World news

Organization for Economic Co-operation and Development gives vote of confidence in the United Kingdom’s economy, revising growth forecast from 0.8% to 1.5% after a “string of positive indicators from the UK”…


Powered by article titled “UK economy upgraded by OECD” was written by Heather Stewart, for on Tuesday 3rd September 2013 09.52 UTC

Paris-based thinktank the Organisation for Economic Co-operation and Development has lifted its forecast for UK growth in 2013, in the latest vote of confidence for the fledgling recovery.

In May, when it last released projections for the world’s major economies, the OECD was expecting 0.8% growth in the UK for 2013. On Tuesday, it said recent survey evidence suggested GDP would expand by 1.5%, grouping the UK with the US and Japan as economies where, “activity is expanding at encouraging rates”.

The upgrade from the OECD comes after a string of positive indicators for the UK, including stronger-than-expected growth of 0.7% in the second quarter, falling unemployment, and survey evidence suggesting the strongest growth in manufacturing output for almost two decades.

Alongside revising up its forecast for the UK, the OECD used its interim economic assessment to warn that while a moderate recovery is underway in many major economies, global growth remains sluggish, and there are still risks to the upturn.

The OECD’s economists single out the impact of the Federal Reserve’s plans to phase out its massive programme of quantitative easing as creating particular problems for some economies.

“In many emerging economies, loss of domestic activity momentum together with the shift in expectations about the course of monetary policy in the United States and the ensuing rise in global bond yields have led to significant market instability, rising financing costs, capital outflows and currency depreciations,” it said.

Countries including India, Indonesia, Brazil and Turkey have been battling to control a potentially destabilising decline in their currencies since the Fed chairman, Ben Bernanke, announced his plans to “taper” QE in May.

The OECD’s experts warn that the slowdown in emerging economies – which have been major drivers of world growth in recent years – would offset the improvement in advanced economies, so that the global recovery would continue to be, “sluggish”.

In the US, the OECD expects growth to be 1.7% in 2013, slightly down on its May estimate of 1.9%. It also warns that the crisis in the eurozone is far from over, saying: “The euro area remains vulnerable to renewed financial, banking and sovereign debt tensions. Many euro area banks are insufficiently capitalised and weighed down by bad loans.” © Guardian News & Media Limited 2010

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Weaker-than-expected growth figures scotch fanciful hopes that Abenomics had found a magic cure for Japan’s woes. Weak growth has raised doubts about whether the government will go ahead with the increase in consumption tax next year…


Powered by article titled “Weak Japanese GDP data highlights flaws in Shinzo Abe’s three ‘arrows’” was written by Larry Elliott, for The Guardian on Monday 12th August 2013 16.36 UTC

The honeymoon is over for Japan’s prime minister, Shinzo Abe. The financial markets loved it when Abe announced a three-arrow strategy last year for ending his country’s two decade struggle with deflation and sluggish growth. Share prices soared and the yen fell after the new government pledged large-scale quantitative easing, higher public spending and structural reform in a package dubbed Abenomics.

But markets were left distinctly underwhelmed on Monday by Japan’s latest GDP figures, which showed growth at 2.6% in the year to the second quarter of 2013, down from 3.8% in the 12 months ending in March. The rate of expansion was far weaker than expected and scotched the always rather fanciful hopes that Abe had found a magic bullet for Japan’s woes. He hasn’t.

Problems have emerged with every bit of the three-quiver policy. Firstly, driving down the value of the yen was supposed to boost the Japanese economy by making life easier for its key export sector. But it has also raised the cost of imports, particularly fuel, at a time when domestic energy production remains hampered by the Fukushima nuclear plant. Dearer energy raises business costs and eats into consumers’ real incomes. As some analysts noted, Japan is getting higher inflation as planned, but it is the wrong sort of inflation.

A second problem is that doubts are starting to surface about the government’s commitment to structural reform. Japan is an elderly and conservative country where the dynamics of an ageing population make it mightily difficult to raise participation rates in the labour market or reduce subsidies to farmers, even if ministers were prepared to make themselves unpopular.

But the biggest immediate problem for Abe is that the weak growth has raised doubts about whether he will go ahead with the increase in consumption tax next year, designed to show markets that Tokyo is serious about tackling Japan’s public debt, currently 240% of GDP. The increase in sales tax from 5% to 8% is chunky and, with a second increase to 10% planned for 2015, clearly has the capacity to derail economic recovery.

Japan has history in this respect, with tentative recoveries in the 1990s aborted due to over-hasty tightening of policy. Ideally, the increase in sales tax should take place at a slower rate over a longer period, which is what one of Abe’s advisers suggested on Monday. The question is whether this can be achieved without the government’s credibility being shredded. A final decision will be taken next month: the hesitancy adds to the sense that Abenomics is essentially smoke and mirrors. © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

The UK service sector has posted its biggest leap in activity in over six years. Germany drags the eurozone back to growth. The head of the Dallas Federal Reserve Bank has declared that the Fed is almost ready to start slowing the US monetary stimulus program…


Powered by article titled “Eurozone private sector returns to growth, as UK service sector surges to six-year high – as it happened” was written by Graeme Wearden, for on Monday 5th August 2013 13.28 UTC

6.21pm BST

Closing summary

Time to wrap up for the day.

