July 2013

Jul. 21, 2013 (Allthingsforex.com) – After several days of trying to gauge the odds of tightening of the Fed’s monetary policy, in the week ahead traders will be back to watching a combination of economic data that will offer more details on the state  of the world’s largest economies.

In preparation for the new trading week, here is the outlook for the Top 10 spotlight economic events that will move the markets around the globe.

1.    USD- U.S. Existing Home Sales, the main gauge of the condition of the U.S. housing market measuring the number of closed sales of previously constructed homes, condominiums and co-ops, Mon., Jul. 22, 10:00 am, ET.

The report could confirm that the housing market recovery is still on the right track with sales of existing homes forecast to increase to 5.27 million in June, compared with 5.18 million in May.

2.    JPY- Japan Trade Balance, an important gauge of economic activity measuring the difference between imports and exports, Tues., Jul. 23, 7:50 pm, ET.

Voters in Japan gave their support to Abenomics this weekend and the weaker yen should contribute to the trend of improvement in the Japanese economy, including the balance of trade which is forecast to show a shrinking deficit of 150 billion yen in June compared with 996 billion yen trade deficit in May. Signs that the economy is getting better could lend some support to the yen on reduced expectations that the government and the Bank of Japan would step up their efforts to devalue the currency and to spur economic growth.

3.    EUR- Euro-zone Manufacturing and Services PMI- Purchasing Managers Index, a leading indicator of economic conditions measuring activity in the manufacturing and services sectors, Wed., Jul. 24, 4:00 am, ET.

Although the indexes have been inching higher in recent months, the chronic contraction in the euro-zone’s manufacturing and services sectors is expected to continue. The Manufacturing PMI is forecast to stay in contraction territory below the 50 boom/bust line for another month with a reading of 49.1 in July from 48.8 in June, while the Services PMI also heads a bit higher but still below 50 with a preliminary estimate of 48.9 in July from 48.3 in the previous month. A weaker than expected data should weigh on the EUR by confirming expectations that the European Central Bank will remain stuck in an easing mode.

4.    USD- U.S. New Home Sales, an important gauge of housing market conditions measuring sales of newly-constructed homes, Wed., Jul. 24, 10:00 pm, ET.

In line with the existing home sales, new home purchases in the U.S. are also expected to increase to 482K in June from 476K in May.

5.    NZD- Reserve Bank of New Zealand Interest Rate Announcement, Wed., Jul. 24, 5:00 pm, ET.

With the kiwi dollar pushed lower in recent months and all other central banks assuring the markets that monetary policy will stay accommodative, the Reserve Bank of New Zealand would not be likely to deviate from the current course. The NZD could weaken further if the Reserve Bank of New Zealand still sees its currency as too strong and hints that tightening policy will not be in the cards for the foreseeable future.

6.    EUR- Germany IFO Business Climate Index, a leading indicator of economic conditions measuring the outlook of businesses, Thurs., Jul. 25, 4:00 am, ET.

The business outlook in the euro-zone’s largest economy is forecast to be more optimistic as the Ifo index rises to 106.3 in July, compared with the reading of 105.9 in the previous month.

7.     GBP- U.K. GDP- Gross Domestic Product, the main measure of economic activity and growth, Thurs., Jul. 25, 4:30 am, ET.

Three consecutive quarters of contraction in the U.K. were followed by a quarter of growth in Q3 2012 only to see the economy contracting again by 0.3% q/q in the final quarter of last year. As a result, fears of unprecedented triple-dip recession in the U.K. escalated. Fortunately, in the first quarter of the year, the U.K. economy managed to avoid another recession expanding by 0.3% q/q and is expected to grow even stronger by 0.6% q/q in Q2 2013. The GBP could stage a rally as a result of a better GDP report which coupled with the 9-0 vote against more QE should reduce significantly the odds of more easing by the Bank of England.

8.    USD- U.S. Jobless Claims, an important gauge of labor market conditions measuring first-time claims for unemployment benefits, Thurs., Jul. 25, 8:30 am, ET.

The U.S. jobless claims are forecast to reach 339K, staying close to last week’s new record low of 334K. Another positive report from the U.S. labor market should keep the USD supported on expectations of a Fed tightening sooner rather than later.

9.    JPY- Japan CPI- Consumer Price Index, the main measure of inflation preferred by the Bank of Japan, Thurs., Jul. 25, 7:30 pm, ET.

Two months of rising inflationary pressures could push the Japanese national core inflation gauge to 0.3% y/y in June from 0% y/y in May and -0.4% y/y in April. With the index exiting deflation territory and heading towards the Bank of Japan’s 2% inflation target, the report could reduce expectations that the Japanese central bank will need to step up its QE campaign, which could mean less pressure on the yen.

10.     USD- U.S. Consumer Sentiment, the University of Michigan’s monthly survey of 500 households on their financial conditions and outlook of the economy, Fri., Jul. 26, 9:55 am, ET.

The U.S. consumer sentiment index is forecast to be revised slightly higher to 84.0 in July from a preliminary estimate of 83.9. Another week of decent U.S. economic data could keep the markets pricing the start of the Fed tapering of monthly asset purchases in September/October.


This week UK GDP figures are expected to show a healthy increase, but is this the sort of recovery that benefits everyone? Analysts predict a growth rate of around 0.6%, perhaps even 0.8%, representing a strengthening of the recovery…


Powered by Guardian.co.ukThis article titled “Britain sees signs of recovery, but who has been left behind?” was written by Heather Stewart and Katie Allen, for The Observer on Saturday 20th July 2013 23.00 UTC

Row upon row of Range Rovers and Minis gleam in the afternoon sun in the yards around Southampton docks, waiting to be driven on to huge cargo ships that will carry them to car-hungry emerging economies.

From his office, port director Doug Morrison can see the towering cruise ships being loaded before they cast off for Mediterranean and Caribbean holidays. Alongside stands a ship awaiting a cargo of new cars, which arrive on the dockside on dedicated trains from manufacturers in the Midlands. Further along are container ships bringing TVs and clothes from the far east and a vast array of goods to stock Britain's shops.

"Two years ago there were 500,000 imports and exports of new cars here. This year it is 750,000 and I am pleased to say 65% of that is exports. They are from Jaguar Land Rover, Honda and there are Mini Coopers. Much of that growth is coming from Jaguar Land Rover sales to the far east," says Morrison.

This picture of a thriving British export sector is exactly the one the coalition will be hoping to project on Thursday, if, as experts expect, the latest GDP figures show the economy expanded at a healthy clip in the second quarter of 2013.

Analysts predict a growth rate of around 0.6%, perhaps even 0.8%, which would represent a marked strengthening of the recovery – good news for a coalition keen to seize on signs that the economy has moved "out of intensive care", as chancellor George Osborne puts it.

"We have a great economic barometer here. We can really see what is happening," says Morrison, who has run the docks for Associated British Ports since 2005. He talks about the "three C's" – cars, cruises and containers – and all point to an upturn, albeit with choppy seas ahead. "The cruise business continues to be very strong," he says.

Famous in the past as the port from which Titanic set sail on its ill-fated maiden voyage, Southampton now sees 1.6 million passengers embark and disembark from cruise ships every year. Less than a decade ago only a third as many were passing through the port.

But Morrison adds that the number of containers being landed has not risen – the lack of growth in consumer imports evidence of tough times on Britain's high streets. "When you look at what the likes of Tesco and Argos are saying, it's not surprising that you are not seeing any real growth in containers."

It is not only at the dockside that things are looking up, four years on from the depths of the recession. Jan Ward, chief executive and founder of specialist metals distributor Corrotherm International, based on an industrial estate on the edge of the city, says she is "overwhelmed with work".

"These have been the best five years we have had," says Ward, who started the company in 1992. On the back of strong demand for the nickel alloy parts the company supplies to the oil and gas industry, turnover grew 46% over the last year to £21m and Ward expects it to double this year. Corrotherm has recently opened offices in Abu Dhabi, Saudi Arabia, Korea and Perth in Australia and is about to open one in China.

Ward, an active member of the local chamber of commerce, believes the government's push for what the chancellor has called a "march of the makers" is finally starting to yield results. "All the signs that I see are very, very good. Finally, these messages are starting to get through to manufacturers and people who are looking to start businesses up. For the manufacturing sector things are looking very bright."

Despite her optimism, however, some economists are concerned that while a stronger GDP reading would undoubtedly be good news, there is so far little sign of the deep-seated shifts in the economy the government had hoped to bring about. Russell Jones of Llewellyn Consulting says: "It looks like what is driving this is the consumer to a large degree, and you could argue that that's the wrong sort of growth."

The housing market is starting to recover and retail spending is on the rise, but business investment in the first quarter of 2013 was more than 16% lower than a year earlier. Meanwhile the latest trade figures suggested that although exports are rising, so are imports, so that hopes of Britain becoming a new manufacturing powerhouse have so far proved over-optimistic.

Simon Wells, UK economist at HSBC, says: "Back in 2010, we were hoping the economy would rebalance in three ways: away from services and towards manufacturing; away from consumption and towards investment; and away from domestic demand and towards exports. Now it seems that for policymakers, any growth will do."

The Bank of England and the Treasury had expected the sharp depreciation in sterling since 2008 to spark an export revival, as British goods became cheaper on world markets. But the transformation has been hampered, both because our major markets have been in crisis and our industrial sector is so hollowed out that an increase in exports brings in its wake a jump in imports too, as manufacturers buy raw materials and parts.

At the same time, the decline in the pound has been one cause of the above-target inflation that has further hampered recovery by eating into workers' pay. Jones points out that with real incomes continuing to fall, in what the TUC has described as the longest squeeze on wages since the late 19th century, any rise in consumption is being driven by "people dipping into their savings".

There is certainly evidence in Southampton that the long-stalled property market is beginning to revive. Lisa Martin-Pope, who works in one of the many estate agents on the city's busy London Road, says: "The biggest indicator at the moment is we are seeing more first-time buyers and seeing banks and building societies lending to them more readily." Her agency, Martin & Co, is seeing homes selling more quickly, with the average buyer paying 93% of the asking price.

