July 9 2013

In the trading room today: Will the EUR Correct Recent Losses vs USD? As Greece gets an approval for additional financial aid, we explore the potential for the EUR to correct some of its recent losses against the greenback and examine the near-term outlook for the single currency, we analyze the latest trend developments in the EUR/USD currency pair, we note the renewed weakness in the GBP/USD pair, we continue to monitor the rally of the USD vs JPY, we highlight the market’s reaction to the Eurogroup’s decision on financial assistance for Greece, the UK Industrial Production and Trade Balance, and the German Industrial Production, we discuss new forecasts from Bank of New York-Mellon and Banco Santander, and prepare for the trading session ahead.


Disappointing UK trade data and industrial output. IMF calls for concerted action in euro area. Protest rally in Greece today after loans approved. The agenda- new IMF forecasts due. Markets head higher in today’s trading session…


Powered by Guardian.co.ukThis article titled “Eurozone crisis: IMF cuts growth forecasts amid new Greek protests – as it happened” was written by Graeme Wearden, for theguardian.com on Tuesday 9th July 2013 14.56 UTC

5.59pm BST

Closing summary

Time to wrap up for the day. Here's a brief closing summary with links to the key points in the blog.

The International Monetary Fund has cut its growth forecasts, admitting that the world economy has not met its expectations since April. The IMF warned that emerging economies were hitting roadblocks, while the eurozone was being held back by its weak banks and record unemployment. See 2.30pm for details and press conference highlights.

The UK, though, was one of the few countries whose growth prospects were revised up. The Treasury said it showed Britain was healing, but critics said the recovery was too weak (see 2.36pm and 3.38pm onwards).

In the eurozone, there was relief that finance ministers had agreed to extend Greece most of its next bailout tranche last night.However, a think tank warned that the economy will shrink by more than expected this year (see 1.45pm)

Municipal workers, who face losing their jobs through Greece's bailout programme, held another strike today. Up to 3,000 employees held a protest rally in Athens (see 1.02pm onwards)

epa03781500 Greek municipal employees protest in front of the Greek Parliament against a suspension decision and possible future layoffs in Athens, Greece, 08 July 2013.
Greek municipal employees protesting in front of the Greek Parliament today. Photograph: ALKIS KONSTANTINIDIS/EPA

Shares rose across Europe's financial markets, fuelled by hopes for economic growth after Alcoa, the world's largest aluminium producer, posted decent results last night.See 5.09pm for closing prices.

In the UK, the latest economic data showed that manufacturing output fell last month. Economists said the survey raised the chances of the Bank of England announcing new stimulus measures in August (see 9.39am onwards for details and reaction)

Britain's trade gap also widened in May. But exports to non-EU states hit a new record high (see 12.10pm).

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

5.35pm BST

Hark! I hear the sound of the European Central Bank scrambling to fix the damage caused by Jorg Asmussen's interview today.

Apparently Asmussen just meant to confirm that rates would stay low for an 'extended period', and did not mean to suggest this would be more than a year.

According to Reuters, though, Asmussen said:

(ECB President) Mario Draghi said in his press conference it is not six months, it's not 12, it goes beyond.

The perils of dabbling with forward guidance – especially in the vague way the ECB has done.

5.09pm BST

Markets close

FTSE 100. last 3 months. to July 9
Photograph: Thomson Reuters

The IMF's warnings of an emerging market slowdown and a deeper eurozone recession this year did not spook the financial markets.

European stocks finished at their highest level in a month, as the upbeat mood that began this morning survived the day's ups and downs.

• FTSE 100: up 63 points at 6513m +1%

• German DAX: up 93 points at 8062, +1.2%

• French CAC: up 22 points at 3846, +0.58%

• Spanish IBEX: down 2 points at 8014, -0.03%

• Italian FTSE MIB: down 9 points at 15790, – 0.06%

In the bond markets,UK and German sovereign debt strengthened, but the yields on Spanisn and Italian bonds rose [prices up means yields, or borrowing costs, are down]

10-year bond yields tonight (not closing prices)

• US: flat at 2.63%

• UK: 2.44%, down 4 basis points (or 0.04%)

• Germany: 1.65%, down 4bp

• Spain: 4.71%, + 6bp

• Italy: 4.42%, +4bp

• Greece: 11.1%, + 15bp

Updated at 5.09pm BST

4.21pm BST

Video: The IMF’s new forecasts

Here's BBC News's piece on the International Monetary Fund's new forecasts, including highlights from Olivier Blanchard's press conference, and comment from World First's Jeremy Cook:

4.17pm BST

4.16pm BST

In the currency markets….