Here’s a brief closing summary.

The UK service sector has posted its biggest leap in activity in over six years. The monthly PMI survey, conducted by Markit, jumped to 60.2 in July, showing strong growth, and suggesting the UK recovery continues to pick up pace.

Details from 9.,39am onwards.

Analyst reaction at 10.14am

There was also optimism in the eurozone that the recession is over. PMI surveys from the region indicated that its private sector had finally returned to growth. Germany led the way, and there were signs of stabilisation in Spain and Italy.

The eurozone data is covered at 9.18am

The key highlights by country begin at 8.31am

• However, other countries performed less strongly. Brazil (see 2.19pm), India and Russia (8.10am) all saw a fall in service sector activity.

Meanwhile in the eurozone…

there were fresh protests against public sector job cuts in Greece (see 1.24pm and 12.50pm)…

…as Italy remained gripped by Silvio Berlusconi’s conviction for tax fraud (see 11.12am)…

…and the IMF urged France to rein in its austerity programme in 2014 (see 4.41pm)

I’ll be back tomorrow. Thanks for the great comments, as ever, and goodnight. GW

Updated at 6.23pm BST

5.55pm BST

Markets close

After a bright opening, Europe’s stock markets have closed with losses in London, and little change elsewhere today.

The news that Britain’s service sector enjoyed a bumper July, and that the eurozone private sector returned to growth, didn’t spark much of a rally.

In London, the FTSE 100 was dragged down by HSBC — which warned of an emerging market slowdown in today’s financial results.

David Madden, market analyst at IG, commented:

In London, the banking sector dragged the market lower after HSBC’s first-half figures were good but not good enough to entice traders to go long.

The largest bank in Europe announced an increase in profit but fell below expectations, prompting traders to unload their positions in the Asian-focused bank. Natural resource stocks initially propped up the FTSE but as the day went on dealers lost their appetite for risk.

And here’s the closing prices:

• FTSE 100: down 28 points at 6619, -0.43%

• German DAX: down 8 points at 8398, -0.1%

• French CAC: up 4 points at 4049, +0.1%

• Italian FTSE MIB: down 21 points at 16757, -0.13%

• Spanish IBEX: down 13 points at 8,560, -0.15%

5.27pm BST

If the cap doesn’t fit….

In the world of banking, HSBC is considering responding to the EU’s cap on bonus payments by boosting the basic salaries paid to its staff.

Our City editor, Jill Treanor, reports:

Speaking from Hong Kong, [chairman Douglas] Flint said one of the options being considered to tackle the bonus cap was a potential pay rise for staff and he said he was confident that shareholders would support policies intended to keep the bank competitive.

"We are looking at a whole range of things," he said.

Here’s the full story: HSBC may raise banker pay to overcome bonus cap

Updated at 5.40pm BST

4.55pm BST

Fed’s Fisher: Tapering is looming

Over in America, the head of the Dallas Federal Reserve Bank has declared that the Fed is almost ready to start slowing the US monetary stimulus programme.

President Richard Fisher told the National Association of State Retirement Administrators that the moment of ‘execution’ on ‘tapering’ the US bond-buying programme (currently bn per month) was close.

Here’s the key quote:

Having stated this quite clearly, and with the unemployment rate having come down to 7.4%, I would say that the (Fed’s policy-setting) committee is now closer to execution mode, pondering the right time to begin reducing its purchases, assuming there is no intervening reversal in economic momentum in coming months.

Fisher also declared that the Fed must avoid ‘market havoc’ when it begins to withdraw the QE punchbowl – having already seen stock markets tumble in May when the prospect was first floated.

4.41pm BST

IMF: France is recovering

The International Monetary Fund has offered the French government some support, and urged Francois Hollande to slow the pace of austerity next year.

France has been criticised for not taking more decisive action to cut its deficit, which is forecast to be 3.9% of GDP this year. But the IMF reckons Paris’s priority must be growth next year, meaning Hollande should ease up on fiscal consolidation.

In its latest report (online here), the IMF warned:

The pace of adjustment should be eased in 2014 relative to current plans in order to support the recovery. Adjustment should also be rebalanced toward expenditure containment.

The IMF also ruled out a surge in growth later this year, predicting that French GDP would shrink by 0.2% in 2013. It also predicted meagre growth in 2014, of just 0.8%.

4.26pm BST

More from JP Morgan. Senior economist Joe Lupton says the global economy made "a positive start" to the third quarter of 2013, but warned:

Although the stronger performance signalled is pleasing in itself, the structure remains uncomfortably uneven by region, particularly with regard to job creation.

4.17pm BST

Global private sector activity hits 16-month high

JP Morgan has added up all July’s PMI data, and concluded that the global services sector posted a healthy increase in activity last month, from 51.1 to 54.9.

This meant stronger growth across the global private sector too, with a PMI of 54.1, the highest level in 16 months, up from 51.2 in June.

Here’s the details:

Updated at 4.24pm BST

4.03pm BST

Putin pays Berlusconi a visit

Back to Italy, where Silvio Berlusconi is receiving a friendly visit from none other than Russian president Vladimir Putin.

That’s according to La Stampa, which reports that "Vladimir Putin, President of Russia, arrived in Rome to meet with his great friend Silvio Berlusconi".