Labour will argue on Thursday that the benefits of the nascent upturn have been pocketed by a limited number of people, including those in financial services. Chris Leslie, shadow financial secretary to the Treasury, says: "Wages after inflation are now down by an average of £1,300 since David Cameron got into Downing Street, yet bank bonuses soared to £4bn in April as high earners took full advantage of the top-rate tax cut."

From his window on the docks, Doug Morrison agrees that not everyone is reaping the rewards of recovery. "The haves continue to spend and the have-nots cannot spend," he says. "People are reluctant to give up their holidays, the haves are still buying cars, but the poor people out of work or not getting any pay rises are not buying their three-piece suites or buying new clothes as often."

The haves are certainly in evidence at Southampton's Ocean Village marina, where shining white yachts are moored alongside motorboats. Luxury apartments overlook the water and in harbourside bars people sit around tables with glasses of chilled rosé and beer.

The only thing to spoil the idyllic summer scene is the sound of the jackhammers on the nearby construction site where a £74m, 24-storey apartment block will become Southampton's tallest building. James King, of local boat and home broker Waterside Properties, says there is a "cautious recovery".

But a short drive away from the marina, at Ford's soon-to-be-defunct Transit van plant, there's a powerful sense that not everyone is sharing in what Osborne calls the "healing" of recession-scarred Britain.

Engineer Chris finds it hard to conceal his dismay at losing the job he has had for 28 years. "It is devastating really. It's the end of an era. Anyone who has been here a long time is faced with a very empty shell of a plant. It is like a ghost town."

Chris, 52, who preferred not to give his full name, is moving to a new job with Ford in Wales, but not all his colleagues have been so fortunate, he says. "There's a lot of youngsters that have young families. We are closely knit."

When the factory is mothballed on Friday it will mark the end of more than a century of Ford vehicle manufacturing in the UK and more than 40 years of making Transit vans in Southampton. Faced with a prolonged slump in demand across western Europe that has seen new vehicle sales drop to a 20-year low, Ford is moving much of its production to a cheaper base in Turkey.

"The atmosphere in there is one of shock and disbelief. People are walking around as if they don't know what's happened. People in there I've known for years, grown men, they have been in tears," says Chris.

It remains to be seen if the long-hoped-for recovery that seems to be taking root will blossom as the year goes on, perhaps bringing with it the greater confidence for firms, and new jobs and pay rises for their staff, that would help to spread its benefits. Until that happens, most analysts will continue to be sceptical. "I'm still quite cautious about growth," says Wells of HSBC. "There must be a limit to how much we can grow when real, post-inflation wages are falling."

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In the trading room today: Focusing on the EUR and the GBP in the Week Ahead. At the end of the week which was all about looking for clarity on the Fed’s future monetary policy, we turn our attention to the EUR and the GBP as the currencies to watch next week and explore the outlook for these two currency majors, 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 bullish stance of the GBP/USD pair, we keep an eye on the USD trend vs JPY, we highlight the market’s reaction to the US Jobless Claims and the Philly Fed Manufacturing Index, we discuss new forecasts from Bank of Tokyo-Mitsubishi and BNP Paribas, and prepare for the trading session ahead.

In the trading room today: The Bernanke Effect and the USD Trend. With the second day of the Fed Chairman’s testimony on Capitol Hill underway, we examine yesterday’s statement by Ben Bernanke and continue to gauge the impact of the Fed’s monetary policy on the trend direction of the USD, we analyze the range in the EUR/USD currency pair, we keep an eye on the GBP/USD pair, we note the strengthening of the USD vs JPY, we highlight the market’s reaction to the UK Retail Sales and the US Jobless Claims, we discuss new forecasts from Royal Bank of Canada and ING Group, and prepare for the trading session ahead.

Federal Reserve chair says bond-buying could slow. No firm plan for policy adjustment, however. Jobs market ‘far from satisfactory,’ Bernanke testifies. The Fed anticipates curtailing its assets purchasing program by the end of the year contingent on an improving economic picture…


Powered by Guardian.co.ukThis article titled “Ben Bernanke: ‘We’re very focused on Main Street’ – as it happened” was written by Tom McCarthy, for theguardian.com on Wednesday 17th July 2013 15.44 UTC

1.31pm ET


We're going to wrap up our live blog coverage of Fed chair Ben Bernanke's House testimony. Here's a summary of where things stand:

Bernanke said the economy hasn't recovered enough for the Fed to take its foot off the gas – yet. "We need accommodative monetary policy for the foreseeable future," he said. 

The Fed anticipates curtailing its assets purchasing program, known as quantitative easing, by the end of the year, but that's contingent on an improving economic picture, which Bernanke emphasized isn't a given. Stocks were up and bonds were down slightly on the perceived signal that asset purchases could taper.

• Bernanke said the economy's still too weak to recommend raising interest rates. He reiterated two key benchmarks for moving rates: unemployment below 7% or inflation of 2%. We're not there yet.

Committee members thanked Bernanke for his service on the occasion of what may be his last appearance before the House as Fed chair. But it wasn't his last Hill appearance: he testifies before the Senate tomorrow. 

1.15pm ET

After 3+ hours of testimony before the House today, guess what Ben Bernanke gets to do tomorrow? Testify before the Senate. 10.30 am ET – be there.

1.13pm ET

And they're done. Adjourned.

1.12pm ET

Michele Bachmann, Republican of Minnesota, is up. She has a debt ceiling question. She says that for 56 days, federal debt on the books mysteriously stayed just under the debt ceiling.

"Has the federal government been cooking the books on this?" Bachmann asks.

Could be a good question – for the Treasury.

"This is not the federal reserve," Bernanke says. "You'd have to ask the secretary of the treasury."

Bachmann's follow-up: Have we exceeded our debt limit?

"Uh, I don't think so," Bernanke says.

1.04pm ET

Andy Barr, Republican of Kentucky, asks Bernanke about sustained unemployment: is it the Fed's fault or Obama's fault?

The economy has weak spots, but "it is the case that we have made some progress since 2009… we're doing better than a lot of other industrial countries," Bernanke replies.

Barr says there's "gotta be a fiscal policy problem here," because the Fed's expansionary policy has been responsible. But Barr isn't another self-hating Congressman. The implication is that it's Obama's fault.

12.59pm ET

University of Michigan professor Justin Wolfers notes that bond prices are down slightly... after months of steep climbing.

12.49pm ET

Guardian emergency responder Alan Yuhas clarifies the IRS Star Trek video reference. Alan wrote about it back in March:

The IRS has apologized for spending tens of thousands of taxpayer dollars to film a Star Trek parody, but has defended the value of Gilligan's Island parody made at the same time. The agency estimates that total expenditures were about ,000.

The Star Trek video features a spaceship on a "never-ending mission to seek out new tax reforms, to explore strange new regulations, to boldly go where no government employee has gone before". They set off to the planet Notax, whose fiscally irresponsible aliens live in chaos. The six-minute video has special effects, elaborate costumes, and two crewmen banter: "Back in Russia, I dreamed someday I'd be rich and famous." "Me too. That's why I became a public servant." The ship's captain throws up his hands in dismay as the crewmen bump fists.

Read the full fun piece here.

12.45pm ET


"I feel like Bette Midler,' says Denny Heck, Democrat of Washington – "the very last guest on the very last episode of the Tonight Show. She famously quipped to Johny Carson, 'You are the wind beneath my wings.'"

Heck says Bernanke's like that, with the economy. 

Updated at 12.50pm ET

12.42pm ET

Dennis A. Ross, Republican of Florida, has said something about an "IRS Star Trek video." He does not elaborate. We'll wait for him to circle back around on that. He's calling for a healthy debate on the debt ceiling – he thinks that the brinksmanship that led to the downgrading of US debt was a good thing. Unclear whether there's a question coming here.

Bernanke says the debt ceiling fights are bad. 

"We did get a pretty big shock to consumer sentiment and it did do harm to the economy."

Updated at 1.19pm ET

12.36pm ET

Bernanke, still going strong, ish, 150 minutes in. Currently talking: Joyce Beatty, Democrat of Ohio, the second-least-senior member of the committee.

12.32pm ET

Randy Hultgren, Republican of Illinois, returns to a concern of many lawmakers on the GOP side, that the Fed is over-regulating community banks, which Hultgren says are being hurt by an interest-rate crunch.

Bernanke says the low rates are meant to strengthen the economy. Throughout the hearing he's deflected the assertion that local banking is crippled. "We're very focused on Main Street," he said early on.

Updated at 12.33pm ET

12.18pm ET

We're not going anywhere! This is the part where Bernanke drops the surprise that turns the economy on a dime. Any second now. 

Updated at 12.20pm ET

12.13pm ET

Marlin A. Stutzman, Republican of Indiana, asks whether Obamacare is hurting the economy. Bernanke admits there have been signs that employers are having some difficulty navigating the new rules requiring them to provide insurance if they carry a certain number of full-time employees:

"It's very hard to make any judgment. One thing that we hear… is that some employers are hiring part-time in order to avoid the mandate there. So we have heard that. But … the high level of part-time employment has been around since the beginning of the recovery, and we don't fully understand that.

Stutzman asks whether it might be smart to push back Obamacare compliance deadlines. Bernanke replies:

This is beyond my pay grade. This would depend on how well, and how much time is needed, to fully implement the bill.

12.04pm ET

Guardian finance and economics editor Heidi Moore flags an exchange between Bernanke and Republican Stephen Lee Fincher of Tennessee, who is worried about private sector dependence on federal largesse – except when he's not worried about that.

Updated at 12.05pm ET

11.44am ET

Emanuel Cleaver, Democrat of Missouri, has a koan-like question for the Fed chair:

What would be the consequences of easing quantitative easing prematurely? 

Bernanke replies with half of this and half of that. The Fed plans to decrease asset purchases unless that's not called for in which case they'll be continued.

11.38am ET

Guardian finance and economics editor Heidi Moore agrees with the congressman's assessment that the legislature hasn't done diddly to bring the jobs market back. In April she wrote, under the headline "When will this do-nothing Congress wake up to America's job crisis?":

While the unemployment rate is dropping, and the number of jobs goes up and down, the labor force participation rate has been steadily falling since the economy started weakening in 2007. [...]

