggest headaches for the Socialist government, which says it is convinced the jobless rate will fall over at least two months before the end of the year despite fresh records being hit every month.

While unemployment is a lagging indicator, Wednesday's data were still likely to dampen public spirits after Hollande and Finance Minister Pierre Moscovici have sought in recent days to drum up optimism over the economy, declaring the recession over.

* – see 8.08am onwards for details of how France's private sector is moving closer to growth this month.

5.25pm BST

Open Europe's sober take on today's PMI data is worth a read:

5.19pm BST

Europeahn markets close up

European stock markets have closed at their highest level in eight weeks, boosted by strong corporate results here and America as well as today's upbeat PMI surveys.

European market closing price
Photograph: Thomson Reuters

Michael Hewson of CMC Markets commented:

Europe’s markets caught an early bid today shrugging off a disappointing Chinese PMI number and taking the positives from better than expected European, French and German manufacturing and services PMI numbers for July, and a slew of better than expected company updates from companies like Kingfisher, ARM Holdings, Easyjet and Tate and Lyle.

And here's the biggest risers and fallers in London:

FTSE 100 top risers, July 24
Photograph: Thomson Reuters
FTSE 100 top fallers, Juy 24
Photograph: Thomson Reuters

4.45pm BST

On the issue of the Greek labour pool, Kathimerini reported this morning that the Athens government needs to find another 5,500 staff to fill it, and meet its targets…. More here.

4.43pm BST

Workers at Greek public hospitals, health centers, welfare structures and the ambulance service are taking part in a one-day strike today, leaving only a skeleton staff on duty.

Unions also held a protest outside the Health ministry today, over the government's plans to transfer some staff to the new 'mobility pool'.

That pool is a key part of the push to cut the state workforce — the one 'prior action' that needs to be met before Greece unlocks its aid payment (see 4.03pm).

Here's a couple of photos:

Workers at public hospitals, health centers, welfare structures and the ambulance service strike for 24 hours. -- Workers at public hospitals, health centres, welfare structures and the ambulance service strike for 24 hours on July 24, leaving only a skeleton staff on duty.
Photograph: Alexandros Michailidis/Demotix/Corbis
Workers at public hospitals, health centers, welfare structures and the ambulance service strike for 24 hours. -- Workers at public hospitals, health centres, welfare structures and the ambulance service strike for 24 hours on July 24, leaving only a skeleton staff on duty.
Photograph: Alexandros Michailidis/Demotix/Corbis

4.03pm BST

Greece one step away from next bailout payment

Back to the eurozone crisis, and the Eurogroup of finance ministers has announced that Greece is one step away from unlocking its next aid tranche, worth €2.5bn.

In a statement, Eurogroup chairman Jeroen Dijsselbloem announced that the Greek government has satisfied all-but-one condition. It wasn't more specific, but it must be the target for public sector job cuts:

Here's the full statement:

The euro area Member States have been informed today by the Troika institutions that Greece has satisfactorily implemented the prior actions required for the release of the next disbursement under the financial assistance programme, except for one action whose adoption by the Greek Parliament needs to be completed by Thursday, 25 July.

These prior actions included important steps in the areas of fiscal policy, tax reform, revenue administration, public administration reform, privatisation and financial sector restructuring. 

Subject to confirmation of compliance with the last outstanding prior action, national procedures may thereafter be finalised and are expected to be completed by 29 July. Once this process has been satisfactorily concluded, the EFSF will be authorised to release the first sub-tranche of the next instalment, amounting to EUR 2.5 billion, according to the programme

3.49pm BST

Sounds like UK readers should tune their televisions to ITV at 10pm tonight…

3.33pm BST

Jane Austen gets nod to grace £10

Breaking news in the UK: Jane Austen is to appear on the next £10 note.

The Bank of England governor, Mark Carney, has just announced that the author will grace the British tenner, from 2017.

Here's the full story:

Carney’s announcement was aimed at quelling a three-month storm of protest unleashed when King announced that the only woman to appear on an English banknote other than the Queen – the prison reformer Elizabeth Fry – would be replaced by Winston Churchill, probably in 2016.

She and Florence Nightingale are the only two women, other than the Queen, to have appeared on English banknotes since they started portraying historical figures in 1970.

And here's the new concept note, showing what it will look like:

Jane Austen £10
Jane Austen £10 Bank of England

I preferred our own version:

Updated at 3.58pm BST

3.26pm BST

Over in Germany, the entire former board of lender HSH Nordbank have gone on trial today in Hamburg.

Six executives are accused of misconduct, or "breach of fiduciary trust", in the run-up to the financial crisis, through allegedly risky and dubious deals. This includes the bank's chief executive, Dirk Jens Nonnenmacher and his predecessor Hans Berger.

Nonnenmacher and HSH's former capital markets chief, Jochen Friedrich, are also accused of accounting fraud,

More details here.

3.00pm BST

Speaking of America, this piece by Moira Herbst argues that income inequality and rising underemployment are holding back the world's largest economy:

10 reasons the US economy is stuck

2.38pm BST

US manufacturing activity hits four-month high

Flash estimate of US PMI, July 2013
Photograph: Markit

America's manufacturing sector is also picking up pace, although the labour market still remains weak.

Markit's 'flash' estimate of US factory sector PMI came in at 53.2, up from June's 51.9. That's the strongest rise in activity in four months.

New export orders, and new work generally, both rose, with total output across the sector posting its highest growth since March.

But while firms hired more workers, the rate of job creation is still lower than earlier this year.

Markit chief economist Chris Williamson explained that America's manufacturing sector isn't strong enough, yet, for the US Federal Reserve to start the process of slowing its stimulus package.

He said:

 The pace of manufacturing growth remains well below that seen at the start of the year, in part reflecting weaker demand from many export markets, notably China and other emerging economies.

Employment growth is disappointingly weak as a result, as firm focus on cost-cutting to boost competitiveness.

The Fed will therefore be encouraged by signs that the sector is showing signs of reviving, but will no doubt remain cautious with regard to the longer-term outlook for the economy and the job market. It is likely that policymakers will generally need to see growth strengthen further before sounding more confident about the ability of the economy to withstand any tapering of stimulus.

2.20pm BST

1.38pm BST

Marketwatch's Sara Sjölin is pretty upbeat about today's PMI data, writing:

 Basically, the region has started to grow, and instead of seeing the area mired in recession, there’s a decent chance it will emerge from the red numbers in the third quarter of the year.

“It’s probably fair to say we’ve turned a corner. We are expecting things to improve and the PMIs confirm that,” said James Ashley, senior European economist at RBC Capital Markets.

Updated at 1.38pm BST

1.24pm BST

Peugeot’s €7bn state loan ‘to get EU approval’

Another boost for France – EU regulators are poised to approve a state loan to Peugeot.

Reuters has the story:

European Union regulators will approve next week a €7bn French state aid loan guarantee for PSA Peugeot Citroen's financing arm aimed at ensuring the French carmaker's viability, a European Commission source said on Wednesday.

The Commission, which enforces state-aid rules in the 28-country European Union, opened an investigation into the case in May to decide whether the measure distorts competition.

A Commission source said the EU competition authority will clear the guarantee after examining concessions offered by Peugeot.

"The discussion was about the conditions that could allow the Commission to approve such a guarantee under EU state aid rules, that is, on the restructuring plan, not on the amount of the guarantee itself," the source said.

Facing falling sales and rising losses, Peugeot is trying to cut its domestic workforce by around one-sixth over the next two years, part of a €1.5bn restructuring plan.