Berlusconi’s conviction for tax fraud clearly didn’t deter Putin from making the date to see his long-time ally.

More here: Putin in visita da Berlusconi

3.45pm BST

This handy graph from Reuters compares the service sector growth in the US (dark blue), the eurozone (light blue) and China (green) over the last five years:

Larger version here.

Updated at 3.51pm BST

3.34pm BST

Duncan Weldon: 5 thoughts on the service sector surge

Duncan Weldon, the TUC’s senior policy advisor, agrees that the jump in British service sector output in July (9.39am) is good news.

He cautions, though, that the economy is still a tough place for many people.

He’s blogged five quick thoughts on the data, including:

Third, the real measure of the recovery will be found in falling unemployment and rising real wages and living standards. We have a triple crisis of jobs, wages and investment and a very long way to go to get out of them.

Here’s the full piece:

The Service Sector PMI: 5 Quick Thoughts

Updated at 5.06pm BST

3.16pm BST

US service sector also posts strong growth

America’s services sector has followed the UK by posting forecast-smashing activity for July.

The US ISM Non-Manufacturing Composite index (which measures its service sector) jumped to 56.0 last month, up from the three-year low of 52.2 reported in June.

That’s the highest reading since February, and indicates much stronger growth. Economists had expected a reading of 53.1.

The jump in the monthly index was mainly due to a surge in new orders (the sub-index leapt to 57.7 from 50.8 in June).

2.48pm BST

2006 and all that

Last month’s surge in UK service sector activity (see 9.39am onwards) is the best monthly performance in over six years. Apart from that, though, July 2013 and December 2006 have little else in common.

The recession, and its aftermath, has pushed Britain’s jobless rate up to 7.8%, from 5.5% six and a half years ago. Interest rates were 5% – compared to 0.5% today. And Tony Blair hadn’t got round to swapping Downing Street for a new career as Middle East envoy and JP Morganite.

My colleague Angela Monaghan has more here:

UK service sector high: the last time we had it so good was 2006

Updated at 2.48pm BST

2.19pm BST

Brazil’s private sector activity falls

More economic data, this time from Brazil — where service sector activity has fallen.

Markit’s Brazilian Services PMI dropped from 51.0 in June to 50.3 in July. That’s enough to drag the wider private sector PMI down to 49.6, into contraction territory.

New orders fell and job creation was unchanged.

It’s another sign of slowing growth in emerging markets, after India’s service sector output shrank for the first time since October 2011 (see opening post).

The drop in activity was also blamed on the anti-government protests which began in cities across Brazil in June.

Updated at 2.28pm BST

1.24pm BST

Photos: Greek workers march

A few more photos from Athens of today’s protest by employees from the Greek Manpower Employment Organization and the social security offices (as mentioned at 12.50pm):

12.57pm BST

Strike watch (2): German canal workers protest

Greece isn’t the only country experiencing industrial action today. In Germany, the country’s canal workers have downed tools today in a row over job cuts.

Transport on the country’s canal network is likely to be hit, as Reuters reports:

Several canals in Germany will be partially blocked to cargo shipping this week due to renewed strikes by lock operators, German trade union Ver.di said on Monday.

The strikes, set to last the rest of the week, are in protest against government plans to restructure the German inland navigation authority WSA.

Traders said they did not expect the strikes to cause widespread disruption and that shipment delays were likely to be local and restricted to smaller canals.

12.50pm BST

Strike watch (1): Protests in Athens over public sector cuts

In Greece, workers at the country’s employment offices pension fund are holding a walk-out today in the latest protest at planned job cuts.

Despite regular protests, the Athens government continues to push on with its targets for cutting 15,000 pubilc sector positions by the end of 2014.

Administrative reform minister Kyriakos Mitsotakis told Mega TV that 12,500 workers will be transferred to the new labour pool (which can lead to redeployment or redundancy).

Mitsotakis said:

The truth is that the ministries have lived up to the commitment they made to the prime minister and we have formed a clear timeline about how we will keep to one of our main pledges to have 12,500 people in the scheme by the end of September.

More here: Mitsotakis confident Greece will meet civil service target by September

Updated at 1.17pm BST

12.06pm BST

The latest retail sales from the eurozone show that the region’s consumers are still facing hard times.

Sales across the euro area sales in the euro zone fell for the first time in three months in June, dropping 0.5% compared with May, as households continued to struggle.

The largest monthly decreases were registered in Estonia (-3.3%), Hungary (-1.9%), Austria (-1.7%) and Germany (-1.5%)

Malta (+1.8%), Luxembourg (+1.3%) and Denmark (+1.2%) bucked the trend with rising sales compared with May.

And on a year-on-year basis, recession-hit Spain showed the largest decline, falling by 6.9% compared with June 2012.

11.28am BST

Key event

Here’s our full news story on the UK service sector’s knock-out performance last month:

UK service sector hits pre-crisis levels, boosting growth hopes

11.26am BST

Alberto Nardelli: Italian government’s lifetime is shortened

Speaking of Silvio Berlusconi (11.12am), political analyst Alberto Nardelli flags up that the next key development is a vote in the Senate in September to rubberstamp his sentence:

As the odds are significantly stacked against Berlusconi (8-15 in the committee which decides on immunity, and 117-198 in the senate itself which would need to vote on the committee’s decision), he may decide to directly step down as a senator. Berlusconi will also need to decide (by mid-October) how he intends to serve his one year sentence (house arrest or community service).