This situation is, economically, a catastrophe. It has existed for the past five years, and no lawmaker in Washington has done very much about it. Somehow, a small group of Republican lawmakers have hijacked the national conversation about financial matters to blather about deficits and long-term budgets. (Leave aside the fact that not a single lawmaker, of either party, seems capable of putting together any kind of practical budget at all.)

Most Democrats and the White House have gone along with this empty rhetoric, accepting that the current standard of wise budgeting is "discipline" and "long-term goals". It's not. The current standard for the creation of a reasonable budget should be "do something that encourages job creation". This task has gone too long unaddressed.

Read the full piece here.

11.35am ET

Congress has to do more to instill confidence in consumers that "we will do things to help create jobs," Al Green, Democrat of Texas, says. "We have not done enough… your good work still needs some help from the policy makers.

"Consumers say to me, 'I need confidence.'" Really?

Bernanke is diplomatic. "No one has a magic formula" for creating consumer confidence, he says. 

11.28am ET

Stephen F. Lynch, Democrat of Massachusetts, is up. He notes that Bernanke is a scholar of the Depression era and wonders whether 30-year mortgages were available back then. They weren't; Lynch's point is to underscore the importance of government support for the housing market.

We want to keep "a preservable, 30-year fixed mortgage, keep that market going, without having the taxpayer take all the risk up front," Lynch says.

Bernanke says the government can't unilaterally move prices but it can step in when the market won't self-correct. "The argument for thinking about government participation is exactly like the situation we faced in the last few years, where there's a big housing problem" and private lenders aren't willing to act counter-cyclically, Bernanke says. 

Lynch thanks the Fed chair for his service. "I've heard stories that this might be your last appearance before this committee for this purpose," he says.

11.19am ET

Bernanke's lips are talking tapering, but that may not be the take-home message here:

Updated at 11.19am ET

11.16am ET

Suggested reading via the National Journal:

11.13am ET

Carolyn B. Maloney, Democrat of New York, is up. She defers to Ed Perlmutter, Democrat of Colorado, because he didn't get to ask a question last time Bernanke appeared.

Perlmutter thanks Bernanke for his steady hand on the economic rudder. Then he goes back to … the sequester. How do we better understand what this 1.5% in lost growth means, practically speaking, he asks.

Bernanke says losses could be thought of in terms of 760,000 "full-time equivalent jobs" or unemployment down "another seven or eight tenths, something like that."

"So it makes a very big difference," Bernanke says. "It's very substantial." 

11.08am ET

Dominic Rushe is keeping an attentive eye on the tickers. Stock markets are still rising as Bernanke speaks, he notes – the Dow is now up +24.13 points or 0.16%.

Hold onto your seats.

11.03am ET

Guardian US business correspondent Dominic Rushe captures the Fed chair in a pensive moment:

11.02am ET

Democrat William Lacy Clay of Missouri is up with a question about how the sequester may be hurting the jobs market.

"In this recovery, even as the private sector has been creating jobs, government at all levels has been cutting … 600,000 jobs," Bernanke says. He says that's unusual during an attempted recovery. 

He refers back to the CBO estimate that the sequester is dulling growth by 1.5% a year. Whose idea was the sequester again? Did we decide whom to blame? The Democrats keep bringing it up, apparently confident the public believes it's the fault of John Boehner's Congress. Insofar as the public is thinking about it.

Updated at 11.04am ET

10.58am ET

Isn't it true, Huizenga asks Bernanke, that Wall Street has benefited more from loose money and bond-buying than Main Street has? 

"I don't think so," the Fed chair replies. "We're working through the mechanisms we have, which of course are financial interest rates and financial asset prices."

"We're very focused on Main Street," Bernanke says.

Updated at 10.58am ET

10.55am ET

Bill Huizenga, Republican of Michigan, asks Bernanke if his buddy should refinance his house – is now a good time?

"I'm not qualified to respond as a financial adviser," Bernanke jokes. Ha.

10.52am ET

We have a self-hating Congress.

10.50am ET

Ranking Democrat Maxine Waters of California is up. She asks Bernanke about an IMF recommendation to repeal the sequester and raise the debt ceiling. The president would like that. Does Bernanke agree?

Bernanke says the sequester is hurting growth, to the tune of about 1.5% in 2013.

"As I've said many times, I think that fiscal policy is focusing too much on the short run and not enough on the long run," he says. 

10.46am ET

Bernanke answers a question from committee chair Jeb Hensarling, Republican of Texas.

Bernanke defends the Fed's decision to telegraph its intentions of keeping rates low, pegged to the unemployment and inflation benchmarks. He says markets are figuring out the Fed's intentions and relative stability is the result.

Updated at 10.46am ET

10.41am ET

If Bernanke testifies and no one hears him, did he make a sound?

10.40am ET

Bernanke testifies that the economy is recovering "at a moderate pace" but he doesn't sound inspired. Home sales and construction are up. Unemployment is down slightly – it hit 7.6% in June – but "the jobs situation is far from satisfactory." Inflation has not touched the 2% benchmark.

The Fed may begin to ease its bonds purchases "later this year," Bernanke says. But it's conditional on sinking unemployment or new indicators of inflationary pressure:

Committee participants also saw inflation moving back toward our 2 percent objective over time. If the incoming data were to be broadly consistent with these projections, we anticipated that it would be appropriate to begin to moderate the monthly pace of purchases later this year. And if the subsequent data continued to confirm this pattern of ongoing economic improvement and normalizing inflation, we expected to continue to reduce the pace of purchases in measured steps through the first half of next year, ending them around midyear. At that point, if the economy had evolved along the lines we anticipated, the recovery would have gained further momentum, unemployment would be in the vicinity of 7 percent, and inflation would be moving toward our 2 percent objective. Such outcomes would be fully consistent with the goals of the asset purchase program that we established in September.

10.31am ET

It works! They fixed it. Bernanke begins. Once more his remarks are here. CSPAN has yet to fix its online feed. The Wall Street Journal has a feed that's working fine.

10.29am ET

Now the committee members and the witness are just sitting uncomfortably staring at each other as presumably terrified techs try to sort out what's wrong.

Bernanke has his arms folded at the witness table and appears not the least put out at the unexpected twist. It's exactly the kind of composure the markets look for in a Fed chair. 

10.26am ET

Heidi Moore is the Guardian's finance and economics editor.

10.23am ET

Committee members are making opening statements, but they're hard to hear because either the mics or the speakers – it seems like a speaker issue – aren't working. CSPAN is not running its usual online video stream on account of the technical issue. 

The statements from committee members are barely audible on television with the volume turned up to around 40. What words can be made out sound safely dull.

It's like Bernanke mumblecore. 

10.15am ET

The Guardian's Dominic Rushe is watching the markets as we prepare to watch Bernanke. So far so good, he reports:

All the major US markets are up – a bit – ahead of Bernanke's testimony. The Dow is up 21 points, 0.14%. This despite the fact that the sequester has obviously taken a huge bite out of Congress's broadcast budget.

10.12am ET

Bernanke's testimony is delayed due to an audio problem in the hearing room. 

SELL! Sell!

While we wait you can read Bernanke's prepared remarks here

9.13am ET

Good morning and welcome to our live blog coverage of Federal Reserve chairman Ben Bernanke's testimony before the House Financial Services Committee. Bernanke's testimony has been released in advance of his 10am ET start in an effort to forestall any undue market excitement.

According to his prepared remarks, Bernanke will announce a possible winding down of the central bank's program to add fuel to a sputtering economy by buying bn in bonds each month, cyclical purchases known as quantitative easing. "Our asset purchases depend on economic and financial developments, but they are by no means on a preset course," Bernanke will testify, according to Reuters:

Bernanke set off a brief but fierce global market sell-off last month when he outlined plans to reduce the quantitative easing program, and he has joined a slew of Fed officials since then who have spelled out their intention to keep interest rates near zero well after the asset purchases.

Bernanke will take questions from committee members on the health of the economy, expectations for unemployment, inflation and other indicators in his semi-annual trip to the Hill – potentially his final appearance as Fed chair. Watch it with us here. 

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The two doves on the Bank of England’s Monetary Policy Committee, Paul Fisher and David Miles, switched their position to back new governor Mark Carney in a 9-0 vote to keep the size of the quantitative easing program unchanged at 375 billion pounds…


Powered by Guardian.co.ukThis article titled “Bank of England policymakers voted 9-0 to leave QE unchanged” was written by Heather Stewart, for theguardian.com on Wednesday 17th July 2013 09.19 UTC

Bank of England policymakers swung behind the new governor, Mark Carney, and voted unanimously against extending quantitative easing at this month's monetary policy committee meeting.

David Miles and Paul Fisher, the two MPC members who had repeatedly backed Sir Mervyn King's calls for an extension of the deflation-busting policy, decided instead to switch their votes and support Carney's plan of leaving QE unchanged, amid signs that economic recovery was becoming "more firmly established".

However, the minutes also showed that the MPC plans to use an August deadline to examine its policymaking remit, set by the chancellor, to establish "the quantum of additional stimulus required and the form it should take". That suggests Miles and Fisher may simply have decided to await next month's meeting before pushing for a fresh round of QE.

George Osborne has asked the Bank to announce next month whether it would like to adopt the policy of "forward guidance" – announcing how it expects interest rates to move to influence market expectations.

The MPC made a first foray into forward guidance at its meeting a fortnight ago, taking the unusual step of issuing a statement to financial markets warning them that interest rates were unlikely to rise.

When Carney was governor of the Canadian central bank, he pledged to keep interest rates low for 12 months, helping to calm fears in financial markets that borrowing costs were about to rise. However, some MPC members are known to be unenthusiastic about the idea.

July's meeting took place during the so-called "taper tantrum", when the Federal Reserve chairman Ben Bernanke's plan to phase out its programme of QE prompted share prices to plunge and bond yields to spike, pushing up interest rates across many economies.