1.13pm BST

Martin Van Vliet, an economist at ING, predicts a "slow and uneven" return to growth in the eurozone. Like Larry Elliott (12.54pm) and Howard Archer (10.01am) Van Vliet sees several obstacles:

"Fiscal policy will remain a drag on growth, especially in the periphery. High unemployment and still-weakening housing markets will also help keep domestic demand in many euro-zone countries subdued.

12.59pm BST

Greece's far-right Golden Dawn party is refusing to swallow the ban on its free food giveaway (see 11.42am), reports Kathimerini:

Far right Golden Dawn on Wednesday announced that it was moving a free food handout scheduled to take place on the same day to another location after police announced a ban on any kind of public gathering in central Athens, froon noon to midnight.

12.54pm BST

Larry Elliott: Eurozone’s problems aren’t over

Today's encouraging eurozone data (9.09am) should not distract from the need for more efforts to nurture growth in the region, writes economics editor Larry Elliott:

The good news is that Wednesday's report was no flash in the pan: the eurozone PMIs have been improving for the past five months. It is also encouraging that the pace of job shedding is easing, given that record unemployment has been a significant drag on activity.

That said, it's far too early to start celebrating. The PMIs have signalled many a false dawn in the past and even now are a long way from signalling that a period of solid growth has resumed.

What's more, the eurozone faces plenty of headwinds. Austerity programmes – despite being less severe – will continue to be a drag on growth; the latest figures for bank lending suggest that businesses are still struggling to get access to finance; and consumer spending will be held back by unemployment in excess of 12% and falling house prices.

More here: Is an end to Europe's misery in sight?

12.25pm BST

GSK warns of China hit

In the City, there's much excitement as drugs giant GlaxoSmithKline releases its financial results, as the storm over bribery allegations in China rolls on.

GSK has reported a 2% rise in revenues, including a 14% incease in sales in China, but warned investors that that its business there will suffer from the current investigation – which has seen several Chinese executives arrested in recent days.

My colleague Rupert Neate is live-blogging the GSK results and conference call here:

GSK's China crisis: chief executive Andrew Witty speaks – live

Witty has already described the allegations as "shameful" and "deeply disappointing".

11.42am BST

Golden Dawn banned from food handout

Sticking with Greece, the mayor of Athens has challenged the neo-Nazi Golden Dawn party by forbidding its members from distributing free food on Friday.

Athens mayor Giorgos Kaminis blocked Golden Dawn's plans for a distribution on Friday afternoon, saying the event "consciously promotes racism and xenophobia.”

The food giveaways are a key part of Golden Dawn's strategy to grow its popularity among Greeks struggling to feed themselves as its economic crisis continues. The party which campaigns to throw immigrants out of Greece, is currently in third place in political polls.

Athens police have now announced that any gatherings in Attiki Square are banned on Friday.

Back in May, Kaminis blocked Golden Dawn from giving away food in Syntagma Square, site of the Athens parliament.

Kathimerini reports that Golden Dawn isn't happy about the latest ban:

Golden Dawn insisted that its plans for a handout were “100 percent legal” as it had informed authorities and that it would go ahead with the event. The party said that all its MPs and leader, Nikos Michaloliakos, would be at the event.

The rise of Golden Dawn, with its swastika-esque logo, military-style training and extremist views, has caused alarm across Europe. The party's popularity has increased as Greece's economic crisis has worsened. Two weeks ago the Greek mnister for Public Order, Nikos Dendias, said he was "very worried" about the party.

Meanwhile, the editor of the Spectator has defended his magazine over an article published by its columist Taki, in which he defended Golden Dawn.

He argued:

GD became very popular with certain poor Greeks while it defended them from being mugged by Albanian criminals and drug dealers, and for safeguarding older folk after bank withdrawals. No, Golden Dawn is not house-trained, and many of its members tend to use rough language and get physical….

Golden Dawn members are mostly labourers, martial artists, cops, security personnel and good old-fashioned patriotic Greeks.

If you find that hard to believe (or stomach) here's the proof: Taki: A fascist takeover of Greece? We should be so lucky

And here's some reaction:

Updated at 12.24pm BST

10.46am BST

Protests in Greece

In Greece, medical staff are holding protests in the city of Thassaloniki against plans to cut health spending.

University lecturer Spyros Gkelis tweets a photo:

10.16am BST

PMI data and corporate results push markets up

European stock markets are also ralling on the back of today's encouraging PMI data.

Strong corporate results from firms such as EasyJet (details here) have also helped push the FTSE 100 up 44 points to 6641, a gain of 0.6%. Germany's DAX is up 0.5% while the French CAC has put on 0.7%).

From the City Matt Basi, head of UK sales trading at CMC Markets, explains:

After another record close for US equity markets last night equity indices have again opened on the front foot this morning, pushed on by better than expected PMI data from Europe and a string of strong earnings from blue chip firms.

EasyJet, ARM, Tate & Lyle, Kingfisher, GlaxoSmithKline and Compass have all provided updates this morning, and all occupy spots in the top 10 of the FTSE100 performance charts.

FTSE risers, 10am, July 24
FTSE risers, 10am, July 24 Photograph: /Thomson Reuters

10.01am BST

Economist: eurozone downturn is over

Howard Archer, European economist at IHS Global Insight, agrees that today's data shows that the eurozone has finally stopped contracting:

We suspect that Eurozone GDP was essentially flat in the second quarter amid improved German growth and reduced contraction in Italy and Spain.

The BBC's Gavin Hewitt is also encouraged, but points out that unemployment is still increasing (although at a lower rate).

9.55am BST

See the data yourself

9.52am BST

A quick reminder — today's improvement in the eurozone PMI data was driven by Germany's private sector growing at a five-month high (see 8.35am for details), and France's private firms shrinking at their softest pace in 17 months (see 8.08am onwards).

We'll have to wait until the end of July for full country-by-country details….

Updated at 9.54am BST

9.45am BST

Graph: Eurozone PMI

Here's a graph of recent PMI data versus eurozone economic output.

It explains why today's recovery in private sector output in the euro area means the recession may end this autumn:

Eurozone composite PMI, July
Photograph: Markit

As explained at 9.09am, Markit's composite PMI rose to an 18-month high of 50.4 – meaning growth for the first time since the early days of 2012.

The data showed a small contraction in the service sector, at 49.6 from 48.3. That was also an 18-month high.

Europe's factories are doing better in July, with the manufacturing PMI hitting a 24-month high of 50.1 from 48.8 in June.

OK, that's only a marginal expansion, as World First's Jeremy Cook points out:

But it's better than losing a fingernail….

Updated at 9.48am BST

9.25am BST

9.09am BST

Eurozone PMI suggests recession may soon end

It's official. The eurozone's private sector is healing, and the end of the recession that has haunted the euro area for more than a year may soon be over.

Markit's composite PMI output index, based on data from thousands of companies across the region, has hit its highest level in 18 months.

It rose to 50.4, up from 48.7 in June, driven by improved performances from private sector companies in France and Germany. This is the first time it's broken above the 50.0 no-change level since January 2012.

Markit reported that new orders only fell marginally, and job losses eased,

Chris Williamson, chief economist at Markit, said the data suggests the eurozone could start growing again soon:

The best PMI reading for one-and-a-half years provides encouraging evidence to suggest that the euro area could – at long last – pull out of its recession in the third quarter.

The revival is being led by a broad-based upturn in manufacturing, where growth surged to a two-year high. Increased goods production was reported in Germany, France and across the rest of the region as a whole.