Nardelli also suggests that Italy faces the real prospect of another election within the year:

In summary, I believe the lifetime of the current government has been inevitably shortened and I wouldn’t bet on it lasting a full-term, and 12 more months are probably also optimistic at this point. The earliest an election could take place is November, but a spring 2014 election is more likely.

More here: Italy – what could happen next (politically)

11.12am BST

Berlusconi conviction still grips Italy

Silvio Berlusconi continues to dominate the news in Italy following his failure to overturn a conviction and jail term for tax fraud last weekend.

Yesterday, hundreds of supporters gathered outside the former PM’s home to protest against the sentence, and were treated to a classic appearance from Berlusconi himself.

Despondent at one stage, and celebratory at another, Berlusconi insisted he was innocent, while also showing support for the country’s coalition.

He declared:

I am here. I am staying here. I won’t give up. We will continue together to fight this battle for democracy and freedom.

(full story by Lizzy Davies here)

Senior members of Berlusconi’s People of Freedom (PdL) party are due to meet President Giorgio Napolitano today to discuss his future.

The ANSA news agency reports:

PdL Senate whip Renato Schifani and House whip Renato Brunetta are expected to discuss ways to make it possible for Berlusconi to stay active in politics after the four-year prison sentence – three of which have been commuted because of an amnesty – comes into effect in October.

PdL supporters are pushing for Berlusconi to be pardoned. But, as ANSA explains, that’s a tough sell:

This could be difficult for Napolitano to do for many reasons, including the fact that Berlusconi is appealing against two other criminal convictions, a seven-year sentence for paying for sex with an underage prostitute and a one-year term for involvement in the publication of an illegally obtained wiretap.

10.49am BST

FTSE 100 rises on Lloyds sell-off rumours

Europe’s stock markets hit two month highs this morning, following the news that the eurozone private sector returned to growth last month (see 9.18am)

In London, the FTSE 100 is up 12 points at 6660, led by Lloyds Banking Group (+4% at 76/7p). That is driven by speculation that the UK government is on the brink of selling some of its 38% stake in the bank.

My colleague Jill Treanor wites:

Shares in Lloyds Banking Group have hit their highest levels in almost three years amid speculation that the government could begin to sell off its 39% stake in the bailed-out bank.

The shares were trading above 76p on Monday, higher than the 73.6p average price at which the government bought its stake in the bank in 2008 and 2009.

They have now enjoyed a sustained rise since António Horta-Osório, the Lloyds boss, said last week it was now up to the government when and how to sell the shares.

More here: Lloyds shares above 76p, fuelling sell-off expectations

10.23am BST

Pound rallies

Good news for UK readers poised for a well-earned foreign holiday – sterling is strengthening against other major currencies following today’s service sector report.

The pound is up three-quarters of a cent against the US dollar, at .5363, and has also gained half a euro cent against the euro to €1.156.

10.14am BST

UK services sector PMI: what the experts say

City economists agree that today’s strong service sector data (see 9.39am) shows Britain’s recovery is taking root.

Robert Wood of Berenberg headlined his research note "UK: WOW" – underlining the surprisingly strong surge in service sector activity last month.

Wood wrote:

From zero to hero in six months, the UK is flying as tumbling mortgage rates and rising confidence are driving a consumer led recovery. Monetary policy is working….

With continued support from the Bank of England, the quagmire of the past couple of years will recede rapidly in the rear-view mirror. We expect the recovery to move onto a firmer footing next year, supported by rising real wages and recovery in the Eurozone. The UK is certainly not facing a ‘new normal’ of weak growth.

Howard Archer of IHS Global Insight called it a:

show-stopping survey that completes a very impressive hat-trick of improved purchasing managers surveys for July.

Jeremy Cook, chief economist at currency firm World First, commented that ‘the good news keep coming". But Cook also warned that the recovery remains fragile:

The key to this, and the sustainability of the recovery, is the confidence around the employment components of these surveys – jobs will only be added if these levels of growth are sustained. Wages should also increase along the way as well further improving confidence and lessening the gap between wage settlements and price rises.

Although the improvement in the weather has helped things, I do worry about sales being dragged forward from months in the future. There could be a potential ‘deflating of the balloon’ as we move through the rest of the year, and when consumers begin to save cash for the inevitable Christmas splurge.

Economist Shaun Richards also tweeted that Britain made a strong start to the third quarter of 2013:

While Deutsche Bank flags up that the service sector’s growth poses some interesting questions for the Bank of England, which releases its next inflation report on Wednesday (with thanks to The Times’s economics editor, Sam Fleming). The BoE is expected to flesh out its new ‘forward guidance’, effectively promising to keep borowing costs low until the economy improves…..

10.10am BST

Today’s blowout reading comes after six months of steadily rising activity in the UK service sector, as this image shows: (anything above 50 = growth).

9.54am BST

Graph: Britain’s surging services sector

Services makes up around three-quarters of the UK economy, and this graph shows how the surge in activity last month could equate to a jump in GDP:

The full report is online here (pdf).