Meanwhile, the pound continues to be pummelled on the foreign exchanges, hitting a three-year low of .4812.

This morning's weak manufacturing data (see 9.39am onwards) is being blamed, with economists expecting yet more quantitative easing from the Bank of England in August.

And the euro has also fallen against the dollar, after the European Central Bank's Jorg Asmussen revealed that last week's guidance of low rates for an 'extended period' meant more than 12 months (Mario Draghi had been rather more vague).

Here's Asmussen's full interview, which sent the euro as low as .278.

3.56pm BST

Ed Ball: Infrastructure spending still essential

Shadow chancellor Ed Balls argues that the UK government should still bring forward structural spending, as the IMF argued after its official healthcheck of the UK economy:

These forecasts confirm that, after three years of flatlining, the IMF believes Britain's economic recovery will remain weak. While this year's figure has been revised up, it is disappointing that this is still a lower forecast than the IMF was making at the start of this year.

And the IMF's advice to George Osborne remains unchanged. As they said just a few weeks ago, Britain is a long way from a strong and sustained recovery and so the government should bring forward infrastructure investment right now to create jobs and growth.

George Osborne did pledge £100bn of infrastructure projects in last month's spending review (details)…

3.41pm BST

TUC: UK is experiencing a less rubbish recovery

Here's the official reaction to the IMF's new forecasts from the TUC's general secretary, Frances O’Grady:

The IMF upgrade is welcome, if unsurprising. But raising growth forecasts from rubbish to not quite so rubbish hardly constitutes a strong recovery. The UK is still on course for the slowest recovery in over a century, and growth this year will still be well below the OBR’s initial forecast of 2.9 per cent.

UK economic growth is slow and limited to a few industries and areas of the country. And with wages continuing to fall in real terms, most ordinary workers are not feeling any sort of recovery at all.

The case for a plan B – replacing austerity with investment in infrastructure and proper employment schemes for young people – is just as strong.

3.38pm BST

Treasury: We’re on the road to recovery

No surprise that the the UK Treasury has welcomed the IMF's upgrade – three months after being furious at Olivier Blanchard for suggesting George Osborne should change course.

A Treasury spokesperson said:

The IMF has confirmed that the UK economy is moving from rescue to recovery, revising up its growth forecast for this year.

But the IMF again warns of the continued risks to the global economy, showing that the recovery cannot be taken for granted.

3.36pm BST

NIESR predicts stronger UK growth in Q2

Bang on queue – the NIESR think tank has predicted that the UK economy grew by 0.6% in the second quarter of 2013.

If accurate, that would mean that growth picked up nicely after the 0.3% expansion in the January-March period. No wonder the IMF's raised its forecast…

3.13pm BST

UK – still a weak recovery

Thomas Helbling of the IMF
Photograph: IMF

Asked about the decision to revise UK growth predictions up (2.30pm onwards), defying the general mood, the IMF argued that we shouldn't get carried away.

Thomas Helbling, division chief of the World Economic Studies division, said that the change (from +0.6% to +0.9%) was pretty normal. It reflected the fact that growth in the first quarter was stronger than expected (+0.3%), and positive signs from the last three months.

Heibling said:

It doesn't change the big picture in the UK, that the recovery is weak…

and added that policymakers should be alert to the need to do more to secure the recovery.

No mention of the UK 'playing with fire', as Olivier Blanchard famously warned in April….

3.08pm BST

Eurozone gloom

The IMF warned that the eurozone has struggled more than it expected three months ago, as it warned that the recession will be deeper than previously feared.

It now expects GDP to fall by 0.6% across the eurozone this year, down from 0.4% before. It is particularly worried about Italy, predicting a 1.8% contraction this year (down from 1.5%).

And the recovery in 2014 will be a ilttle feebler, it says, with GDP rising by just 0.9%, not 1%.

The IMF said the eurozone suffered from:

low demand, depressed confidence, and weak balance sheets [which] interacted to exacerbate the effects on growth and the impact of tight fiscal and financial conditions.