The minutes show that MPC members were concerned by the "surprising" rise in UK government bond yields that followed Bernanke's remarks, and were keen to dampen expectations that interest rates were set to rise. In April, markets had not been expecting rates to go up until late 2016; by the time the MPC met, that had been brought forward to mid-2015.

"UK developments, while broadly positive, had not been enough to warrant such an upward move in the near-term path of Bank Rate," the minutes said.

Persistently weak real income growth – with high inflation more than outweighing paltry pay deals – was also highlighted as a risk to the recovery by MPC members: "Real income growth had remained weak … and it was unlikely that consumption growth could continue at its current rate without some rise in real incomes."

However, the MPC added that "developments in the domestic economy had generally been positive" and broadly in line with the moderately upbeat picture presented by the previous governor, Sir Mervyn King, at his final inflation report press briefing.

For "most members", therefore, "the onus on policy at this juncture was to reinforce the recovery by ensuring that stimulus was not withdrawn prematurely" – subject to keeping inflation on track to hit the government's 2% target.

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Greek unions attack public sector layoffs. Trains stopped, offices closed, protests planned. European car sales hit 17-year low. UK inflation up compared with the same month last year. Germany’ s ZEW index misses forecasts…


Powered by Guardian.co.ukThis article titled “Greek protests amid general strike over austerity job cuts – eurozone crisis as it happened” was written by Graeme Wearden, for theguardian.com on Tuesday 16th July 2013 12.53 UTC

5.47pm BST

End of the line

A woman walks across rail tracks in the northern Greek port city of Thessaloniki, during a 24-hour strike that  disrupted flights, public transport, state hospitals and other services, on Tuesday, July 16, 2013.
A woman walks across rail tracks in the northern Greek port city of Thessaloniki, during today’s strike. Photograph: Nikolas Giakoumidis/AP

With the Greek general strike coming to a close (see 10.25am onwards, and 2.46pm onwards, for details, and 1.53pm for analysis) , and Europe's stock markets closed lower (see 5.04pm), it's time to wrap up for the day.

Back tomorrow, for more action in Greece over the austerity bill, Ben Bernanke testifying at Congress, UK unemployment, Bank of England minutes, the latest twists in the eurozone crisis, and anything else that comes our way.

Until then, thanks and goodnight. GW.

5.43pm BST

The falls on today's stock markets came despite a bumper set of profits from Goldman Sachs.

As Dominic Rushe writes from Wall Street:

Goldman Sachs doubled its profits in the second quarter as the bank benefited from gains in fixed income, currency and commodity trading revenue.

The Wall Street giant set out its latest quarterly earnings Tuesday morning announcing net income of .93bn, compared with 2m a year earlier. Net revenue, including net interest income, rose 30% to .61bn from .6bn last year.

Updated at 5.53pm BST

5.23pm BST

Bank of Portugal slashes 2014 growth forecast

Some late news from Lisbon – Portugal's central bank has revised its economic forecasts. It now expects a slightly shallower slump this year — with GDP shrinking by 2.0%, not 2.3% as before.

But the Bank of Portugal also took the knife to its growth forecasts for 2014, scribbling out its projection of 1.1% in favour of just 0.3%.

It also warned that the political instability was hurting the economy:

The forecasts for the Portuguese economy are surrounded by particularly high uncertainty linked to the recent internal developments, adding to the challenges of the compulsory implementation of the adjustment programme.

Portugal's politicians have been locked in talks this week, after the country's president insisted that the major parties should agree a deal to maintain stability before its bailout programme ends in 2014.

5.04pm BST

European stock markets close

Not the most thrilling day in the financial markets. Perhaps one of the least.

Here's where the numbers finished:

FTSE 100: down 29 points at 6556, -0.45%

German DAX: down 29 points at 8205, – 0.35%

French CAC: down 26 points at 3851, -0.69%

Spanish IBEX: down 56 points at 7798, -0.7%

Italian FTSE MIB: down 67 points at 15529, -0.43%

And in New York, the Dow Jones is down 43 points, or 0.28%, at 15441.

A trader works at the Goldman Sachs kiosk on the floor at the New York Stock Exchange, in this May 29, 2013 file photo.
A trader works at the Goldman Sachs kiosk on the floor at the New York Stock Exchange, in this May 29, 2013 file photo. Photograph: BRENDAN MCDERMID/REUTERS

Traders are waiting for Ben Bernanke, chair of the Federal Reserve, to testify at Congress tomorrow. He may give new insight into the Fed's plans for slowing its monetary easing programmes.

There's also some interesting UK data out tomorrow morning, as CMC Market's Michael Hewson explains:

Investors seem content to sit on the sidelines today ahead of a big day tomorrow, when Fed Chairman Ben Bernanke starts his semi-annual testimony to Congress, while UK markets will be awaiting the first set of post Carney minutes from the Bank of England, as well as unemployment and average earnings data.

 This morning's weaker-than-expected ZEW survey of German economic confidence (details at 10.21am) also hit share prices, explains David Jones, chief market strategist at IG. The latest slump in EU car sales didn't help (details at 8.50am)

We could lay today's blame for the sideways movement of European equity indices on the unexpected decline in the German economic sentiment survey, which fell for the first time in three months. The data point was the only real item of note in Europe today, as year-on-year inflation for the eurozone came in at 1.6% as expected.

European car sales were abysmal, falling to a 16-year low with year-on-year sales for June declining by 6.3%. The extreme levels of unemployment in Europe have been blamed

4.15pm BST

It's a big summer for Greece's tourist industry, with officials hoping for record numbers of visitors now the eurozone crisis has eased.

General strikes and marches might not sound like sightseeing gold-dust — but this photo suggests tourists were quite interested in today's events:

Tourists take photographs from the top of a tourist bus, of protesters taking part in an anti- austerity rally (not seen in the picture) outside the Greek parliament in central Athens,
Tourists take photographs from the top of a tourist bus, of protesters taking part in an anti- austerity rally (not seen in the picture) outside the Greek parliament in central Athens, Photograph: Petros Giannakouris/AP

Might be a different story if the teargas and stone-throwing youths return…

Updated at 4.18pm BST

3.41pm BST

Cyprus prepares for Troika visit

Over in Cyprus today, the government is hoping to get a good report card from its lenders, who begin their first assessment of its bailout programme on Wednesday.

While Greece's general strike was based on anger over the Troika's demands, the government in Nicosia is focused on persuading international creditors that it's sticking to the terms of its financial rescue when they complete their first assessment.

Speaking to reporters earlier today, finance minister Haris Georgiades argued that the quickest way to escape the bailout terms is to implement the reforms demanded.

The speedy exit from restructuring will allow us to take new steps that will further ease and ultimately eliminate capital controls.

Cyprus' Minister of Finance, Haris Georgiades speaks during a press conference on July 16, 2013 in Nicosia, Cyprus.
Cyprus’ minister of finance, Haris Georgiades, speaks during today’s press conference in Nicosia, Cyprus. Photograph: STAVROS IOANNIDES/AFP/Getty Images

Those capital controls still restrict how much money Cyprus's citizens can withdraw from a bank, or take out of the country, making a 'Cypriot euro' less valuable than one in other countries.

Georgiades also hinted that selling some of Cyprus's gold reserves, as outlined in the bailout deal, was not the only option to raise funds for its part of the deal, saying:

It [the gold sale] will be considered, when the time comes, with options, or rather, all other options.

The gold price has fallen sharply since Cyprus's bullion sale was originally agreed, from around ,585 per ounce in early April to below ,300 per ounce today.

Updated at 3.43pm BST

2.52pm BST

Athens police reckon that about 16,000 protesters gathered in the main Syntagma Square for today's demonstration, which (if accurate) is a rather smaller turnout than during previous marches.

2.50pm BST

Eleni Fotopoulou, 58, a retired teacher and mother of two, summed up the situation in Athens today:

It feels like Greece is dead and now the vultures are fighting over its corpse.

I'm not angry anymore, I am disgusted. We have to fight back.

Updated at 2.50pm BST

2.47pm BST

And here's one more photo from outside the Athens parliament this lunchtime, where protesters chanted "No more sacrifices" and waved banners with slogans such as "Fire the troika".

Protesters hold flags in front of the Greek Parliament during a demonstration in central Athens, Greece, 16 July 2013.

2.46pm BST

Although the low-key protests are over, for now at least, many Greek workers remain off work today as the general strike continues.

Reuters sums up the situation:

Domestic flights were disrupted after civil aviation unions staged a four-hour work stoppage and Athens's main tourist attraction – the Acropolis – shut early.

City transport was also affected, with bus and trolley bus drives holding work stoppages in the morning and in the evening. Trains stopped running and tax offices and municipal services remained shut. Garbage collectors, bus drivers, bank employees and journalists were among other groups joining the walkout.

1.53pm BST

Analysis: Helena Smith on today’s strike

Municipal policemen march to Syntagma square where the Greek Parliament is situated.
Municipal policemen marching to Syntagma Square today. Photograph: Nikolas Georgiou/Demotix/Corbis

Every strike in Greece has a slogan and today’s, rather fittingly, is “we are people not numbers.” In Europe’s seemingly un-ending debt crisis, it is the human factor that has often got lost – never more so than in the country where it all began, writes Helena Smith from Athens.

Athens’ coalition government may insist that Greece is on the road torecovery but on the ground where the tell-take signs of six years of recession have left large swaths of the nation feeling increasingly desperate it is the opposite that rings true.

Efklidis Tsakalotos, the left-wing Syria MP, was not far off the mark this morning when he told parliament (11.36am):

the people running this country live in a different environment. They go to different hospitals. Their kids go to different schools. And they don’t understand what people are going through.

The Troika’s obsession with budget targets – no matter what the social cost – is what today’s protests are all about. Greeks have displayed immense patience – indeed fortitude – with austerity measures that have left over 1.3 million out of work, cut salaries by an average 25% and plunged more than a third of the population into poverty.

The omnibus reform package that parliament must now enact for the country to win further EU-IMF rescue funds is unlikely to be scuppered by the strike (as I write it is being tweaked by ministers desperate to keep anti-austerity sentiment in check).