There are also promising signs of stabilisation in the service sector, which hints at some much–needed upturns in domestic demand. Rising service sector activity in Germany is being accompanied by slower rates of decline in France and elsewhere across the region.

Employment continues to fall, but even on the jobs front there is welcome news in that companies are cutting back on headcounts to a lesser extent than earlier in the year.

The survey data will therefore provide a summer fillip to policymakers, especially in terms of there being light at the end of the tunnel for austerity-hit periphery countries where political and social tensions have risen.

The ECB in particular will be feeling much more confident in its expectation of the region returning to growth by the end of the year.

Details and reaction to follow

Updated at 9.25am BST

8.59am BST

The euro just hit a 1-month high of .3249 against the US dollar, following today's PMI data from Germany and France.

8.46am BST

8.45am BST

Early reaction

More reaction to this morning's upbeat data from France and Germany, and downbeat news from China:

8.40am BST

Graph: Germany’s PMI

German PMI, July 2013
Photograph: Markit

Tim Moore, senior economist at Markit, said Germany’s private sector had shaken off its recent malaise in July to post its fastest pace of
output expansion for five months (see 8.35am)

The return to new business growth sets a positive tone at the start of the third quarter and a rebound in employment numbers adds to the air of positivity in the latest figures.

The stronger performance of the German private sector in July appears to have been driven by improvements in domestic business and consumer spending.

In particular, manufacturers cited higher demand patterns from the autos industry and among clients in the domestic construction sector, which helped offset continued weakness in key export markets.

8.35am BST

German PMI beats forecasts

Germany's private sector has posted its strongest output in five months, suggesting Europe's largest economy may be strengthening this summer.

Markit just reported that the "Flash Germany PMI" rose to 52.8, from June's 50.4, The strongest reading since February this year.

Germany's factory sector returned to growth, clawing over the 50-point mark that separates expansion from contraction. Manufacturing PMI came in at 50.3, much better than June's 48.6.

And Germany's service sector PMI jumped to 52.5, from 50.4.

Encouraging stuff. Details to folllow….

8.19am BST

Graph: Does French PMI show recession ending?

French private sector PMI, to July 2013
Photograph: Markit

Today's improved French PMI data comes a day after finance minister, Pierre Moscovici, declared that the country's recession was over.

Jack Kennedy, senior economist at Markit, said there are signs that the French private sector is close to a recovery, and could return to growth this year:

Output in the French private sector moved closer to stabilisation at the start of the third quarter. Manufacturers actually signalled a rise in output for the first time in almost one-and-a-half years, while service providers registered a slower decline in activity.

8.08am BST

French PMI data

Encouraging data from France — where private sector output has fallen at its slowest rate in 17 months.

Markit, the data provider, reported that the French private sector PMI has risen to 48.8 this month, up from June's 47.4. That's a 17-month high, and suggests the private sector only shrank marginally.

France's manufacturing sector came close to posting growth, with a PMI of 49.8 (up from 48.4 in June). That's also a 17-month high. And the service sector also did better, at 48.2 from 47.2.

Markir reported signs of optimism in the eurozone's second-largest economy:

Service providers indicated a slower fall in outstanding business, while manufacturers reported a rise for the first time since April 2012.

The rate of job shedding in the French private sector moderated further in July. The latest fall in staffing levels was the slowest in 15 months. Both
service providers and manufacturers signalled weaker reductions in employment.

Here's the full report.

And here's some instant reaction from City experts on Twitter:

Updated at 8.11am BST

8.00am BST

Portuguese reshuffle

Portugal's new cabinet will be sworn in at 5pm BST today, at the end of a dramatic three weeks.

Junior coalition partner Paulo Portas becomes deputy prime minister, cementing his new, more powerful position after his (now-reversed resignation):

European reporter José Miguel Sardo has the details, and reports that the country's new economy minister is keen to make changes to Portugal's austerity programme.

7.49am BST

Chinese manufacturing activity hits 11-month low

Employees work inside a milk factory in Beijing, July 5, 2013.
A milk factory in Beijing, China, where manufacturing activity appears to be dropping. Photograph: CHINA STRINGER NETWORK/REUTERS

Good morning, and welcome to our rolling coverage of the latest events around the eurozone, the global economy and the financial markets.

A big morning for economic data has already begun with some disappointing news from China. Manufacturing activity in the world's second-largest economy has shrunk to its lowest level since last August.

New orders and output both shrank in July, while the jobs market also declined, according to the 'Flash' estimate released by HSBC in the early hours.

The flash HSBC/Markit Purchasing Managers' Index fell for a third straight month, to 47.7, from June's final reading of 48.2. A reading between 50 indicates that activity fell.

As Hongbin Qu, chief China economist of HSBC, explained:

The lower reading of the July HSBC Flash China Manufacturing PMI suggests a continuous slowdown in manufacturing sectors thanks to weaker new orders and faster destocking.

This adds more pressure on the labour market.

It also puts Chinese premier Li's promise yesterday to keep growth at 7% or higher under the microscope. Further stimulus measures could be needed, especially with Beijing banning anyone building a new government building until 2018.

But closer to home, how are Europe's manufacturing and service sectors performing this month?

We'll find out in the next few hours, with 'flash' readings from several countries including France (8am BST) and Germany (8.30am BST), followed by the full reading for the eurozone at 9am BST.

Also coming up…. Portugal's new government is being sworn in (details to follow), and medical staff in Greece will be holding a strike against proposed job cuts.

I'll also be watching for updates on the status of the next Greek aid payment, following last night's news that it may be delayed. if you missed that news, Marketwatch sums up the situation:

The European Commission notified Berlin Tuesday that it can’t vouch yet that Greece has fulfilled all the conditions to receive its next slice of bailout loans, Germany’s deputy finance minister said in a letter to the German parliament.

The decision means the next tranche of aid for Greece will likely be delayed, but there should not be any “serious” problem with the payment, one person familiar with the situation said.

Full story: Germany says payment of Greek aid may be delayed

I"ll be tracking all the latest developments through the day as usual…

Updated at 8.03am BST

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Chinese premier vows to keep GDP growth above 7%. French finance minister says recession’s over. Greek PM demands more progress on Troika targets. Bank of Spain sees recession slowing. Cyprus talks with its Troika of lenders are continuing, with a “difficult” path ahead…

 


Powered by Guardian.co.ukThis article titled “France ‘returns to growth’ and Spain sees slump easing – as it happened” was written by Graeme Wearden, for theguardian.com on Tuesday 23rd July 2013 16.23 UTC

5.17pm BST

European markets close lower

After a bright start fuelled partly by positive comments about Chinese growth, markets have slipped back from their best levels on disappointment with the latest US manufacturing survey, writes Nick Fletcher.

• The FTSE 100 fell 25.73 points or 0.39% to 6597.44

• Germany's Dax is down 0.2% at 8314

• France's Cac closed 0.43% lower at 3923

• Italy's FTSE MIB edged up 0.03% to 16,238

• Spain's Ibex added 1.35% to 8073

• Athen's market ended up 0.02% at 842

Meanwhile in the US, the Dow Jones Industrial Average is up 20 points ore 0.13%.

And on that note, it's time to close up for the evening. Thanks for all the comments, and we're back tomorrow.