2.49pm BST

Read the report yourself

2.47pm BST

Japan growth forecast hiked

Japan, along with the UK (see 2.36pm), is one of the few countries to be upgraded by the IMF this afternoon — growth of 2% is now expected this year, up from 1.5%.

Olivier Blanchard said there had been a clear increase in confidence since the launch of the Abenomics stimulus package earlier this year. But the IMF remains cautious, citing several dangers to Japan.

They include the risk that bond investors will worry about debt sustainability (Japan's ability to repay its debts). If they demand higher rates, that would put Abenomics in trouble, he added.

2.41pm BST

Blanchard: Emerging markets have hit speedbumps

Olivier Blanchard, chief economist at the International Monetary Fund
Olivier Blanchard, chief economist at the International Monetary Fund Photograph: /IMF

The iMF's chief economist, Olivier Blanchard, has warned that emerging markets face cyclical and structural problems.

Speaking at a press conference now (live here), Blanchard said that the IMF saw slightly slower growth across most economies, compared to April. This is particularly clear in the BRIC economics (Brazil, Russia, India and China), he warned:

After years of strong growth, the Brics are beginning to run into speedbumps.

For example, the IMF expects China to grow by 7.75% this year and next year, which is 0.25% (for 2013) and 0.5% (2014) less than before.

Updated at 2.44pm BST

2.36pm BST

…but raises UK forecast

However, the IMF has raised its forecast for UK growth. It now expects GDP to increase by 0.9% this year, up from 0.6% back in April (when it actually cut the forecast from 0.9%).

My colleague Phillip Inman explains:

Britain will grow faster this year than previously expected according to the International Monetary Fund (IMF), in the first major upgrade of the UK’s economic outlook for almost three years.
The economy will expand by 0.9% compared with the previous forecast of 0.6%, the IMF said in its quarterly global financial health check. But a lacklustre performance by developing countries, a prolonged eurozone recession and US spending cuts will hamper plans to increase exports and restrict Britain’s GDP growth in 2014 to 1.5%, it added.
George Osborne will be cheered by the more upbeat outlook after suffering two years of brickbats from the IMF, which has lectured the government on taking a more expansionary stance and delaying public spending cuts. Yet growth of 1.5% next year could still be too weak to improve employment or spark a revival in manufacturing investment, which the chancellor believes is necessary for a more sustainable recovery.

Here's Phillip's full story.

Updated at 2.36pm BST

2.30pm BST

IMF cuts global growth forecasts

Breaking: The International Monetary Fund has cut its forecast for global economic growth this year.

In its World Economic Outlook Update, the IMF predicted growth of around 3.1% this year, down from 3.3% back in April.

it also cut next year's growth forecast to 3.8%, down from 4%.

It said the downgrade was largely due to:

appreciably weaker domestic demand and slower growth in several key emerging market economies, as well as by a more protracted recession in the euro area.

More details and reaction to follow….

2.24pm BST

Nearly time for the IMF:

2.09pm BST

One for history lovers:

Bryan, who ran for the US presidency several times without sucess, was a leading critic of the Gold Standard back in the day when most of the world's currencies were pegged to each other.

He argued that it was wrong that credit availability and interest rate levels were influenced by the amount of gold in the system – and wanted the system expanded to include silver.

In the famous speech of 9th July 1896, Bryan declared:

You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.

Despite the support of America's farming community (heavily dependent on loans to keep running), Bryan never succeeded in changing the monetary system of the day. He looked rather prescient forty years later (as Lords of Finance explains)

Updated at 3.32pm BST

1.57pm BST

New IMF report due at 2.30pm BST

A reminder that the International Monetary Fund will release its updated World Economic Outlook at 2.30pm BST.

There'll be a press conference, which should be streamed live here.

Updated at 1.57pm BST

1.48pm BST

1.45pm BST

Greek thinktank predicts deeper recession

A Greek thinktank has punctured any euphoria over last night's loan deal, by warning that the country's economy will shrink by even more than expected this year.