9.39am BST

UK services data smashes forecasts

Britain’s dominant services sector has recorded its best monthly performance since before the financial crisis began, smashing analyst forecasts and suggesting the recovery is gathering pace.

The UK service sector PMI index has surged to 60.2 up from June’s 56.9. That’s the strongest monthly reading since late 2006, and shows extremely strong growth.

The survey found a solid rise in new orders, driving optimism higher across the service sector. Underlying demand was reported to be stronger, with firms saying they see better conditions both at home and abroad.

Recent good weather in the UK, and a recovery in the housing market, were also credited with driving the service sector in July.

A separate survey last Thursday showed that Britain’s factory activity hit its highest level since 2011 last month.

Taken together, the two reports suggest that Britain’s economic recovery is well underway.

And with the eurozone private sector also returning to growth in July (see 9.18am), Europe’s prospects look brighter.

David Noble, chief executive officer at the Chartered Institute of Purchasing & Supply, commented:

The services sector stormed to a six year high in July, registering levels of performance not seen since before the financial crisis. Combined with the
manufacturing and construction figures, this is the clearest sign yet that the UK economy is experiencing a broad based economic recovery and
has the momentum to deliver continued growth. 

The seventh month of sustained, accelerated growth in services was underpinned by improved market conditions both domestically and abroad. Business confidence for UK services is now the
highest it has been for 15 months, allowing businesses to expand, develop new products and increase their fees.

The steep rise in new business and the sharpest rise in backlogs of work since 2010 have put some pressure on capacity, giving firms the conviction to take on more staff and increase wages, which have been stagnant for a long time. Taken together, these could signal a significant month in the turnaround of the fortunes of UK plc.

More to follow….

9.25am BST

Howard Archer of IHS Global Insight agrees that today’s data (see 9.18am) shows that the eurozone economy has stopped shrinking:

The near stabilization in Eurozone services activity in July fuels hope that Eurozone GDP has finally stopped contracting and is on course to eke out marginal growth over the second half of the year.

Furthermore, all countries saw an improved services performance in July compared to June.

However the recovery will be constrained by tight fiscal policy, record unemployment and "limited consumer purchasing power", Archer added.

9.18am BST

Relief for eurozone as private sector starts expanding

It’s official… the eurozone’s battered private sector has posted a rise in activity for the first time since January 2012.

Markit’s survey of thousands of firms across the eurozone showed a final private sector PMI reading of 50.5, which indicates output has risen.

The region’s service sector has almost returned to growth, while data last Thursday shows that manufacturing activity increased last month.

Markit said that the Eurozone economy has stabilised as the "German recovery accelerates and downturns ease in France, Italy and Spain" (see 9.01am for the data). Job losses slowed, and business confidence hit a 16-month high.

Here’s the key data (where 50 = the gap between expansion and contraction)

• Germany: 52.1 5-month high
• Italy: 49.7 26-month high
• France: 49.1 17-month high
• Spain: 48.6 25-month high

Rob Dobson, senior economist at Markit, said the data showed "a welcome return to growth for the Eurozone economy", boosting hopes that the recession will end this quarter.

Granted, the euro area has experienced false dawns before, but the improvements in confidence and other forward-looking indicators warrant at least some optimism for the outlook this time around. Germany posted a return to expansion in July, while the downturns in the other big-four economies all eased.

Dobson added that export demand had driven growth in the eurozone manufacturing sector, but there are also signs of recovery in domestic markets.


The labour market remains the main bugbear of the eurozone, as rising joblessness hurts growth and raises political and social tensions.

9.01am BST

Signs of recovery in Europs

Back in the eurozone.. and Italy, Germany and France are all showing signs of recovery.

Activity in Italy’s service sector has hit a two year high in July, rising to 48.7 on Markit’s index — much stronger than June’s 45.8. Still a contraction, but at a much slower pace.

In France, the service sector posted its best reading in 11 months. Its July Services PMI of 48.6 was an improvement on June’s 47.2.

And, as predicted, Germany’s service sector leads the way – with a PMI of 51.3. That indicates growth in Europe’s largest economy for the third month in a row.

8.53am BST

Egypt stands out as the worst-performing of the major Middle East economies, with firms in both Saudi Arabia and the UAE reporting an increase in activity.

Updated at 8.53am BST

8.52am BST

Egypt’s private sector in dire situation

Grim confirmation that Egypt’s economy is contracting at an alarming rate.

Its private sector deteriorated sharply in July, with the headline PMI diving to 41.7, down from June’s 47.5. That’s a very sharp drop in activity. No surprise, given the political turmoil and violence that grips the country following the overthrow of Mohamed Morsi’s presidency at the start of July.

The number of people in work fell during July, and orders from overseas also dropped.

Simon Williams, chief economist for the Middle East at HSBC, warned that Egypt’s situation was perilous.

Political order is a prerequisite for recovery, but even if that is achieved, it will prove very challenging to quickly reverse the losses of the past 10 months.

8.35am BST

Graph: Spanish PMI vs GDP

And here’s a graph comparing Spain’s service sector PMI to its GDP — showing how the worst of its recession could be over…..