5.06pm BST

Greek aid tranche reportedly delayed

Payment of the latest tranche of aid to Greece has reportedly been delayed, according to the German finance ministry:

Updated at 5.23pm BST

4.20pm BST

Cyprus government: we are travelling a long road

An elderly man walks outside the Ministry of Finance during a meeting between Cyprus' financial minister and central bank government and officials from the European Commission, European Central Bank and the International Monetary Fund in Nicosia, Wednesday, July 17, 2013.
The Ministry of Finance in Nicosia. Photograph: Petros Karadjias/AP

Over in Cyprus, a government spokesman has told reporters that talks with its Troika of lenders are continuing, with a "difficult" path ahead.

It's nearly a week since officials from the Troika began their assessment of Cyprus's bailout programme. Asked about reports that there are concerns about progress regarding certain structural reforms, Christos Stylianides said:

The Government is patient. It consults with the Troika, the lenders, and will speak out when the consultation is completed. We must not run ahead. The course we traverse is long but we insist on our basic positions. On our part, we are diligent with regard to the implementation of the Memorandum and we think that only through its implementation we can get out of the Memorandum at the earliest.

The consultation with the Troika takes place on a daily basis, it takes place in a very good climate, the road is difficult, but we are waiting for the final evaluation to say what we have to say on our part, and this will in fact be stated by the President of the Republic himself.

It also emerged this afternoon that the Bank of Cyprus is considering splitting itself in two. Asked about this, Stylianides said its new shareholders must decide the future of the bank, which has already cut many hundreds of jobs and seen large depositors 'bailed in' to its rescue package.

Stylianides's full statement is online here.

3.40pm BST

While eurozone consumer confidence offered reasons for optimism, the latest US economic data disappointed.

The Richmond Federal Reserve's survey of manufacturing output dropped to -11 in July, sharply lower than June's +8. Particularly alarmingly, the retail sales measure tumbled by 23 points, to -22.

Business Insider has a good summary: Richmond Fed Index Shows Mammoth Fall In Retail Sales

Updated at 3.44pm BST

3.22pm BST

Eurozone consumer confidence picks up

Eurozone consumer confidence, to July 2013
Photograph: European Commission

Morale among consumers in the 17 countries which use the euro has improved, in another signal that conditions may be picking up.

Data released by the European Commission found that eurozone consumer confidence improved to -17.4 this month, better than June's -18.8. It's the best performance since August 2011.

In the European Union, consumer confidence rose to -14.8, from -17.5 in June.

Both readings still show that morale is weak, as you'd expect given the events of recent years – and the challenges ahead. The long-term average is zero (as the graph above shows).

Howard Archer of IHS Global Insight said the data was encouraging. Here's his early analysis:

Eurozone consumer confidence extended its recent improvement in July to be at a 23-month high, likely driven by increased optimism about the economic outlook and a slightly less pessimistic view of the recent economic situation. Consumers were also likely relatively sanguine about the inflation situation and outlook.

Hopefully, improving consumer confidence and the help to purchasing power coming from muted inflation across the Eurozone (just 1.6% in June) will provide increasing support to consumer spending and help Eurozone economic activity to stabilize and then finally start growing over the latter months of 2013.

Even so, a marked overall pick up in Eurozone consumer spending still looks unlikely in the near term at least. Despite being at a 23-month high in July, confidence is still limited compared to long-term norms while Eurozone consumers continue to largely face high and rising unemployment, generally muted wage growth and tight fiscal policy. This is particularly, the case in the southern periphery countries but it is also true for countries such as France and the Netherlands.

Updated at 3.50pm BST

2.50pm BST

Wall Street has opened higher, pushing the Dow Jones industrlal average to a new record intraday high.

The Dow hit 15604 at the start of trading, up 59 points or 0.37%, while the S&P 500 gained 0.2% to 1,699.94.

Updated at 2.55pm BST

2.29pm BST

Cypriot property prices have taken quite a hoofing since the country lurched into a rescue package in March, a new survey has found.

The Cyprus arm of the Royal Institution of Chartered Surveyors (RICS) calculates that apartment price fell by 12.6% in the last three months. Office space has tumbled by 23.3% during the quarter.

And with capital controls still in place, the only way is down, as Pavlos Loizou of RICS Cyprus explained:

Definitely the market is going to deteriorate further and faster than before. There is no lending available and people's money (in banks) is blocked.

This follows many years of steadily rising prices during the good days, which now look firmly behind Cyprus. More on Reuters: Acute property slump takes hold in bailed-out Cyprus: survey

1.49pm BST

Market update

European stock markets continue to be boosted by the encouraging news from Asia overnight.

China's determination to keep GDP growth at 7% or higher, and Japan's upgraded economic forecasts (see 8.15am) has pushed mining stocks up in London – they're packing the list of top risers on the FTSE 100:

FTSE 100 top risers, lunchtime July 23 2013
Photograph: Thomson Reuters

And the Spanish stock market is romping ahead, after the Bank of Spain predicted that GDP fell by just 0.1% in the last three months (see 9.44am). Spain also conducted a successful debt auction this morning, with borrowing costs.

That's sent the Spanish IBEX up 1.8%, followed by Italy's FTSE MIB which is up 1.2%.

The FTSE 100 (+0.2%) German DAX (+0.26%) and French CAC (+0.2%) are only posting meagre gains, after Asian markets pushed to six-week highs overnight.

Chris Beauchamp of IG says the City is calm and subdued:

With the eurozone mercifully quiet for now, the main driver remains corporate earnings.

London-listed miners are stretching their legs this morning after some suitably sunny comments from the Chinese premier. Beijing aims to keep growth above 7%; commendable as this is, saying something doesn’t make it true, even if the latest economic data indicated that consumer spending in China was helping to pick up the slack.

1.07pm BST

12.29pm BST

12.18pm BST

Turkey hikes overnight lending rate

Developments in Turkey, where the Central Bank has just hiked its overnight lending rate to 7.25%, from 6.5%.

It's the latest shot in its fight to stop the lira's value sliding — it's been under pressure since last month's protests in Instanbul.

The Bank of TurKey also warned that capital inflows are slowing, which it blamed on uncertainties within the global economy.

The instant reaction – the lira has risen against the US dollar to a one-month high of .9090. Turkish government bonds also strengthened, pushing down the yields on 10-year debt to 8.49%, from 8.69% before.

Updated at 12.18pm BST

12.10pm BST

More debtors being jailed in Cyprus – report

Here's a headline that reeks of Dickensian London: Rise in debtors adds to prison overcrowding

But it's not Victorian history. It's Cyprus today, where the financial crisis is driving more people into jail through non-payment of fines and "other debts".

Prison Governor Giorgos Tryfonides told the Cyprus News Agency (CNA) that efforts were being made to help such convicts pay off their debts in instalments.

“We are trying our best to make plans for payment of debt so an arrangement can be made with the attorney-general to postpone any punishment as long as the instalment is accepted by the plaintiff,” he said.

Due to the crisis, the number of people facing jail for financial reasons is on the rise compared to other years, Tryfonides said, adding on certain days up to five people might be imprisoned for similar offences.

Here's the full story: Rise in debtors adds to prison overcrowding.

Updated at 1.27pm BST

11.43am BST

11.40am BST

Greek PM gives ministers the hurry-up

Greek prime minister Antonis Samaras has now met with senior ministers to discuss meeting the country's bailout targets.

Kathimerini reports that Samaras ordered his colleagues to speed up the pace of reforms, ahead of the Troika's next visit in early September. It explains:

Prime Minister Antonis Samaras on Tuesday told key cabinet members in the two-party coalition to speed up structural reforms in the state sector in order to meet the targets set by the country's international creditors, who want to see progress in agreed changes to the public administration as a condition for releasing further life-saving funding.