The Athens-based IOBE think tank predicted that Greece's GDP could shrink by as much as 5%, from a previous forecast of around 4.6%. That's a rather deeper forecast than Greece's lenders expect (officially, anyway):

Reuters has more details:

"The projection on growth must be adjusted downwards – the recession this year will be around 5.0 percent," IOBE said in its quarterly report. It said it would range between a decline of 4.8 and 5 percent, compared with its previous forecast of a 4.6 percent slump.
The EU and IMF expect the economy to shrink by 4.2 percent in 2013; the Bank of Greece projects a contraction of 4.6 percent. The economy shrank 6.4 percent last year.
"Fiscal consolidation and improved competitiveness have not been coupled with successful implementation of the structural reforms programme," the locally influential think tank said.
IOBE projected the country's unemployment rate will rise to 27.8 percent this year, raising its previous 27.3 percent projection. Unemployment was 26.8 percent at the last count.
"As long as the recession persists, the economy isn't only burning fat but also productive tissue," said Nikos Vettas, the new head of IOBE.

Updated at 1.45pm BST

1.27pm BST

Photos: today’s protests in Athens

Just in – new photos from Athens of the protest rally held today by up to 3,000 municipal employees who oppose plans to lay off thousands of workers as part of the Greek bailout (see also 1.02pm):

Municipal employees chants slogans in front of the ministry of administrative reform in Athens, during their protest rally  on July 9, 2013.
Municipal employees chants slogans in front of the ministry of administrative reform in Athens. Photograph: LOUISA GOULIAMAKI/AFP/Getty Images
A municipal worker sits in front of riot police guarding the parliament during a rally against public sector reforms in Athens July 9, 2013.
A municipal worker sits in front of riot police guarding the parliament. Photograph: YANNIS BEHRAKIS/REUTERS

A municipal worker holds a banner reading “layoffs” near the Greek parliament. Photograph: LOUISA GOULIAMAKI/AFP/Getty Images

Updated at 1.27pm BST

1.02pm BST

A striking municipal worker stands on July 9, 2013 in front of police forces protecting the Greek Parliament in Athens.
A striking municipal worker in front of police forces protecting the Greek Parliament in Athens earlier today. Photograph: LOUISA GOULIAMAKI/AFP/Getty Images

Up to 3,000 striking municipal workers have marched through the streets of central Athens to voice their anger over the planned cuts in civil service numbers, according to Associated Press reporters.

As explained at 9.00am, their union has called a two-day strike which began yesterday. They oppose being added to the “mobility and reallocation scheme”, from where they can be sacked if they don't accept a new job.

The Greek Administration and E-Governance Ministry has said that 4,200 civil servants will be added to the pool this month, rising to 12,500 by the end of September. More than 8,000 municipal police will also be included.

The Athens government is committed to dismissing 15,000 civil servante by the end of 2014, including 4,000 this year, so entering the pool could easily lead to the sack.

12.10pm BST

UK exports outside the EU hit record high

A technician assembles a Nissan car on the production line at Nissan's Sunderland plant on January 24, 2013 in Sunderland, England. The Japanese manufacturer's factory employs 6,225 people producing the Juke, Note and Qashqai models.
The production line at Nissan’s Sunderland plant. Photograph: Christopher Furlong/Getty Images

My colleague Katie Allen has analysed today's UK trade data (9.39am onwards), and found some positive news for UK business secretary Vince Cable and the business groups that have been pushing sales to new markets for fear of being too dependent on a troubled eurozone.

ONS data shows goods exports to non-EU countries have hit a record high. In the three months to May, exports of goods to non-EU countries rose £1.7bn (4.6%) to £39.0 billion. That outstripped growth in goods exports to the EU, which were up by £0.3bn (0.8%) to £37.4bn.

The ONS adds more details:

Outside the EU, the level of exports to China continues to grow. In the latest three months the value of exports was 17% higher than the average 2012 quarterly level.

Import values from China were little changed, so the trade deficit with China, which had averaged £5.2 billion a quarter in 2012 shrank to £4.8 billion in the latest three months.

Historically, the UK runs a trade in goods surplus with the United States. That rose in the latest three months. The value of exports was 5% higher than its average 2012 level, while imports fell by 8%.

And here's Katie's full story on today's trade figures and industrial output data: UK manufacturing suffers surprise output fall after string of upbeat survey

Updated at 1.28pm BST

11.55am BST

Latvia has finally been given full approval to join the eurozone.

EU finance ministers gave their agreement at today's ECOFIN meeting, stating:

Euro notes and coins will be issued in Latvia on 1 January 2014.