Updated at 8.37am BST

8.31am BST

Spain: Services downturn slows

The long slump in Spain’s service sector has eased, but firms are still suffering a drop in activity.

That’s the message from its Services PMI, which came in at 48.5, up from 47.8 in June. The best reading in nearly a year, but still a decline.

Markit, which compiled the data, said the decline in activity was slowing, suggesting Spain’s two-year recession could finally be over by Christmas:

Andrew Harker, senior economist at Markit and author of the report, commented;

The Spanish service sector came close to a change of momentum in July, with the rate of contraction in activity easing further during the month.

Should this current trend be built upon, we could be in line to see a return to growth of GDP by the end of the year.

This remains far from assured, however, with service providers continuing to highlight the effects of the economic crisis in their responses to the latest survey.

8.25am BST

Sweden roars back

Sweden’s service sector has roared back into growth, with a PMI of 56.6 – up from 44.8 in June.

Encouraging news for the Swedish economy, which suffered a rare (but small) contraction in the last three months (details).

8.19am BST

What we expect from Europe

This morning’s data is expected to show that Germany is the only eurozone member whose service sector is actually growing.

Michael Hewson of CMC Markets rounds up the predictions:

Of all the countries only Germany’s PMI is expected to show any form of expansion with a reading of 52.5 expected.

All the others are expected to show an improvement but are still expected to remain firmly stuck in contraction territory. Italy is expected to improve to 46.5, Spain 48.1 and France 48.3, while the broader European measure is expected to come in at 49.6.

Meanwhile, the UK service sector is expected to show stonking growth, with a PMI of at least 57, up from 56.9 in June.

Updated at 8.19am BST

8.10am BST

Service sector data adds to India’s gloom

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

It’s a big day for economic data, with a string of surveys showing how the world’s service sectors performed in July. And it’s already begun with alarming signs from two key economies – India and Russia.

The Indian service sector has shrunk for the first time since October 2011, driven by a drop in new orders and weaker economic activity. This means India’s private sector’s output has contracted for the first time in over four years, fuelling fears that its economy is on the slide.

This graph shows how India’s once-buoyant private sector has slipped in recent months:

The Indian service sector PMI tumbled to 47.9, down from 51.7 in June. Any number below 50 shows a fall in activity.

Leif Eskesen, chief economist for India at HSBC – which compiled the data – warned that manufacturing and services companies are both seeing a drop in new work.

Activity in the service sector contracted in July led by a drop in new business, which also led to a decline in optimism among the surveyed companies.

The slump in activity comes as the Reserve Bank of India (RBI) has battled to bolster the rupee, which has hit a series of record lows against the US dollar in recent weeks. Eskesen argued that the RBI will soon need to prioritise growth:

While the RBI has to cater to the currency at the moment, it will eventually need to cater more to growth as economic activity continues to soften.

The picture isn’t too much better in Russia either, where the private sector has suffered its first drop in activity in three years, and hit a four-year low.

The Markit/HSBC Services PMI, released this morning, fell marginally to 48.7 from 48.8 in June — meaning another month of falling activity.

This followed a similar drop in Russian manufacturing output last week, so Russia’s private sector PMI has now slipped to 48.7. That’s the first reading below 50 since August 2010, and the lowest since July 2009.

Russia has been hit by recent falls in commodity prices, which helped to push down privat sector employment.

Alexander Morozov, chief economist for Russia and CIS at HSBC, warned that Russia faces both cyclical and structural problems — with many firms declining to spend more on investment.

Like a duet of synchronised springboard divers, output in services and manufacturing dove in unison at identical rates in July, the HSBC Russia Composite PMI survey revealed.

Apparently, this kind of diving is not the one that can cheer anybody. In essence, it appears that the Russian economy has lost its growth engines, with neither manufacturing nor services being able to sustain overall economic growth alone anymore.

And here’s the obligatory graph:

A bad start to the morning. Can Europe do better? We get service sector from across the eurozone (9am BST), and from the UK (9.30 BST) this morning. Last week’s manufacturing data was encouragin, suggesting that the eurozone recession was over, and Britain’s recovery was gathering pace.

On top of all this economic data, I’ll be tracking the latest political developments across the eurozone area. Italy continues to be gripped by Silvio Bersluconi’s tax fraud conviction, while in Greece prime minister Antonis Samaras is preparing for a trip to America….

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Over 160,000 new jobs created as unemployment rate drops to 7.4%, though bond-buying program continues unchanged. The Labor Department revised down the number of jobs added in May and June, indicating fragility of the economic recovery…


Powered by article titled “US jobless figure drops to lowest rate in four years” was written by Larry Elliott and Heidi Moore, for on Friday 2nd August 2013 14.02 UTC

The US unemployment rate fell to its lowest level in more than four years last month, but the addition of 162,000 new jobs to the world’s biggest economy was lower than expected.

Figures released in Washington showed that the pace of hiring eased slightly in July, following a slowdown in economic growth in the first half of 2013. The Labour Department revised down the number of jobs added in May and June, indicating the underlying fragility of the economic recovery.

Wall Street had been expecting a stronger report and analysts said the data might make the US Federal Reserve more wary about removing the stimulus provided by asset purchases and low borrowing costs.