Meeting at his Maximos Mansion headquarters, Samaras, his coalition partner and Deputy Prime Minister Evangelos Venizelos, and Finance Minister Yannis Stournaras, called for more urgency from the ministers of Interior Yiannis Michelakis, Administrative Reform Kyriakos Mitsotakis, Education Constantinos Arvanitopoulos, Development Costis Hadzidakis and Health Adonis Georgiadis.

More here.

11.23am BST

Green shoots in Ireland’s property sector? For some, anyway.

Irish residential property prices have posted their first annual rise since the financial crisis began.

Ireland's central statistics office reported that property prices rose by 1.2% in June, on a year-on-year basis. That's the first rise since January 2008.

Estate agents, though, report an uneven recovery – with prices up around 15% in Dublin in the last year.

10.47am BST

Video: Moscovici saying France is out of recession

Europe 1 has uploaded a video clip of Pierre Moscovici's interview this morning, in which the French finance minister predicts that France's recession is over.

Here's their story: Moscovici : "nous sommes en sortie de récession"

10.31am BST

Crewe gets green light for Bentley SUV

Back in the UK…there'll be a few celebrations in Cheshire today.

The Volkswagen Group has just announced that its first Bentley sports utility vehicle will be constructed at its headquarters in Crewe, creating up to 1,000 new jobs across the country. Bentley will invest some £800m at the site, VW added.

A nice fillip for the British economy, ahead of Thursday's GDP figures which are likely to show that growth picked up in the last three months.

10.28am BST

Rajoy to discuss slush fund scandal on August 1

A date for the diary – Spain's prime minister, Mariano Rajoy, will answer questions regarding the illegal payments scandal in parliament on August 1. More details here.

Yesterday, Rajoy bowed to pressure and announced that he would agree to be quizzed over the affair, centred on a former treasurer of his party accused of siphoning off millions of euros of secret cash payments.

10.18am BST

Spain's latest GDP forecasts (see 9.44am) bolster hopes that the eurozone will keep muddling through the crisis, argues Simon Nixon of the Wall Street Journal:

10.11am BST

UK mortgage approvals rise again

In the UK, the British Bankers Association has reported that mortgage approvals rose to a 17-month high of 37,278 in June, up from 36,290 in May.

Quite an improvement on February's 31,109 – the month before UK chancellor George Osborne announced new measures to stimulate the housing market.

Osborne's been meeting with the industry this morning to discuss his Help to Buy Scheme — which critics claim will fuel a new price bubble.

But as my colleague Rupert Jones reports, planned income checks and "stress testing" means many people with less-than-perfect credit records could be barred from the £12bn scheme.

Credit history will bar many from £12bn scheme for homebuyers

Updated at 10.20am BST

9.44am BST

Bank of Spain sees recession slowing

Spain has now endured a recession for the last two years, but the pace of the downturn is finally slowing, according to official forecasts released this morning.

The Bank of Spain predicts that GDP shrank by just 0.1% in the last three months. That would be a much smaller contraction than the 0.5% drop in output recorded in the first quarter of this year.

On an annual basis, the Bank believes the Spanish economy had shrunk 1.8% over the last 12 months — again, a small improvement on Q1's reading, of 2%.

The Bank said that 'strong exports' had helped to moderate the pace of the downturn.

We get official GDP data for April-June next month, which will show whether or not the Spanish recession has really lasted for eight quarters, having begun in the second half of 2011.

The Madrid government has pinned its hopes on the recovering beginning in the current quarter.

Analysts fear, thought, that the country's banks are too weak to support a bounce-back — as their levels of toxic debts are still rising.

There are also concerns that this year's tourist season could be weaker than hoped, as holidaymakers across Europe tighten their belts.

Bloomberg has a report here:

Spanish Sunshine Season Overshadowed by Growth Doubts

It begins:

In Almeria’s Cabo de Gata natural park, one of the few unspoilt stretches left of Spain’s southern coast, Hotel Tio Kiko is close to full. Its owner, Jose Venzal Alonso, isn’t optimistic though.

“I can’t say I see an economic recovery,” the 51-year-old hotel manager says in a telephone interview, speaking with a heavy southern Spanish accent. “All our clients are saying so, that they can’t afford to stay more than three days when they would happily come for six before the crisis. We used to have a full house much earlier in the season.”

9.25am BST

Moscovici: French recession is over

France's Finance Minister Pierre Moscovici attends a news conference, part of the G20 finance ministers and central bank governors' meeting, in Moscow, July 19, 2013.
France’s finance minister Pierre Moscovici. Photograph: GRIGORY DUKOR/REUTERS

France's finance minister has declared that the French recession is over, hot on the heels of this morning's upbeat industrial morale reading (9.07am).

Speaking on Europe 1 radio, Pierre Moscovici cited forecasts from the Bank of France and INSEE for growth of 0.2% in the second quarter of this year. That would reverse the contraction of 0.2% in the first three months of 2013, which pushed France into Le Double DIp.

Moscovici declared:

Now we need to work to transform this exit from recession into a genuine recovery.

(quotes via Reuters).

France's economy has been stagnating over the last two year, as this graph shows:

French GDP
French GDP. Photograph: INSEE

9.07am BST

French industrial morale rises

There's reasons for optimism in France too this morning, where optimism among industrial firms has risen to its highest level for over a year.

Despite concerns over France's fiscal position, INSEE's monthly survey of industrial morale rose for the fourth month in a row, to 95. That's a rise on June's 93, and better than analysts expected. But it's still low in historical terms, where 100 is the long-term average.

The broader measure of business confidence also rose, to 87, from 86. Again, better, but still weak, as these charts show:

French business morale, July 23
French business morale, July 23 Photograph: /Thomson Reuters
French business morale graph, July 23
French business morale over the last 20 years. Photograph: /Thomson Reuters

8.37am BST

Greece pushing civil service job cuts

In Greece, meanwhile, the government is cracking on with the task of meeting the targets agreed with its lenders, including cutting thousands of public sector jobs.

Prime minister Antonis Samaras has summoned his top ministers to a meeting on Greece's "mobility scheme' – a key part of the strategy to lay off tens of thousands public sector workers.

Deputy PM Evangelos Venizelos, finance minister Yannis Stournaras and administrative reform minister Kyriakos Mitsotakis are all attending.

Kathimerini has more details:

Samaras is likely to press ministers to speed up the evaluation of staff at their ministries to ensure the project remains on track. Mitsotakis, who has been tasked with overseeing the civil service overhaul, appealed to his colleagues to join the effort. “I have repeatedly said that the job of administrative reform is being overseen by this ministry but, if we are to hit the targets, all the ministries must be involved.”

But the mobility scheme remains deeply unpopular with the workers who face being moved into it on lower pay, with the threat of being laid off. As reported in Monday's liveblog, schoolteachers held a protest rally in Athens yesterday…and medical staff are planning a strike tomorrow.

Updated at 8.37am BST

8.15am BST

Asian markets hit six-week high

Chinese Premier Li Keqiang addresses a symposium on the economic situation of a number of provinces and regions in Nanning, capital of southwest China's Guangxi Zhuang Autonomous Region, July 9, 2013
Chinese premier Li Keqiang, who pledged today to keep GDP growth at 7% or higher. Photograph: Ma Zhancheng/Xinhua Press/Corbis

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

We start with encouraging signs from Asia, where bullish talk from Chinese premier Li Keqiang and the Japanese government have sparked a share rally overnight.

Li tried to calm fears that the Chinese economy was stalling, telling businessmen in Shanghai that the country’s “bottom line” for economic growth is 7% in future (it slowed to 7.5% in the last quarter).