But there are growing signs that Greece is reaching a tipping point. At a time when unemployment is nudging 27% the firing of some 25,000 civil servants – because no matter what language the dismissals are cloaked in that is what it amounts to – are simply seen as a demand too far.

A protester holds a banner featuring a man hanging from a Euro logo as he marches to the Greek Parliament during a protest in Athens, Tuesday, July 16, 2013.
A protester holds a banner as he marches to the Greek Parliament. Photograph: Kostas Tsironis/AP

Had the public sector been streamlined earlier, when other indicators were not so off-target, the sackings may have been more palatable. If, in six months, there were tangible results with privatisations, such news might have been better too.

As it is, the timing could not be worse. Barely a month after the debacle that followed prime minister Antonis Samaras’ attempt to close ERT, the state broadcaster, the government has egg on its face again. When he visits Athens on Thursday, the protests will be a vivid reminder to Wolfgang Schäuble, the German finance minister, that far from being a success story Greece remains a minefield in the euro zone. HS.

Updated at 1.53pm BST

12.58pm BST

Share your photos and videos

Guardian Witness are running an assignment for photos and videos of this week's protests in Greece.

If you're there, you can take part very easily – just visit this page.

Updated at 1.42pm BST

12.55pm BST

Syriza MPs join the protest


MPs from the left-wing Syriza party took part in today's protests, coming out of the parliament building to hand a banner reading "Let's fire the government. No lay-offs in the state and private sector".


12.38pm BST

Symantec gives Ireland a lift

At the other end of the eurozone, Ireland, there is some better news – 400 new posts have been created by Internet security firm Symantec.

From Dublin, Henry McDonald reports:

The jobs will be based at Symantec's base in Blanchardstown, West Dublin with 200 going on stream immediately and a further 200 IT workers recruited over the next two years.

They will work at the company's new European Customer Management Centre in the city.

The company says it will be seeking highly-skilled, multilingual staff to take on the roles.

Symantec has been in Blanchardstown for 22 years, and the base which employs just over 600 people, is already home to a security operations centre, as well as operations in business authentication, software development and testing.

The new project is supported by Ireland's Industrial Development Authority, and its chief executive Barry O'Leary said Symantec is part of a thriving cluster of world leading security software companies operating in the Republic.

This latest jobs boost comes less than a week after Standard & Poor gave an upbeat forecast of the Irish economy and put the country's credit rating into the positive zone.

The creation of these jobs also indicates that while domestic demand and the constrution industry remain in the doldrums the Republic's export led hi-tech sector continues to flourish in the face of the recession.

12.32pm BST

Nick Malkoutzis, deputy editor of Greece's Kathimerini newspaper, confirms that today's Athens rally was a "relatively low key protest".

More protests to come later today, though (including another gathering in Syntagma this evening).

Updated at 12.44pm BST

12.09pm BST

A couple more shots of today's protest march in Athens:

A rally has also taken place in Chania, Crete, though. Here's a photo of the march passing through its port:

Updated at 12.13pm BST

11.58am BST

Former Greek finance minister faces indictment over Lagarde List

George Papaconstantinou
Greece’s former finance minister George Papaconstantinou. Photograph: Icon/Reuters

Greek politics is also gripped by the repercussions of last night's parliamentary vote in favour of prosecuting the former finance minister George Papaconstantinou.

Papaconstantinou is accused of mishandling the infamous “Lagarde list” of 2079 suspected tax evaders with accounts in the Geneva branch of HSBC, and removing the names of his own relatives

From Athens, Helena Smith explains that a five-member judicial council will decide whether the 52-year-old former minister will face a special court. Most analysts think it very likely that the court will be set up.

Papaconstantinou told parliament that he'd been made a scapegoat, by a political establishment desperate to be seen to be cleaning up after the wrong-doing of the past.

I absolutely and categorically deny these accusations,” he told the chamber saying instead of pursuing the “real, big scandals that have cost the country billions” lawmakers were pursuing him on trumped-up charges. 

“Not only is it unfair to attempt to wash the sins of many governments on my back, it’s something more: it’s dishonourable,”

And Helena reports that Papaconstantinou, a reform-minded moderate, has his supporters on both the left and right today.

"I do not for a minute think he was foolish enough to delete the names of his own relatives from the list,” the right-wing publisher and analyst Giorgos Kyrtsos told me. "He has become a convenient scapegoat." 

In the socialist Pasok party insiders also rued the development. “He doesn’t deserve to rot in prison,” said one. “After all he did a lot to modernise the economy. If he is guilty it is of miscalculating public anger when he did something as silly as erase those names.”

In a front-page editorial today, the mass-selling daily Ta Nea makes the point that unlike France, Germany, Spain and Italy – handed similar lists of suspected tax evaders by the then French finance minister Christine Lagarde – Greece has failed to rake in “even one euro” from those on the list.

If tried and found guilty of the charges, Papaconstantinou could face ten years or more in prison.

11.36am BST

Syriza MP: Greece must change course

Efklidis Tsakalotos, a left-wing MP from the Syriza coalition, has laid into Antonis Samaras's government in parliament today during the debate on the austerity bill (vote due tomorrow night).

Tsakalotos called on the governing coalition to ditch its latest planned reforms.

It's a disgrace for the government to say that things are getting better with unemployment at such a high level.

It is clear that with the economy still shrinking that we need a change of course.

The people running this country live in a different environment. They go to different hospitals. Their kids go to different schools. And they don't understand what people are going through.

(via AP)

However, if the bill is not passed then Greece's lenders will not hand over the rest of its bailout tranche….

11.07am BST

Economist Intelligence Unit: Strike shows anti-austerity support

Tourists watch as union members stage a demonstration against the Greek government during a general strike in Athens on July 16, 2013
Tourists watch today’s demonstrations. Photograph: ANGELOS TZORTZINIS/AFP/Getty Images

Today's general strike will not succeed in persuading the Athens government to withdraw its austerity bill, predicts Martin Koehring, Greece analyst at The Economist Intelligence Unit.

Koehring also predicts that there's little chance of encouraging government MPs into a rebellion against the planned reforms and job cuts.

He explains:

The general strike is unlikely to succeed in its aim of forcing the government to withdraw its latest reform bill or convincing enough MPs to vote against it.

Although the government only has the support of 155 MPs in the 300-seat parliament, it is improbable that there will be sufficient defections for the bill to be voted down. A major rebellion by coalition MPs so soon after last month's cabinet reshuffle is unlikely.

But that doesn't mean the stike is meaningless. Instead, it shows the "strong anti-austerity sentiment among the population".

The Economist Intelligence Unit continues to expect political risk (social unrest and a potential collapse of the two-party government coalition) to remain a major focal point in Greece this year and in 2014, Koehring added.

10.38am BST

Communist protest march

A couple of photos of supporters of the Communist-affiliated trade union PAME marching up to, and past, the Athens parliament a few minutes ago:

Supporters of the Communist-affiliated trade union PAME take part in an anti-austerity rally in Athens, July, 16, 2013, during a 24-hour general strike.
Supporters of the Communist-affiliated trade union PAME take part in an anti-austerity rally in front of the parliament in Athens July, 16, 2013, during a 24-hour general strike

10.25am BST

Greek protest rally reaches Syntagma

Back to the Greek general strike, and the first union demonstration against the government's austerity bill has reached Syntagma Square.

Looks like a decent turnout (with the Greek parliament in the middle of the shot):

10.21am BST

ZEW survey

Meanwhile, the ZEW survey of economic confidence in Germany has just missed expectations.

At 36.3, the ZEW showed sentiment weakened, slighly, from May (when it registered 38.5). This follows unerwhelming German industrial production and foreign trade date.

German economists are a little more optimistic about economic expectations for the Eurozone. However, there's a long way to go. As Zew puts it:

The indicator for the current economic situation in the Eurozone has also improved and now stands at the minus 74.7 points-mark (up 4.8 points).

Not much reaction in the City.

Here's the statement from ZEW.

Updated at 10.43am BST

10.03am BST

Inflation, instant reaction

The 2.9% annual rise in the UK consumer prices index (9.32am onwards) to a 14-month high could mark inflation's high point in the current cycle, argues George Buckley of Deutsche Bank, who called it "encouraging news",

We think this is going to be the peak in inflation and inflation will fall in the second half of the year and beyond and get back towards its target, not at target but towards its target by the end of the year.

But it is rather higher than inflation in other countries (CPI in the eurozone is just 1.6%), and outpacing the rise in British wages (around 1%).

The TUC's Duncan Weldon doesn't expect any respite when we get UK unemployment stats tomorrow….

While Robert Wood of Berenberg says it's good news for governor Mark Carney:

They say it’s better to be lucky than good, and Mark Carney certainly appears to be lucky….

A fall in volatile air fares kept inflation from rising further.


Britain is slowly but surely getting past the worst of its troubles. The recovery so far is built on sand. Household finances are not a pretty picture, with inflation eating into spending power and consumption therefore being sustained by sharp falls in the saving ratio.

Updated at 10.07am BST

9.36am BST

Inflation, the details

The rising cost of living in the UK last month was driven by increased prices of fuel, clothing and footware.

But at 2.9%, CPI has come in below City expectations. And crucially, it means governor Mark Carney will not have to write a letter to the chancellor explaining why the Bank of England failed to keep inflation within one percentage point of 2%.

The Retail Prices Index (RPI), the inflation measures used for wage negotiations, also came in slightly lower than forecast at 3.3%.

Updated at 9.42am BST

9.32am BST

UK inflation up

Breaking: Inflation is up in the UK, with the consumer prices index jumping to 2.9% in June, from 2.7% in May. That's the highest level since April 2012.

Updated at 10.07am BST

9.26am BST

Photos: General strike underway

Familiar scenes in Athens this morning as the walkout hits transport links:

A commuter walks by a closed train station in a northern Athens suburb July 16, 2013
A commuter walks by a closed train station in a northern Athens suburb this morning. Photograph: JOHN KOLESIDIS/REUTERS
Commuters read a notice at the closed entrance of central Syntagma square station during a general strike in Athens July 16, 2013.
Commuters read a notice at the closed entrance of central Syntagma square station. Photograph: YANNIS BEHRAKIS/REUTERS

8.50am BST

European car sales slide; Ireland hammered

The slump in Europe's car industry continues, with new figures released this morning showing that sales fell to a 17-year low in June.