Riga will join at a rate of 0.702804 lats to the euro.

Updated at 11.57am BST

11.20am BST

Portugal’s junior coalition leader sees stability after dramatic week

Portuguese Foreign Affairs Minister and CDS-PP President party Paulo Portas (L) meets with Portugal's President Anibal Cavaco Silva at Belem president palace in Lisbon July 9, 2013.
Paulo Portas (left), Portuguese deputy PM and CDS-PP leader, at his meeting with Portugal’s President Anibal Cavaco Silva at Belem president palace today. Photograph: RAFAEL MARCHANTE/REUTERS

Over in Portugal, the head of the junior coalition partner has declared that the country is ready to return to political stabilty – a week after his resignation destabilised the government.

After a meeting with the country's president, CDS-PP party leader Paulo Portas told reporters that:

We think the conditions for stability are in place and that political stability is important not only for the government but also for the conclusion of the aid package.

Portas was promoted to deputy prime minister last weekend, after resigning as foreign minister last Tuesday.

That cabinet reshuffle has calmed the panic over Portugal's bailout — although its sovereign debt is still changing hands at lower prices than before Portas quit. Portuguese 10-year bonds are trading at a yield of 6.9% this morning (Tradeweb data).

11.05am BST

Spain’s house price crash

The slump in Spain's housing market continues, according to data released today by the real estate firm Tinsa.

Tinsa reported that prices fell by 10.6% year-on-year in June, which means the average property has lost around 40% of its value since the financial crisis began.

As this graph shows, property prices were rising by around 15% per year during the boom days, but have been shrinking ever since.

Spanish house prices over last decade
Photograph: Tinsa

10.45am BST

In the City…

Marks & Spencer is the worst performer on the FTSE 100, falling almost 2% this morning after reporting another quarter of falling clothes sales.

That won't protect CEO Marc Bolland from criticism from the hordes of small shareholders at today's annual general meeting. Here's the full story: M&S clothing and non-food sales fall for eighth consecutive quarter.

The word from Wembley Stadium is that the small investors are not in particularly good spirits:

The other key corporate story of the day was the appointment of Ben van Beurden as new chief executive of Royal Dutch Shell. That's not caused any ructions, with Shell's shares up 1% – in line with the market.

And here's a comment on the markets from Brenda Kelly, senior market strategist at IG:

The warm weather may be helping to energise equity markets, with the FTSE 100 powering through the 6500 level led by its key components, miners and banks. With US aluminium producer Alcoa providing a strong start to the US earnings season by beating forecasts, and the misfortunes of Greece seemingly appeased, risk appetite is back with a vengeance.

UK manufacturing production continues to be something of a fly in the ointment for the overall economic outlook, falling by 0.8% in May against the 0.3% increase expected. While most UK economic data has been fairly good of late, this adds up to an annualised fall of 2.9% in total and thus may give credence to the recent forward guidance from the Bank of England in respect of the perpetuation of a loose monetary policy.

Updated at 10.51am BST

10.19am BST

Greece's debt agency just rolled over €1.625bn of six-month bonds, showing that it still has access to the short-term money markets.

The T-bills were sold at average yield of 4.2%, with the agency receiving bids for 1.7 times as much debt as was on offer. That's an identical result to a similar auction in June.

10.03am BST

Reaction: Britain’s weak industrial production and widening trade gap

City analysts say this morning's disappointing UK economic data (9.39am onwards) suggest that growth may not have been as strong last quarter as hoped.

This could increase the chances of the Bank of England increasing its bond-buying programme next month.

Here's some instant reaction (partly culled from the Reuters terminal)

Philip Shaw of Investec:

Trade figures are as expected, no great surprises. The tone of the data suggests to us that we are still likely to get more QE from the Monetary Policy Committee next month.

Rob Wood of Berenberg Bank:

On trade … I think it broadly confirms the continuing picture for the UK, which is that this is not an export-led recovery we are starting to see. This is a monetary policy, low rate, rising consumption, rising house prices-driven recovery, so I don't expect the trade balance to improve very much.

Tom Vosa of National Australia Bank:

The mix seems to be that disappointingly, we're not seeing the rebalancing of the economy that we would like… But the trade data still points to a relatively robust Q2, although perhaps not as high as 0.6% on the quarter which the survey data had been pointing to.