The comments came amid local reports that Beijing will drive investments in high-speed railways to help reduce overcapacity in sectors such as cement and steel.

Cue optimism across the region. As Alvin Pattisahusiwa, a director of investment at PT Manulife Aset Manajemen Indonesia, put it:

Li’s statement provides assurances for investors that there won’t be negative surprises in the country.

That's welcome news in Europe too, where there are fears that China could slide into an economic hole before the eurozone manages to dig itself out of its own predicament.

And with Tokyo's Cabinet Office upgrading its economic outlook for the third month in a row, there's a little more optimism about prospects in the month ahead.

The Cabinet Office declared that the Japanese economy was "steadily picking up", and moving towards a "self-sustainable recovery", adding:

Recent price developments indicate that deflation is easing.

This stream of news sparked a decent rally in Asia, driving markets to a six week high. China's CSI 300 jumped 2.5%, driven by railway company shares, while the Hong Kong Hang Seng is up 3.5%.

And in Europe, traders are joining in – with the main indices all gaining ground (the FTSE 100's up 27 points at 6650.

Otherwise, as you may have already deduced, it's a quiet morning, as Europe slides into its summer lull. I'll be covering all the key developments through the day, though…..

Updated at 9.04am BST

guardian.co.uk © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

In the trading room today: EUR and USD: Is this the Calm Before the Storm? As the EUR/USD exchange rate still fluctuates within its range, we examine the drop in volatility and ponder if this is simply the calm before the storm which could be triggered as a result of the big upcoming events in the week ahead, we analyze the test of a resistance level in the EUR/USD currency pair, we take a look at the rally of the GBP vs USD, we note the strengthening of the USD vs JPY, we highlight the market’s reaction to the US Existing Home Sales and the Chicago PMI, we discuss new forecasts from HSBC and UBS, and prepare for the trading session ahead.

New Portuguese PM Passos Coelho: we must rebuild confidence. Junior partner gets responsibility for Troika talks. Relief as bond yields tumble. Analysts: 2nd bailout looks likely. Europe’s collective debt keeps rising. Protests scheduled in Greece today…

 


Powered by Guardian.co.ukThis article titled “Portugal’s borrowing costs slide as PM vows to stick to bailout terms – as it happened” was written by Graeme Wearden, for theguardian.com on Monday 22nd July 2013 16.00 UTC

5.17pm BST

Closing summary

That's all for the day. Here's a round-up of the main events.

Portugal's prime minister has pledged to stick to the terms of the country's bailout, after weeks of political turbulence. Pedro Passos Coelho told a press conference that he was committed to the current economic plan, and to rebuilding confidence with the rest of the world.

Passos Coelho also confirmed that his junior coalition partner would take a prime role in negotiating with its troika of lenders. (see 12.03pm onwards).

There was general relief after Portugal's president announced last night that he would not seek an early general election, following the collapse of talks over a 'National Salvation' government. (see 7.59am)

Portugal's government bonds strengthened through the day, as traders calculated that its debt was less risky. Shares in Lisbon also rallied. (see 12.12pm for details of the bond rally, and 5pm for the closing market prices).

But despite the relief, many City experts believe Portugal may need a second aid deal when its bailout runs out. See 8.53am and 10.52am for the latest analysis.

Spain's prime minister bowed to pressure over its slush fund scandal. Mariano Rajoy said he would answer questiosn on the issue in the next few weeks. (see 4.22pm onwards)

In Greece, anger over public sector job cuts has not abated. Teachers held another protest in Athens (photos at 3.04pm), while medical staff are planning a strike on Wednesday (see 2.54pm).

And the eurozone's debt pile kept growing. Total government borrowing now equals 92.2% of GDP. Greece, Spain, Ireland, Portugal and Cyprus suffered the biggest increases. (See 10.27am onwards).

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

5.00pm BST

Relief rally on Portuguese stock market

Portugal's PSI20 over last three months, to July 22
Portugal’s PSI20 over the last three months. Photograph: /Thomson Reuters

Portugal's stock market has posted strong gains today, on relief that the country is not lurching towards an early general election.

The PSI index closed almost 2.5% higher, led by financial stocks, with two banks posting double-digit gains.

BIggest risers on the PSI 20, July 22 2013
BIggest risers on the PSI 20, July 22 2013 Photograph: /Thomson Reuters

And Portuguese government debt rallied through the day. The yield on 10-year bonds remains sharply lower tonight at 6.39%, from nearly 7% before trading began today.

It was a quieter day in other markets, though, as the summer slowdown kicks in.

Closing prices.

• PSI 20: up 126 points at 5651, + 2.3%

• FTSE 100: down 7.5 points at 6623, -0.1%

• German DAX: down 0.5 points at 8331, – 0.01%

• French CAC: up 14 points at 3939, +0.37%

• Spanish IBEX: up 22 points at 7966, + 0.29%

• Italian FTSE MIB: up 109 points at 16233, + 0.68%

David Jones, chief market strategist at IG, sums up the situation in London:

It has been a drowsy day on the market, with the FTSE 100 drifting aimlessly for most of the day, as London enjoys what might be the end of the current heatwave. Economic data has been a touch poorer, but not bad enough to inspire panic or change expectations about central bank policy.

Overall, today’s market has something of the 'coiled spring' about it, seeming to be waiting for an excuse to move higher.

4.36pm BST

And here are the key quotes from Spanish PM Mariano Rajoy this afternoon (via Reuters)

I have talked to the head of parliament and I have told him that I would ask to appear at the end of the month or at the beginning of August.

I will appear before parliament in order to give full explanations because I believe that's where I should do it.

4.22pm BST

Rajoy will answer slush fund questions

Spanish Prime Minister  Mariano Rajoy (R), and his Romanian counterpart, Victor Ponta, during a joint press conference held after their meeting at La Moncloa Palace in Madrid, Spain, 22 July 2013.
Spanish Prime Minister Mariano Rajoy (right) with Romanian counterpart, Victor Ponta, during a joint press conference today. Photograph: BALLESTEROS/EPA

Important developments in Spain. The prime minister has announced he will appear in parliament in the next few weeks to answer questions over the slush fund scandal that has dominated Spanish politics for months.

Mariano Rajoy told a press conference this afternoon that he will answer questions over allegations that Luis Barcenas, former Popular Party treasurer, ran an illegal payments operation which benefitted top party officials, includign Rajoy himself.

The session is likely to take place at the end of July, or the beginning of August.

Rajoy announced the plan at a press confernence with the prime minister of Romania today, as journalist José Miguel Sardo explains:

Rajoy has been under mounting pressure since new documents and text messages released this month appeared to move him closer to the scandal. The PM has repeatedly denied any involvement, while avoiding answering questions about the allegations.

Many protests have taken place in Spain, with people calling for his resignation. And a poll published on Sunday found that almost 90% of Spaniards believe Rajoy should give a full account.

Sounds like they may get their wish….

4.09pm BST

On a lighter note, former Bank of England governor Sir Mervyn King has been enrolled into the House of Lords today.

Lord King (in the middle of the ermine-clad trio in the tweet above) won't be gracing the red leather benches every day — as he's also accepted a position of visiting professor at New York University's Stern School of Business and School of Law.

3.36pm BST

Key event

Open Europe, the think tank, has blogged on the latest developments in Portugal, here:

Beyond appearances, the recent political crisis has changed things in Portugal

It argues that the promotion of junior coalition leader Paulo Portas to deputy PM (see 1.10pm) with responsibility for dealing with the troika, is an important change:

Let's not forget Portas tendered his resignation from the government because he disagreed with Prime Minister Pedro Passos Coelho over the appointment of Maria Luís Albuquerque as new Finance Minister. On that occasion, Portas made clear that he was hoping for a change in the country's economic policy approach (in substance, less austerity).