The financial markets had been anticipating a rise of 184,000 in non-farm payrolls, the key measure of the health of the US jobs market. Analysts said it was also disappointing that employment in previous months had been revised down by 26,000, and that average weekly hours worked had fallen.

The unemployment rate dropped by 0.2 points to 7.4%, the lowest since the global recession was at its most intense in the winter of 2008-09. The report said, however, that part of the drop was due to some Americans leaving the labour market after giving up hope of finding work.

The Fed chairman, Ben Bernanke, has said there is “broad support” among colleagues for shutting down its bond-buying programme, costing bn (£55.8bn) per month, if the unemployment rate falls to 7%. The US is expected to reach that level around the middle of next year, and the Fed spooked markets last month when it said it might begin “moderately” tapering asset purchases by September.

The dismal jobs report indicated the underlying weakness in the American economy, according to economists.

Peter Morici, an economist and professor at the Smith School of Business of the University of Maryland, sent out a research note titled “another disappointing jobs report” and said: “Overall, the jobs count may be up but for most working families and recent college graduates the situation is grim. Adding in discouraged adults and part-timers who want full-time employment, the unemployment rate becomes 14%.”

Joseph Brusuelas of Bloomberg LP gave a similarly dire evaluation, saying that 5 million more men over the age of 20 were unemployed now than before the recession started in November 2007. He called this “the real crisis that is brewing deep inside the US labor market for men entering the peak earning years that will carry long-term implications for the overall social and economic well-being of the country”.

Brusuelas also pointed out that longer unemployment periods have made people unsuccessful in finding new jobs after they’ve lost a job.

“The average duration of unemployment is 35.6 weeks or roughly 8 months [and] has rendered some of these individuals unemployable in their former lines of work,” Brusuelas said.

James Knightly, economist at ING bank, said the markets had been hoping for a stronger report after upbeat US GDP data earlier in the week, which saw the economy grow by 1.7% in the second quarter.

He said it appeared to have “taken the wind out of the sails of those heavily backing a September start to quantitative easing tapering. Additionally, wages fell 0.1% on the month, the first fall since last October. This takes the year-on-year growth in wages down to 1.9% and is not indicative of a tight labor market.” © Guardian News & Media Limited 2010

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ECB press conference highlights. Bank of England and ECB decide to keep benchmark rates and monetary policy unchanged in August. Eurozone manufacturing returns to growth. Spanish PM denies slush fund claims. Rajoy’s gamble…


Powered by article titled “Eurozone crisis: Berlusconi’s final appeal rejected; central banks hold rates – as it happened” was written by Graeme Wearden, for on Thursday 1st August 2013 20.03 UTC

9.03pm BST

Lizzy Davies: Silvio Berlusconi’s prison sentence upheld by Italian supreme court

And finally, here’s our Rome correspondent Lizzy Davies with the news from the supreme court:

Silvio Berlusconi, Italy’s longest-serving postwar prime minister, has been handed his first definitive criminal conviction in more than 20 years of legal battles but the country’s supreme court spared him the immediate prospect of being barred from public office.

In a long-anticipated ruling, the five judges of the court of cassation emerged from more than seven hours of deliberations to issue a verdict confirming a four-year jail term for the leader of the Freedom People party (PdL), a vital part of Italy’s coalition government.

That sentence had already been cut to one year according to a 2006 amnesty, and, owing to Berlusconi’s age – he will be 77 in September – it will be served through house arrest or community service.

It was enough, however, to place great pressure on the fragile government and prompt fury among his supporters…..

Lizzy’s full story is here: Silvio Berlusconi’s prison sentence upheld by Italian supreme court

And that’s a good moment to stop the blog, I think. Cheers all, and good night from London.

Updated at 9.03pm BST

8.54pm BST

Berlusconi’s lawyers: it’s not over

Silvio Berlusconi’s legal team just released a statement, in which they talk about their dismay over the judgement of the supreme court tonight. They also suggest the possibility of an appeal to the European Courts.

It’s online here. Here’s a rough translation:

There were very solid reasons and legal arguments to reach a full acquittal of Mr Berlusconi.
We will pursue any useful initiative and also [look to] European locations to make sure that this unjust judgment is radically reformed.

8.50pm BST

Meanwhile, in the US courts

In unrelated legal news tonight — former Goldman Sachs vice-president Fabrice Tourre has been found liable on six of seven counts of defrauding investors by violating federal securities law..

The WSJ has a good early take: Former Goldman Trader Found Liable

8.40pm BST

Italian PM and president urge calm

Enrico Letta, Italy’s prime minister, and the country’s president Georgio Napolitano, have both urged Italians to remain calm following the Supreme Court ruling that three-time prime minister Silvio Berluconi is guilty of tax fraud.

Updated at 8.40pm BST

8.24pm BST

Political reaction

Reuters has pulled together some political reaction to the decision to uphold Berlusconi’s conviction for tax fraud, from across the spectrum:

Luca d’Alessandro, head of Berlusconi’s PDL parliamentary justice commission: "This country used to be famous as the cradle of law. Today it has become its tomb, run by a corporation of grave diggers in gowns who have carried out the perfect crime."

But the leader of the centre-left PD, Guglielmo Epifani said, "The sentence has to be respected and carried out."