Updated at 10.07am BST

9.48am BST

Pound slides

Sterling took a small tumble when this morning's weak UK economic data hit the wires a few minutes ago. The pound is down over half a cent against the US dollar, at .489. Against the euro, it's close to a four-month low at €1.155.

9.44am BST

Graph: Britain’s trade gap

..and this graph shows how Britain has made little, if any, impact on its trade gap over the last year, leading to today's deficit of £2.435bn.

UK monthly trade gap
UK monthly trade gap in goods and services with the rest of the world. Source: ONS

9.39am BST

UK trade gap widens as industrial output stalls

Britain's industrial output stalled in May, dashing hopes of a 0.2% rise, as the sector appeared to stumble.

The Office for National Statistics reported that manufacturing output was down by 0.8% in May, or 2.9% lower on a year-on-year basis. That left output across the wider industrial sector unchanged month-on-month, or down 2.3% on an annual basis.

In another downbeat news, Britain's trade gap widened in May to its biggest deficit in six months.

The Office for National Statistics reported that Britain's defict in goods rose to £8.491bn, up from £8.43bn in April. Even when services was added, the overall trade gap was £2.435bn, up from £2.073bn in April.

Updated at 9.39am BST

9.29am BST

Merkel’s election prospects looking rosy

German Chancellor Angela Merkel (CDU) talks to trainee Francis Schwan during a visit of the company GE Energy in Berlin, Germany, 08 July 2013.
German chancellor Angela Merkel visiting a GE Energy factory in Berlin yesterday. Photograph: Soeren Stache/dpa/Corbis

German chancellor Angela Merkel should be pleased that the mini-saga of Greek bailout loan tranche was concluded last night, ahead of Germany's general elections this autumn.

A raft of opinion polls have shown that Merkel's CDU/CSU party holds a healthy lead, with around 42% of the vote. With her junior partners, the right-wing Free Democrats, close to the 5% threshold for winning seats, there's a decent chance that the existing coalition will retain power.

As the Wall Street Journal explains:

Ms. Merkel's CDU/CSU group appears to be strengthening. The FDP is just short of 5% in some surveys. But its results in recent regional elections have been better than opinion polls predicted.

"The FDP has few core supporters and many of its voters decide late," says Manfred Güllner, head of Berlin polling institute Forsa.

A center-right win would please German business, which fears a stronger left-wing influence in government could lead to higher taxes. But it would disappoint many other countries in the euro zone, including France, where some officials hope a grand coalition with the SPD might push Ms. Merkel toward slightly more generous and growth-friendly policies on the European debt crisis.

German polling data, July 9
Photograph: WSJ

More here: Merkel Gains Ground as Election Nears

Updated at 10.05am BST

9.00am BST

Protest march due in Greece as strike continues

Greek municipal employees are continuing a two-day strike, in protest at the plans to lay off thousands of public sector workers.

The walkout will hit municipal offices and operations across the country, although social welfare services should continue (according to the informative Living in Greece)

Even though the Athens government has agreed to cut the state workforce, unions representing municipal staff have organised a march starting anytime now (11am local time, or 9am BST)

In a statement (here in Greek) the POE-OTA says that 'mass, unified' protests are the only way to prevent ordinary workers being impoverished through the bailout programme.

As crisis-watcher Yiannis Mouzakis points out, municipal workers are often at the lower end of the pay scale:

Updated at 9.00am BST

8.32am BST

Kathimerini: legislation on Greek ‘prior actions’ due soon

Back to Greece, where the Kathimerini newspaper flags up that legislation will soon be tabled on the Athens parliament to push through the 'corrective actions' demanded by the Troika.

A vote on the measures (which sparked angry protests yesterday) is expected next week.

Kathimerini writes:

A multi-bill bundling together all the prior actions that Athens must honor in order to receive the pledged funding – including an overhaul of the tax system and cutbacks in the civil service – is expected to be tabled in Parliament on Tuesday or Wednesday.

The bill will be put to a debate with a vote expected next week. The most controversial aspect of the legislation is a pledge by Greece to put 12,500 civil servants into a so-called mobility scheme in the coming weeks, where they would receive lower wages ahead of a status review, as well as 15,000 layoffs by the end of next year.

In last night's statement (online here) the Eurogroup insisted last night that these 'prior actions' are taken swiftly in return for Greece receiving its aid loans.