That could mean further tensions between the coalition, with Portas's conservatives pushing for less austerity, while the prime minister's Social Democrats stick to the current policy.

3.04pm BST

Photos: Greek teachers protests in Athens

And here's a few photos from Athens of the protest held today by Greek schoolteachers (10.01am), against plans to move 2,000 staff in a mobility scheme, which could lead to being laid off.

A protesting high-school teacher chants slogans in central Athens, Monday, July 22, 2013.
A protesting high-school teacher chants slogans in central Athens, Monday, July 22, 2013. Photograph: Thanassis Stavrakis/AP
A teacher stands in front of riot police during a protest against public sector reforms and layoffs outside the Finance Ministry in Athens July 22, 2013.
A teacher stands in front of riot police outside the Finance Ministry. Photograph: JOHN KOLESIDIS/REUTERS
A protesting high-school teacher stands in front of riot police officers outside the Finance Ministry, in central Athens, Monday, July 22, 2013.
Photograph: Thanassis Stavrakis/AP

2.54pm BST

Greek healthcare workers to strike

More industrial unrest in Greece. Kathimerini reports that heathcare workers will be striking on Wednesday, in protest at plans to transfer workers to the new 'labour pool' (part of the programme for cutting thousands of public sector jobs)

It reports:

Public hospitals, health centers and the ambulance service will operate with skeleton staff on Wednesday due to a strike by employees.

Doctors and nurses have called the action to protest the government’s plans to place 2,500 healthcare staff in a mobility scheme which will lead to them being transferred or dismissed.

Updated at 2.54pm BST

2.38pm BST

First UK fine for high-frequency trader

Meanwhile in the City, the Financial Conduct Authority (FCA) has slapped a fine of nearly £600,000 on a high-frequency trader for manipulating the oil price.

The City watchdog has announced this lunchtime that Michael Coscia had been penalised for running an "abusive trading strategy" in which he would place a small buy order, then flood the market with large sell orders to move the oil price. The instant the buy order was taken he'd cancel the large sell orders, then repeat the process in reverse to square out the position.

That strategy yielded decent profits for Coscia, at the expense of the rest of the market. As the FCA explains (full details here):

Between 6 September 2011 and 18 October 2011 Coscia used an algorithmic programme of his own design to instigate an abusive trading strategy known as “layering”.

During this time, Coscia placed thousands of false orders for Brent Crude, Gas Oil and Western Texas Intermediate (WTI) futures from the US on the ICE Futures Europe exchange (ICE) in the UK.

Taking advantage of the price movements generated by his layering strategy, Coscia made a profit of US 9,920 over the 6 week period of trading at the expense of other market participants – primarily other High Frequency Traders or traders using algorithmic and/or automated systems.

This is the first time the FCA has taken enforcement action against a High Frequency Trader.

American regulators are also imposing financial penalties, relating to trading on US oil exchanges.

High-frequency trading uses high-powered computers, high-speed links and sophisticated algorithms to execute trades in fractions of a second. Supporters of HFT say it increases liquidity and means the gap between buy and sell orders is narrowed.

However, it has been blamed for sparking wild swings in prices, such as in the Wall Street Flash Crash of 2010.

Its critics include many MEPs, who voted last autumn to ban HFT in a clampdown on 'purely speculative' financial activity – even though it (unlike Coscia's activities) does not breach any rules. That ban has yet to come into law, and was opposed by the UK.

Updated at 2.41pm BST

1.10pm BST

Portuguese reshuffle on the way

Portugal's PM has now announced that Paulo Portas, his junior coalition partner will be given responsibility for "co-ordinating" negotiations with the Troika.

Pedro Passos Coehlo also confirmed that Portas will become Portugal's new deputy prime minister — proving that old adage that a well-timed resignation can do wonders for a career*.

It was Portas's shock decision to quit on July 2 that inflamed the crisis, a day after former finance minister Vitor Gaspar threw in the towel.

There's going to be a wider cabinet reshuffle too – but the details aren't available yet.

Latest newsflashes:

  • 12:40 – PORTUGAL PRIME MINISTER SAYS MY INTENTION REMAINS TO RESHUFFLE CABINET, TERMS TO BE DETAILED
  • 12:41 – PORTUGAL PRIME MINISTER SAYS RESHUFFLE PROPOSAL IS FOR JUNIOR COALITION PARTNER PORTAS TO BE DEPUTY PM
  • 12:43 – PORTUGAL PRIME MINISTER SAYS RESHUFFLE WOULD MAKE PORTAS COORDINATOR OF TALKS WITH LENDERS, SPENDING REFORM

* – don't try this in the office, folks….

Updated at 1.23pm BST

12.38pm BST

Portuguese 10-year bond yields in July
Portuguese 10-year bond yields in July. Photograph: Thomson Reuters

12.33pm BST

Portuguese borrowing costs back at pre-Gaspar levels

Portuguese bond yields have now fallen back to the levels seen at the start of July, before finance minister Vitor Gaspar sparked the crisis by resigning.

12.12pm BST

Key event

Portuguese government bonds are on a roll this morning, leaping in value as investors welcome prime minister Passos Coelho's commitment to Portugal's bailout plan, and the news that early elections have been ruled out.

The yield (interest rate) on its 10-year bonds has now tumbled to 6.4%, down from 6.92% on Friday night.

Portuguese 10-year bond yields, July 22 2013
Photograph: /Thomson Reuters

12.03pm BST

Portugal’s PM: we will rebuild confidence

Portugal's prime minister has vowed to stick to the country's bailout programme, and rebuild confidence in the country following the confusion and discord of the last fortnightthree weeks.

Pedro Passos Coelho said that his government remained to delivering the targets agreed with its Troika of lenders. That includes exiting its bailout in 2014, he insisted. 

In his first speech since president Cavaco Silva ruled out early elections last night, Passos Coelho declared:

We will rebuild the confidence without raising any doubts about the process we are carrying out, saying 'yes, we want to complete the assistance programme on the agreed date'.

Passos Coelho also argued that Portugal's difficult circumstances means its auterity programme must continue, as flagged up at 11.34am.

Updated at 12.30pm BST

11.34am BST

Hot off the terminal

News flashes from Portugal:

• 11:27 – PORTUGAL PRIME MINISTER SAYS AUSTERITY IS IMPOSED BY COUNTRY'S DIFFICULT CIRCUMSTANCES 22-Jul-2013

• 11:30 – PORTUGAL PRIME MINISTER SAYS NEED PROFOUND REFORMS TO REBUILD CONFIDENCE 

• 11:31 – PORTUGAL PRIME MINISTER SAYS POLITICAL CRISIS HAS DENTED CONFIDENCE 22-Jul-2013

•11:32 – PORTUGAL PRIME MINISTER SAYS WE WANT TO COMPLETE BAILOUT PROGRAMME AS AGREED IN MID-2014 

More to follow….

11.20am BST

Worst debt/GDP performers

Another point on today's eurozone government borrowing figures (see 10.27am onwards) — the countries suffering the biggest rise in debt, as a percentage of GDP, are all in bailout programmes or trying desperately to avoid one.

Over the last year, the highest increases in the GDP/debt ratios were recorded in Greece (+24.1 percentage points), Ireland (+18.3%), Spain (+15.25%), Portugal (+14.9%) and Cyprus (+12.6%).