The European Automobile Manufacturers Association reported a 5.6% slump in new vehicle registrations across Europe in June, and a 6.6% fell for the first six months of 2013.

That means the industry has sold around 400,000 fewer cars than a year ago during 2013, at a time when manufacturers are trying to cut capacity and improve competitiveness.

European car sales have been sliding steadily since the eurozone crisis began — apart from a small blip in April when sales rose year-on-year.

European car registrations, June 2013
Photograph: ACEA

Core eurozone countries are suffering now — with German sales down -4.7% and France dropping by -8.4%.

There was also a stunning 71% year-on-year plunge in sales in Ireland. Just 1,673 new vehicles were registrated in the Republic in June, down from 6,352 in June 2012. That puts Ireland's status as an austerity poster boy into perspective.

Within manufacturers, Fiat suffered a -12.6% drop in sales, GM were down 9.9%, Peugeot-Citreon fell 10.8%, BMW dropped 7.9% and VW Group's sales were down 3.6%.

Ford, though, gained +8.1%, and Jaguar Land Rover were up 1.6%.

Here's the data (pdf).

UPDATE: In the reader comments, grace5715 explains that the drop in Irish car sales follows a change to the registration system. (see here for the full story)

Updated at 3.14pm BST

8.22am BST

Today’s protests

Several protests are planned for Athens today, with the first starting shortly, and an all-night sit-in planned outside the Greek parliament

10:30 local time (8.30am BST): Communist workers group PAME will gather in Omonia Square in Athens, then coverge with union protest in Syntagma. A seperate march will take place in the city of Thessaloniki.

11:00 local time (9am BST): Employees from the ADEDY, GSEE and POE-OTA (municipal employees) unions will start a protest in Klafthmonos Square and move to Syntagma, outside Parliament

20:00 local time (6pm BST): Municipal workers will begin a sit-in and overnight protest in Syntagma Square, as MPs debate the latest austerity bill required to secure bailout funds.

That's via Living in Greece, which has more details of today's disruption.

8.15am BST

Why another strike?

By my reckoning this is the fourth general strike in Greece this year (following walkouts on 20 February, 1 May and 13 June).

Greek unions hope today's walkout can change the government's approach to the crisis (despite its austerity measures, such as 15,000 civil service job cuts by the end of 2014, being largely dictated by its Troika of lenders).

Private sector union GSEE declared:

We are continuing our fight to put an end to policies that annihilate workers and drive the economy to an even greater recession.

We will stand up to those who, with wrong and dead-end choices, have driven the Greek people to poverty and despair.

While ADEDY, representing state workers, has attacked the way layoffs are being imposed on staff, such as those at the state broadcaster ERT which was closed down last month.

It said:

The policy of mass layoffs, the dismantling of public institutions responsible and the demolition of any notion of labor rights inaugurate a new undemocratic governance of the country.

Today's walkout has already left trains halted in their sidings,and meant many government offices are shut, Reuters reports from Athens. Air traffic control staff are also holding a four-hour stoppage from noon (10am BST).

Updated at 8.16am BST

7.47am BST

Greek general strike against austerity

Teachers hold placards and posters with messages regarding the future of children. -- Teachers and education workers protest against layoffs and school closures. As Greece's lenders have demanded, the Greek coalition government is about to vote for 12,500 layoffs in the public sector, including teachers and school guards.
On Monday night, teachers and education workers protested against layoffs and school closures, ahead of today’s general strike. Photograph: Nikolas Georgiou/Demotix/Corbis

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

Bubbling anger against Greece's austerity programme will hit the streets of Athens today. Labour unions are holding their fourth general strike of 2013, with demonstrations planned for the Greek capital.

The walkout comes as MPs debate the latest austerity measures agreed with Greece's lenders, including cutting 15,000 public sector workers from the payroll. Those layoffs are the price of Greece's latest bailout loans, but the unions say they will bring further suffering to a country locked in recession since the early days of the financial crisis.

As usual on these occasions, we're expecting disruption to transport links, government services, and a protest march to the parliament at Syntagma Square.

MPs are due to vote on the austerity measures on Wednesday night, so today's strike is an opportunity to change some minds within the parliament.

The Athens government has already been trying to assuage the anger. As Kathimerini reports this morning:

In various statements to the media, government officials sought to appease fears of impending layoffs. Public Order Minister Nikos Dendias told Skai that the aim was for all municipal police officers to be reposted within the ranks of the Greek Police force.

Health Minister Adonis Georgiadis told Mega television channel that more than 1,000 hospital staff scheduled to join a mobility scheme for civil servants by the end of the year would only be subject to reduced wages for two months ahead of their transfer to other posts, insisting that none of them would be laid off.

But that may not prevent workers taking to the streets, or from continuing their sit-ins at some municipal buildings.

The schoolteachers union, for example, is reportedly planning legal action over plans to put teachers staff into Greece's new 'mobility scheme' — where workers are paid less and can be more easily laid off.

We'll have full analysis of the situation shortly, from Athens.

Also today…

• Spanish prime minister Mariano Rajoy remains under pressure over the slush fund scandal (after failing to resign yesterday).

UK inflation and German ZEW confidence data is due out later this morning.

• And in the corporate world, Goldman Sachs reports its results (as former trader Fabrice Tourre defends himself against fraud charges.

Busy busy….

Updated at 7.57am BST

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Mariano Rajoy: I won’t quit over slush fund allegations. ‘Blaring sirens’ at Athens demonstrations against job cuts. Police officers protest in Athens. Fresh stimulus measures expected after China’s growth rate drops. Weaker US retail sales…


Powered by Guardian.co.ukThis article titled “Eurozone crisis: Greek police officers protest; Spain’s PM refuses to resign – as it happened” was written by Graeme Wearden, for theguardian.com on Monday 15th July 2013 15.49 UTC

5.59pm BST

Closing summary

Time to stop, after one of our quieter days (apologies – I guess it's the summer lull…).

Here's a very brisk closing summary:

Greek unions are preparing for another general strike, starting midnight tonight. The protests, which will hit transport services, schools, hospitals and government offices, are designed to put pressure on MPs to reject the latest planned job cuts to the public sector. See 4.59pm for details.

Police officers have already held fresh protest today. Athens was brought to a halt by demonstrators in cars and on motorbikes, in the latest sign that municipal workers have not accepted the deep redundancies demanded by the Troika. See 11.57am for photos and 1.12pm for a report from the scene.

Spain continues to be gripped by the illegal payments scandal that has struck its ruling party. Prime minister Mariano Rajoy hopes to ride out the storm, refusing to resign today and insisting that stability is important. (see 8,.44am for the latest allegations and 3.19pm for highlights of Rajoy's press conference today)

The man at the heart of the issue, former party treasurer Luis Barcenas, appeared in court to answer questions over the affair. Details here

The day began with confirmation that China's economy is slowing. But at 7.5%, on an annual basis, its GDP growth was better than feared. See 8.25am for details

While the latest US economic data was murky. Manufacturing beat forecasts, but retail sales were weak. See 2pm

And European stock markets rose, on a mixture of Chinese relief and speculation that the US stimulus programme has longer to run. See 5.25pm for closing prices and the main movers on the FTSE 100.

And finally, Fitch downgraded the eurozone's temporary bailout fund, the EFSF. The fallout from France's downgrade continues… (see 5.53pm)

I"ll be back tomorrow. Should be more lively. Until then, thanks for reading and for the comments (as ever!). Goodnight! GW

5.53pm BST

Worth noting the 'Key Assumpions' that Fitch uses to assess the EFSF's credit rating (and by extension the eurozone as a whole):

Fitch assumes there will be progress in deepening fiscal and financial integration at the eurozone level in line with commitments by euro area policy makers. Fitch also assumes that the risk of fragmentation of the eurozone remains low.

On the one hand, that's encouraging. On t'other, it means further downgrades if progress stumbles or the crisis flares up again.

5.50pm BST

Fitch downgrades EFSF

Some late breaking news – Fitch, the credit rating agency, has downgraded the European Financial Stability Facility, the bailout fund which helped to finance several eurozone bailouts.

The move follows Friday night's downgrade of France, one of the main backers of the EFSF.

Here's the statement: Fitch Downgrades European Financial Stability Facility to 'AA+'

5.23pm BST

Markets close

A gentle day for Europe's stock markets. Relief that China's growth slowdown wasn't worse helped to push shares higher, while the Spanish stock market slipped as the slush fund scandal rumbled on.

Today's weaker-than-expected US retail sales figures (2pm) helped push shares higher, as it boosted hopes that America's stimulus packages will run for longer….

Here's the closing prices:

FTSE 100: up 41 points at 6586, +0.6%

German DAX: up 22 points at 8234, + 0.27%

French CAC: up 23 points at 3878, +0.6%

Spanish IBEX: up 10 points at 7855, + 0.13%

Italian FTSE MIB: up 166 points at 15597, + 1%

FTSE 100 top risers, July 15
FTSE 100 top risers today. Photograph: Thomson Reuters
FTSE 100 top fallers, July 15
FTSE 100 top fallers today. Photograph: Thomson Reuters

4.59pm BST

Greece's unions are getting ready for their third general strike of 2013, starting at midnight tonight.

GSEE, the biggest private-sector union, hopes that the walkout will persuade the Greek government to change course, as it brings leglslation to cut the public service workforce.

In a statement, GSEE said:

The workers continue the struggle to put a final end to these policies that kill labor and drive the economy to ever deeper recession.

We demand a change to the politics of firings, privatization and divestiture of the public sector.

(via Bloomberg)

As usual, government services, transport links, schools and health services could all be disrupted by the walkout.

4.49pm BST

Open Europe has been tracking the latest developments in Spain here: Slush fund scandal reignites in Spain, but risk of early elections remains small

It flags up that Mariano Rajoy's comments on the illegal payments scandal this afternoon (see 3.19pm onwards) may have been pre-prepared:

Another interesting fact from the Rajoy-Tusk presser. When a foreign leader comes to Spain on an official visit, the protocol establishes that, at the joint press conference, Spanish journalists and their counterparts from the visitor's country are only allowed two questions each.