8.27am BST

Europe’s stock markets advance

FTSE 100 risers, early trading, July 9 2013
The biggest risers on the FTSE 100 in early trading. Photograph: Thomson Reuters

Optimism abounds in the stock markets this morning, with shares up across Europe after Greece secured its aid tranche last night.

Traders are also cheered by upbeat forecasts from alumunium producer Alcoa (details). By sticking to its demand forecast, Alcoa calmed fears that China's economy is caught in a rapid slowdown.

And in the UK, economic surveys released overnight have shown that retail sales rose in June, while house-buying inquiries also picked up. Further signs that the British economy may be returning to health.

• FTSE: up 60 points at 6510, + 0.9%

• German DAX: up 57 points at 8026, +0.7%

• French CAC: up 19 points at 3843, + 0.5%

• Spanish IBEX: up 61 points at 8081, +0.8%

• Italian FTSE MIB: up 112 points at 15912, + 0.7%

Updated at 8.34am BST

7.55am BST

The agenda

Here's what's coming up:

• EU finance ministers meet at ECOFIN: all day

• UK industrial production for May: 9.30am BST

• UK trade balance for May: 9.30am BST

• IMF: World Economic Outlook update: 2.30pm BST

7.41am BST

Greece gets its loans… eurozone gets a blast

Greek finance minister Yannis Stournaras at Eurogroup meeting.
Greek finance minister Yannis Stournaras at last night’s Eurogroup meeting. Photograph: Isopix/Rex Features

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

So, after all the talks and tension, Greece will receive its next bailout loans – in return for making further cuts to its public sector workforce.

Eurozone ministers last night agreed to extend €2.5bn of loans to Athens this month, with a further €500m arriving in October if various corrective actions (ie: civil service layoffs) are taken.

As our Europe editor Ian Traynor wrote last night from Brussels:

Under Monday's agreement, Athens has to get to grips with a painful programme of public sector job losses mainly affecting education.

Some 6,500 teachers or education ministry staff are either to be fired or put on a "reserve" and sacked at the end of next year if no alternative work has been found. This makes up more than half of the 12,500 public sector jobs on the line, which also include 3,500 police posts. Police officers anxious for their jobs staged protests in Athens at the weekend

With the International Monetary Fund expected to provide a further €1.8bn of loans, last night's decision removes a nagging worry as Europe's politicians prepare to wind down for the summer break. The move should please the financial markets, and give European finance ministers a sprint in their step as they gather for an ECOFIN meeting today.

But their problems are not over, as the IMF has been swift to warn in its new annual assessment of the euro area.

Pointing to the eurozone's weak growth and record unemployment, the IMF urged "concerted policy actions" to end the malaise.

IMF managing director Christine Lagarde warned bluntly that the economic crisis in Europe had not been resolved, saying:

Over the past year, substantial actions at both the national and euro-wide levels have been taken to combat the crisis,"

But despite this progress, the economic recovery remains elusive, unemployment is rising, and uncertainty is high. Additional policy measures are required to fully restore confidence, revive growth, and create jobs.

International Monetary Fund (IMF) Managing Director Christine Lagarde waits for the start of an euro zone finance ministers meeting in Brussels July 8, 2013.
Christine Lagarde at last night’s eurozone finance ministers meeting in Brussels. Photograph: FRANCOIS LENOIR/REUTERS

The IMF said growth was beng hampered by "centrifugal forces across the euro area" – including weak banks, record jobless, and limited credit in part of the region. Here's the full report.

The IMF's four-point plan for the eurozone contained familiar themes:

• a 'credible' assessment of how much capital needs to be pumped into Europe's struggling banks (and then action to fix the problems)

• completing banking union (including introducing a single resolution mechanism for failed banks)

• new measures to stimulare economic demand (with a nod of approval to Mario Draghi for last week's promise to keep interest rates low).

• and finally structural reforms (always an IMF favourite).

But with Europe soon to wind down until September, it's not clear that the warning will be heeded soon.

The IMF will be in the news this afternoon too, when it releases its latest World Economic Outlook report (at 2.30pm BST). That will include its latest economic forecasts for countries across the world, and the global economy.

I'll be tracking the IMF report, reaction to last night's eurogroup meeting, and other news in the eurozone and beyond through the day….

Updated at 7.59am BST

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