Across the EU, twenty-four Member States registered an increase in their debt to GDP ratio at the end of the first quarter of 2013.

The three who achieved a decrease over the last 12 months were Latvia (-5.1%), Lithuania (-1.9%) and Denmark (-0.2%). [Germany posted a fall over the last three months, but not year-on-year].

Updated at 11.25am BST

11.11am BST

The BBC's Gavin Hewitt agrees that today's eurozone debt levels (see 10.27am) shows how the region's austerity programmes have failed to lower the region's borrowing, as a percentage of national output.

Both Greece and Italy's figures show the negative impact of those austerity programmes – it's hard to cut your debt-to-GDP ratio if your economy is shrinking.

Updated at 11.17am BST

10.52am BST

Eurasia Group: Portugal unlikely to exit bailout smoothly

Back to Portugal. Mujtaba Rahman, Europe director at Eurasia Group, agrees that Pedro Passos Coelho's coalition government is unlikely to hang on until 2015.

Rahman also warns that Portugal's chances of exiting its bailout next year are receding, following the collapse of the 'national salvation' talks on Friday night (see 7.59am).

We'll get a clearer picture of the situation this autumn, when Portugal's lenders return to assess the situation, as Rahman explains:

As a result of the political impasse over the course of the last month, the eighth Troika review will now most likely take place alongside the ninth review, at some point in late September/early October.

As we've previously argued, there is implicit policy space within the program to account for the developments of recent days. The next big milestones are the passage of a number of bills related to state reform (for example, measures on voluntary dismissals; streamlining the expenditures of line ministries and pension reforms, among others) that are supposed to inform the draft budget for mid/late-October and, in so doing, the fiscal targets for 2014-15. As long as these bills are passed by the parliament by mid/late-October, the fiscal situation-at least in terms of government effort-should still be on track.

Still, given the developments of the last several weeks, this is unlikely to improve the prospects for smooth program exit and follow-up next year.

10.27am BST

Europe’s debt pile keeps growing

The collective national debt of the eurozone jumped to 92.2% of annual economic output in the first quarter of 2013, from 90.6% three months earlier.

Only two euro-area countries cut their debt, as a percentage of GDP, over the last year – Germany and Estonia – according to new data released by Eurostat this morning.

Across the wider European Union, the government debt pile rose to 85.9% in the first three months of 2013, up from 85.2% in the previous quarter.

A year ago, the eurozone debt-to-GDP ratio was 88.2%, compared to 83.3% for the EU. So, after another year of austerity programmes and a recession, Europe's debt position has worsened.

Eurostat's full release is online here, and explains:

The highest ratios of government debt to GDP at the end of the first quarter of 2013 were recorded in Greece (160.5%), Italy (130.3%), Portugal (127.2%) and Ireland (125.1%), and the lowest in Estonia (10.0%), Bulgaria (18.0%) and Luxembourg (22.4%).

Eurozone debt/GDP levels
Photograph: Eurostat

10.01am BST

Greek teachers to protest today

Over in Greece, schoolteachers are planning another protest as the first wave of public sector job losses begins.

The Federation of Secondary Schoolteachers (OLME) has called a demonstration for noon today (10am BST). It is unhappy that 2,000 teachers are being removed from their technical and vocational high schools, and transferred to the 'labour reserve'. They could be laid off early next year, if new positions have not been found for them.

OLME is planning legal action to prevent the transfers going ahead, despite MPs approving the legislation to bring in public sector job cuts last week.

Updated at 10.07am BST

9.32am BST

Portuguese debt continues to rise in value…

8.53am BST

A second bailout for Portugal? What the analysts say

Several analysts, are suggesting today that Portugal will need a second aid programme, when its existing €78bn bailout ends in 2014.

Jamie McGeever of Reuters sums up this morning's research notes:

Michael Hewson of CMC Markets commented:

With the next troika report delayed until after the German elections, both parties are expected to stagger on trying to implement the bailout agreement as the Portuguese president decides on what steps to take next. This failure to adopt consensus is becoming all too familiar in the politics of southern Europe and is likely to jeopardise any prospect of Portugal being able to return to the markets next year.

What seems more likely is that the country will probably need another bailout.

While David Buik of Panmure Gordon agrees that debt restructuring is inevitable, in Portugal and beyond:

Even if an election is avoided, Portugal economically is still hanging in rags, as is Spain and Greece!…

The sooner there is a realisation that Ireland, Portugal, Greece and probably Spain has no chance of repaying or sustaining its debt and that haircuts will need to be taken across the spectrum, the quicker we can all get on with our lives.

8.37am BST

Portuguese stock market rises

Shares have also risen on the Lisbon stock market, although we've seen more vigorous relief rallies in our time.

The PSI 20 is up 31 points at 5556, +0.57%

Most other European markets are sliding a little, but it's all rather tame:

FTSE 100: down 16 points at 6614, -0.25%

German DAX: down 6 points at 8325, – 0.1%

French CAC: down 5 points at 3920, -0.1%

Spanish IBEX: down 5 points at 7937, -0.07%

• Italian FTSE MIB: up 16 points at 16141, + 0.1%

There's little major economic news on the calendar, so it could be a quiet day in the City….

8.30am BST

Portuguese bonds strengthen

Portuguese government debt has risen in value this morning, as investors welcome the decision not to call early elections in Portugal.

This has pushed the interest rate, or yield, on Portuguese 10-year bonds down to 6.84% (as measuresd by Tradeweb), from 6.92% on Friday. Further away from the 7% 'danger zone', where a country is priced out of the markets [Portugal's immediate borrowing needs are covered by its bailout, of course].

Updated at 10.50am BST

7.59am BST

Portuguese president backs coalition after turbulent days

Portuguese President Anibal Cavaco Silva arrives prior to addressing the nation from Belem Presidential palace in Lisbon on July 21, 2013.
Portuguese president Anibal Cavaco Silva arriving to address the nation from Belem Presidential palace in Lisbon last night. Photograph: PATRICIA DE MELO MOREIRA/AFP/Getty Images

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

Like the thunder over London early this morning, Portugal's political crisis is rumbling on.

After nearly three weeks of turmoil, Portuguese president Anibal Cavaco Silva has backed the present government and ruled out early elections. This despite the country's main political parties failing to agree the 'National Salvation' deal he had called for.

Speaking to the nation last night, Cavaco Silva declared:

The best solution is to keep the current government in power….

I think in the current context of national emergency, calling elections is not a solution for the problems Portugal is facing.

Adding:

It is important to show our European partners that Portugal is a governable country.

Cavaco Silva adressed the Portuguese people after a week of talks between the centre-right coalition and the socialist opposition broke up without an agreement on Friday night. The Socialists, it seems, were not prepared to back Portugal's painful bailout programme.

So having failed to whisk up a government of national salvation, Cavaco Silva has now thrown his support behind prime minister Pedro Passos Coelho. He'll continue to lead the coalition, alongside deputy leader Paulo Portas whose resignation 13 days ago ignited the tinderbox of austerity fatigue and economic gloom.

By not calling for early elections, Cavaco Silva has dampened down fears over Portugal's immediate future. But its chances of returning to the financial markets in 2014 are looking thinner. Without a unity government, it will be harder to push through any further austerity measures that may be needed to keep Portugal's financial programme on track.

Unlike lightning, eurozone bailouts certainly can strike twice. Will Portugal need another?

I'll be tracking the situation in Portugal through the day, along with the latest developments across the eurozone and beyond...

Updated at 12.30pm BST

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