Today, it had been agreed that the two questions from the Spanish side would come from El Mundo and the news agency EFE. However, Rajoy unexpectedly gave the floor to a journalist from ABC.

Asked by his colleagues at the end of the presser, the ABC journalist explained that he had received a phone call from his editor dictating him the exact wording of the question he had to put to Rajoy – who then replied by reading a short written statement he had prepared.

Updated at 4.50pm BST

4.40pm BST

IMF: Spain’s banks aren’t safe from risks

The International Monetary Fund has added to the pressure on Spain today, warning that its banks are still at risk – despite recent progress.

In its latest assessment of the Spanish financial sector, released this afternoon, the IMF welcomed the creation of Spain's Bad Bank, called Sareb, which hasmopped up toxic loans from the commercial banking sector.

But given the ongoing economic downturn,the country's banks are not out of the woods. The IMF fears they will suffer new losses as the recession continues, forcing them to limit their lending. It wants them to boost their capital ratios by cutting cash dividends or issuing new shares instead.

In its report, the IMF warned that Spain's banking sector was in a poor position, saying:

Risks to the financial sector arising from the difficult economic environment still loom large, requiring continued action to safeguard the program's gains and better support economic recovery.


Financial sector dynamics still contribute to recessionary pressures, with credit contraction accelerating, lending standards tightening, and lending rates to firms rising.

Not a good time for the prime minister to be fighting calls for his resignation….

4.13pm BST

PP’s Barcenas in court….

A banner reading “Law and control to clean up”, is seen at the High Court in Madrid, where former People’s Party treasurer Luis Barcenas appeared today. Photograph: Andres Kudacki/AP

Luis Barcenas, the former treasurer of Mariano Rajoy's Popular Party, spent several hours in a closed-doors court hearing today.

Barcenas faces several charges including bribery, money laundering and tax fraud, relating to allegations that PP ran a secret fund where businesspeople funneled payments to the party.

Reuters reports that Barcenas, who has been held in prison since June, disclosed new documents to judge overseeing the case:

A High Court judge questioned Barcenas behind closed doors for more than three hours on Monday after he was transported from jail in a white and black van.

A lawyer involved with the case told Reuters that Barcenas, a once-trusted aide, turned over documents showing how he ran a secret slush fund at the party for many years, and provided details of years of cash payouts to party leaders.

Over his more than 20 years handling PP finances, Barcenas accumulated as much as 48 million euros in Swiss bank accounts that prosecutors say he has failed to adequately explain.

Rajoy is not charged with any crime and has repeatedly denied that he or other party leaders received illegal payments.

While Rajoy is refusing to resign over the affair (see 3.19pm), public anger over the scandal is rising, at a time when Spanish citizens have suffered from a long recession and record unemployment:

3.19pm BST

Rajoy refuses to resign over illegal payments scandal

Spanish Prime Minister Mariano Rajoy gestures during a joint press conference with his Polish counterpart after their meeting at the Moncloa palace in Madrid on July 15, 2013. Sain's Prime Minister Mariano Rajoy today ruled out resigning over a corruption scandal rocking his government.  AFP PHOTO / PIERRE-PHILIPPE MARCOUPIERRE-PHILIPPE MARCOU/AFP/Getty Images
Spanish PM Mariano Rajoy gestures during today’s joint press conference in Madrid. Photograph: PIERRE-PHILIPPE MARCOU/AFP/Getty Images

Spanish prime minister Mariano Rajoy has defended himself over the slush fund scandal, and refused to resign.

Speaking as the former treasurer of his Popular Party appeared in court over the affair, Rajoy said he would not bow to calls to step down. Rajoy insisted that he would see out his term of office, and would not allow the case to derail his political reform programme.

At a press conference with the Polish prime minister, Donald Tusk, Rajoy said:

I will defend political stability and I will fulfill the mandate given to me by Spanish voters.

As explained at 8.44am, the El Mundo newspaper published text messages which they claim show Rajoy offering support to Luis Barcenas, the ex-treasurer of the PP party, who is accused of collecting secret payments from Spanish businessmen and passing the onto senior party members.

Rajoy declined to comment on these latest allegations, as journalist José Miguel Sardo flags up:

City analysts aren't convinced that Rajoy can ride out the storm…..

Spanish Prime Minister Mariano Rajoy (R) shakes hands with his Polish counterpart Donald Tusk (L) during a press conference after their meeting at the Moncloa palace in Madrid on July 15, 2013.
Rajoy shakes hands with his Polish counterpart Donald Tusk. Photograph: PIERRE-PHILIPPE MARCOU/AFP/Getty Images

2.36pm BST

The spate of demonstrations in Greece in recent days, and the protests planned for this week, highlights the anger and shock felt by public sector workers who have discovered their jobs are being cut to meet the targets set by the Troika.

Teacher Dude, a citizen journalist who covers the Greek crisis, reports:

A municipal police officer holds a Greek flag during a protest in front of the  Parliament in Athens, Greece, 15 July 2013
A municipal police officer holds a Greek flag during a protest in front of the Parliament in Athens today. Photograph: FOTIS PLEGAS G./EPA

2.13pm BST

Confirmation that tomorrow's general strike in Greece will hit some flights into the country, with civil aviation employees planning to stop work between noon and 4pm (10am-2pm).

2.00pm BST

US data: retail sales disappoint, but manufacturing beats forecasts

A classic mixed bag of economic news from the US.

The Good: The 'Empire State' survey of the manufacturing sector in the New York area, which showed a decent, unexpected, rise in output .

Business conditions rose to 9.46, up from 7.84 in June, bneating foreacsts of a reading of 5.

The Bad: US retail sales only rose by 0.4% last month, dashing hopes of a 0.8% rise. Strip out spending on new cars, and gasoline, and sales were down by 0.1%.

And the bad news is trumping the good news, it seems, with the dollar weakening — on the grounds that this makes an early 'tapering' of America's stimulus measures a little less likely.

1.12pm BST

AP: Police protests block traffic in Athens

Municipal police officers protest in front of the  Parliament in Athens, Greece, 15 July 2013.
Municipal police officers protesting in front of the Parliament in Athens today. Photograph: FOTIS PLEGAS G./EPA

Traffic was brought to a standstill in Athens by the striking municipal police offices who held a demonstration against the plan to lay off thousands of public workers (see 11.57am for details & early photos).

Associated Press reports:

Sirens blaring, striking municipal police officers brought traffic to a standstill across central Athens Monday.

As part of a protest against government cuts, the officers parked their motorcycles and patrol cars outside the offices of the governing center-right New Democracy party and its Socialist coalition partner.

The officers hope to persuade MPs not to support the firing of 15,000 public sector workers by the end of 2014, as demanded by Greece's lenders.

AP continues:

The rally launched a week of planned demonstrations against the latest round of austerity measures that will impose staff cuts on teachers and local government. Municipal authorities across Greece including the Athens municipal police, who are generally tasked with checking parking violations and checking street vendors have suspended services for three days, while unions have called a general strike for Tuesday.

Public sector workers, while slapped with repeated salary and benefit cuts, have been spared firings until this year.

The measures are to be voted by parliament this week the first major political test for Conservative Prime Minister Antonis Samaras since a left-wing party abandoned his coalition government last month, leaving it with a reduced majority.

As explained earlier (11.26am), the municipal workers' strike will last until the end of Wednesday. Then on Thursday, German finance minister Wolfgang Schaeuble is visiting Athens…..

12.41pm BST

Uk business confidence has hit a six-year high, a new global business outlook survey from Markit has found.

However, eurozone firms are much less upbeat, as Markit's chief economist, Chris Williamson, explains:

The eurozone remains a weak spot in the global picture, though far less so than late last year.

However, while there are signs of rising optimism in the periphery, notably Spain and Ireland, the mood in France and Germany remains subdued compared with earlier in the recovery, which will restrain the overall pace of economic recovery for the region.

The survey also found that global business confidence had deteriorated in recent months, with US and Chinese firms less optimistic – even before today's GDP data confirmed China's growth was slowing (see opening post).

Here's the full story: UK business optimism at six-year high

12.12pm BST

Fabulous Fab due in court

Heads-up: Former Goldman Sachs banker Fabrice Tourre will go on trial today on civil fraud charges relating to sales of bundled mortgage securities in the run-up to the financial crisis.

'Fabulous Fab' is the only Goldmanite to face charges over the affair, which attracted a 0m fine in 2010. As our Wall Street correspondent Dominic Rushe explains, its a chance for the Securities and Exchange Commission to win a high-profile cases related to the credit crunch:

Tourre, a mid-level employee, was the only Goldman executive to be charged individually and chose to fight the case.

Tourre is to argue he was just a cog in the machine, and that those who lost money were sophisticated investors who made their own bad decisions.

The SEC claims that Tourre misled clients who were sold a 'toxic' derivatives product, by not revealing that hedge fund billionaire John Paulson had helped choose which mortgages were included, and was planning to bet on the assets falling in value,

Tourre denies the charges. More details here.

11.57am BST

Photos: Poiice demonstrate in Athens

Following on from that last post, Greek municipal police officers in cars and on motorbikes have held a demonstration against public sector layoffs this morning.

Here's the latest photos from Athens:

Municipal police officers take part in a protest with motorbikes and cars against public sector layoffs, which the government has promised its international lenders in exchange for bailout funds, in Athens July 15, 2013.
Municipal police officers take part in a protest with motorbikes against public sector layoffs, which the government has promised its international lenders in exchange for bailout funds, in Athens July 15, 2013.
A municipal police officer takes part in a protest with motorbikes and cars against public sector layoffs, which the government has promised its international lenders in exchange for bailout funds, in Athens July 15, 2013.

11.26am BST

Greece protests this week

It's shaping up to be another week of anti-austerity protests in Greece.

A general strike has been called for Tuesday by the main public and private sector unions, who will hold a protest march in Athens. Local airports and long-distance train services are likely to be disrupted (check out Living in Greece for full details).

Municipal workers have already begun a new three-day walkout this morning, against propose layoffs.

Union leaders representing the municipal workers are due to meet with deputy prime minister Evangelos Venizelos, finance minister Yannis Stournaras, interior minister Yiannis Michelakis and administrative reform Minister Kyriakos Mitsotakis this afternoon.

The Athens parliament is due to vote on the latest measures agreed with its Troika of lenders later this week.

MPs are also expected to vote tonight on whether former finance minister Giorgos Papaconstantinou should be prosecuted over the Lagarde list of tax evaders (he denies removing the names of several relatives from the list).

10.53am BST

FrAA+nce shrugs off downgrade

Being stripped of its AAA rating hasn't done France any immediate harm, with its government bond prices little changed this morning.

Fitch became the third and final major credit rating agency to downgrade France, on Friday night, with a one-notch downgrade to AA+.

The French debt burden is no longer consistent with a top-rated country, Fitch warned, with general government gross debt expected to peak at 96% of GDP next year, and still be 92% in 2017.

Bond traders aren't spooked, though, with the yield (interest rate) on French 10-year bonds up just 0.02% at 2.2% this morning.

Investors won't have been surprised to hear that France has a debt problem – Fitch is rather late to this party. And with so many AAA ratings having been trampled underfoot since the crisis began, a downgrade carries little oomph.

As Nikolaos Panigirtzoglou, head of global asset allocation at JPMorgan, put it, double-A is the new triple-A:

Conservative bond investors, such as reserve managers, used to have triple-A only mandates but they have adapted to the reality that there aren’t many triple-As anymore.

(quote via Reuters)

9.57am BST

In the UK, three pro-European politicians from across the political spectrum are warning that it would be a "historical error" for Britain to quit the European Union.

The Conservative cabinet minister Ken Clarke, Liberal Democrat Danny Alexander (number 2 at the Treasury) and Labour's Lord Mandelson are all backing a cross-party group called British Influence.

It's new manifesto, called 'Better off in a Better Europe', is being launched today. It argues that the UK should help reform the EU from the inside, making it "leaner and meaner", rather than quitting.

The move comes days after MPs voted in favour of an in-out EU referendum – Clarke was one of a small handful of Tories who didn't back the plan.

Here's the full story: Ken Clarke, Danny Alexander and Lord Mandelson warn against EU exit

Updated at 9.58am BST

9.35am BST

European stock markets are holding onto their early gains (see 8.25am), and Mike McCudden, head of derivatives at stockbroker Interactive Investor, confirms that the Chinese economic data has provided cheer:

Solid Chinese GDP has provided the comfort many investors were looking for and equities have been given a confidence boost in early trade.

9.28am BST

Tsipras re-elected as Syriza’s leader

Over in Greece, left-wing politician Alexis Tsipras is celebrating after being re-elected leader of Syriza last night.

Syriza has officially changed to become a single party rather than a coalition of leftists factions, in an attempt to pick up more support after surging to second place in last year's elections.

Tsipras, who picked up 74% of the vote, declared:

Starting tomorrow, with our new party, all together, stronger and more united than ever, we will embark on our great and victorious path.

Tsipras also declared that Syriza would support striking Greek municipal workers "to the end", as they fight thousands of public sector job cuts.

During a five-day congress, Syriza also agreed to keep pushing for Greece's bailout programme to be renegotiated:

Kathimerini reports:

The party adopted as its official position the cancelling of Greece's EU-IMF memorandum and the renegotiation of its loan agreement. It also intends to carry out an audit of Greece's public debt with the aim of cancelling any part that is considered "odious", or illegitimate.

9.14am BST

Over on Alphaville, Kate Mackenzie has crunched through the details of China's economic data (showing an annual growth rate of 7.5%), and flagged up some key details:

• The seasonally-adjusted rate is 1.7 per cent. If annualised — ie the way that most countries present their quarterly GDP data — is it just under 7 per cent. On the same basis, Q1 was 6.6 per cent, and Q4 2012 was 7.8 per cent (see table below for more).

• The headline rate of 7.5 per cent for Q2 was in line with expectations — but those expectations had fallen fairly rapidly from 7.8% about a month ago (at least on the Bloomberg survey).

There were also an intruiging rise in 'capital formation', which helpfully offset a drop in export growth. More here: China GDP

8.59am BST

Portuguese parties work on ‘national salvation’ plan

Portugal's three political parties have set themselves a week to agree a "national salvation pact" to keep its bailout programme on track.

Late last night, the opposition socialist party said it has begun talks with the two coalition parties who form the Portuguese government.

In a statement, it explained:

The talk process began today with representatives from the Social Democratic Party, the Democratic and Social Center Party and the Socialist Party discussing methodology of the works and fixing a deadline of a week to…search for a national salvation commitment.

(via the WSJ)

The parties are aiming to get a deal by July 21 (next Sunday). The talks come after the country's president shook Portugal by calling for politicians of all sides to work together, ahead of elections next year.

Updated at 9.00am BST

8.44am BST

Spanish PM faces new calls to resign

Hundreds of people demonstrated in Barcelona against political corruption and demanded the resignation of Prime Minister Mariano Rajoy, on 14 July 2013.
Hundreds of people demonstrating in Barcelona against political corruption and demandinf the resignation of Prime Minister Mariano Rajoy, on 14 July 2013. Photograph: Andreu Gim nez/Demotix/Corbis

Over in Madrid, Mariano Rajoy is under renewed pressure after the country's opposition leader called for his resignation over the illicit payments scandal.

There were also demonstrations in Barcelona yesterday, after a Spanish newspaper claimed that the prime minister had texted messages of support to the former party treasurer at the heart of the 'slush fund' scandal that has gripped Rajoy's Popular Party (PP), and the country, for months.

El Mundo said Mr Rajoy had sent supportive words to Luis Barcenas, PP's former treasurer, who is accused of taking secret donations from businesspeople and passing them on to senior party members.

One alleged text message read:

Luis, I understand. Stay strong. I'll call you tomorrow. A hug.

Barcenas denies charges of corruption and tax fraud, and Rajoy also denies any wrongdoing. But the scandal, and the drip-drip-drip of allegations continues to dog the PM.

The leader of Spain's main opposition Socialist Party, Alfredo Perez Rubalcaba, said last night that he was cutting all contact with Rajoy and PP, and said the PM should resign.

Rubalcaba declared:

Mr Rajoy's conduct in this situation can be summarised quite simply: silence, lies, and after what we have learned today, collusion, extremely serious collusion

Barcenas is due back in court later today.

8.25am BST

Shares rise after Chinese GDP data

An investor gestures at a private securities company on Monday July 15, 2013 in Shanghai, China.
An investor gestures at a private securities company in Shanghai, China, earlier today. Photograph: AP

There's relief in the City this morning that the Chinese GDP data didn't show a sharper slowdown.

The main European stock markets are all showing gains, led by mining stocks, after Shanghai's stock market rose by almost 1%.

Here's the early prices:

• FTSE 100: up 47 points at 6592, + 0.75%

• German DAX: up 43 points at 8255, + 0.5%

• French CAC: up 21 points at 3877, + 0.57%

• Spanish IBEX: up 43 points at 7888, + 0.5%

• Italian FTSE MIB: up 102 poiints at 15533, + 0.6%

Traders are cheered that China isn't slowing down more rapidly, especially after finance minister Lou Jiwei had appeared to hint that the data would be worse:

Mike van Dulken, head of research at Accendo Markets, explains:

While there may be concerns thar China's official target will be missed and a potential lower rate of growth, there is no real surprise as we get used to the emerging giant’s growth having to slow up after years of strong expansion…

Updated at 8.27am BST

8.02am BST

China’s slowing growth confirmed

A China Railway High-speed (CRH) Harmony bullet train (bottom) drives past Beijing's central business district, July 11, 2013.
A China Railway High-speed Harmony bullet train drives past Beijing’s central business district. Photograph: JASON LEE/REUTERS

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

The most important economic news this morning is that China's economic growth is continuing to slowdown, but no worst – officially at least – than economists had expected.

Chinese GDP grew by 7.5% on an annual basis between April and June, the second consecutive quarter of slowing growth.

Analysts reckon the data, released overnight, shows that Beijing could miss its target 7.5% growth for the whole of 2013. With Europe struggling for growth and some emerging markets stumbling, even 7.5% would be the lowest rate of expansion in more than two decades.

Xianfang Ren, economist at IHS Global Insight, warned:

As of now, China's gross domestic product has been staying under 8% for five straight quarters, a clear sign of distress

The rather sharp growth deceleration and the recent financial market turmoil indicate that risks have been building on both the financial and real goods sector.

Industrial production figures for June also showed less growth than a year ago, adding to fears that the second-largest economy is weakening in the face of a lacklustre global economy and a crackdown on its shadow banking sector.

If China's economy really stumbles, the effects will be felt worldwide – potentially hurting the eurozone's attempts to claw its way back to growth.

Credit Agricole's Dariusz Kowalczyk reckons China may need to launch fresh stimulus meaures, predicting:

We will see some targeted measures to stimulate growth.

The Bejing government has already scrambled to 'correct' a report that finance minister Lou Jiwei had said the country’s growth target this year is 7%.

Bloomberg has the details:

In an English-language story released yesterday and dated July 12, Xinhua [the official Chinese news agency] said it corrected a quote attributed to Lou to “there is no doubt that China can achieve this year’s growth target of 7.5 percent” from its original story dated July 11 that cited him as saying “there is no doubt that China can achieve the growth target, though the 7 percent goal should not be considered as the bottom line.”

Hope that clears up any doubts.

Meanwhile in Europe….. political instability threatens to reignite the eurozone debt crisis.

Portugal remains a serious concern, after opposition head António José Seguro called for an end to its austerity programme on Friday night, and a renegotiation of its bailout programme.

While in Spain, prime minister Mariano Rajoy is facing fresh calls to resign over the illicit payments scandal that has rocked the country in recent months.

I'll be watching for news from Lisbon and Madrid, along with reaction to China's slowing economy and other developments throughout the day….

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