Beppe Grillo, leader of the populist 5-Star Movement that won a quarter of the vote in the last general election, back in February, declared: "The verdict is like the fall of the Berlin Wall in 1989."

Updated at 8.32pm BST

8.15pm BST

Here’s a photo of the moment that the president of the Italian supreme court, Antonio Esposito, read out that Silvio Berlusconi’s prison term over tax fraud had been upheld, but that the public office ban would be reconsidered by a lower court.

The latter decision means Berlusconi can, for now, remain as a senator.

8.05pm BST

If Berlusconi’s public office ban is cut to three years, then there’s a possibility he could be free to run in the next Italian general election, points out analyst Alberto Nardelli.

He reckons that this evening’s news poses tough problems for Berlusconi’s opponents — as the mainstream centre-left and centre-right (Berlusconi’s PDL) parties are locked in an uncomfortable coalition.

Alberto adds:

• will Berlusconi decide to pull the plug on the Letta Government? I don’t think he will do this despite many in his party pushing for elections.
• how will the centre-left PD react: will they vote (in the Senate) to confirm the ban from public office when it eventually comes?
• if Berlusconi is banned from public office, the ban would expire before the end of Letta’s government if the government serves a full-term – would PD want to go to elections before then and will PD push for a law that would make those definitively sentenced ineligible?

More here: Thoughts on the Berlusconi verdict

Updated at 8.06pm BST

7.42pm BST

Photos: Celebrations at the Supreme Court

Scenes of celebration and fizz being swigged outside the Italian Supreme Court, following the news that Silvio Berlusconi’s final appeal has been rejected.
Two photos from the scene:

Updated at 7.51pm BST

7.28pm BST

The BBC’s Imelda Flattery suggests that house arrest is unlikely to count as cruel and unusual punishment for Silvio Berlusconi:

7.26pm BST

Berlusconi verdict – instant reaction

Italian political expert Alberto Nardelli says the key development tonight is that Silvio Berlusconi’s five-year ban on service in a public office is going to be reexamined:

Vincenzo Scarpetta of the Open Europe think tank underlines the point that the ban hasn’t actually been scrapped:

Updated at 7.30pm BST

7.18pm BST

And here’s Associated Press’s first take:

Italy’s highest court has upheld ex-Premier Silvio Berlusconi’s tax fraud conviction, but ordered a review a five-year ban on public office that was part of the lower court’s sentence.
The court on Thursday confirmed the four-year prison sentence, and ordered another court to determine the length of a public office ban.
This is the first time Berlusconi, a three-time former premier and billionaire media mogul, has been definitively convicted of any crime.

7.14pm BST

Hot off the Reuters terminal, here’s its first report from Rome:

Italy court rejects Berlusconi appeal against tax sentence

Italy’s top court upheld a jail sentence against Silvio Berlusconi for tax fraud on Thursday in a ruling which could throw the country’s fragile coalition government into crisis.
The Court of Cassation confirmed a four-year jail sentence – commuted to one year under an amnesty – imposed by a lower court. But it ordered a further judicial review of a ban on holding public office imposed for the same offence.
The long awaited ruling is likely place the fragile left-right coalition led by Prime Minister Enrico Letta under severe strain although Berlusconi has pledged that his centre-right party will maintain its support for the government.

7.12pm BST

Public office ban to be reviewed

The key question now, though, is what happens about the five-year ban on Silvio Berlusconi holding public office, which the court has now annulled?
The judges have asked for that ban to be reviewed, so we may not know for some time.

The prospect of the former PM being banished from the Senate for years had threatened to destabilise the coalition. As explained at 5.36pm BST, Italy’s coalition government relies on the support of Berlusconi’s party (although he doesn’t serve in Enrico Letta’s cabinet).

On Tuesday, the prosecution recommended cutting the ban to three years, which looked like an admission that the original sentence was too severe (Italy’s legal framework suggested a ban of between one and three years).

7.03pm BST

Historic moment

The verdict of the Rome Supreme Court means that Silvio Berlusconi has run out of legal road — there are no more appeal courts left, and he must now accept the conviction for tax fraud.

And that also means the prison sentence that was handed down by the lower court, and upheld in the last few minutes.

Given his age, though, legal experts have already predicted it would be changed to community service or house arrest.

Definitely a significant moment…

Updated at 7.04pm BST

6.51pm BST

BREAKING: The verdict is in. The Italian Supreme Court has upheld Silvio Berlusconi’s one year* prison sentence for tax fraud in the Mediaset case. It has also ordered a review on the ban on public office that was handed down.

*originally four years, but reduced to 1 year under an amnesty

More to follow…

Updated at 6.53pm BST

6.43pm BST

Any moment now..

6.16pm BST

Scratch that thought — it looks like a verdict has been reached over Silvio Berlusconi’s tax fraud appeal.

Cameras are being allowed into the Supreme Court in Rome now, , so the news could come within the hour. Police have asked journalists to turn off their mobile phones, reports Linkiesta’s reporter Alessandro Da Rold.

Updated at 6.32pm BST

6.03pm BST

Maybe we won’t get the Berlusconi verdict tonight, after all. If the Supreme Court can’t reach agreement in the next couple of hours, everyone might have to come back tomorrow…

Updated at 6.03pm BST

5.52pm BST

No Berlusconi verdict yet. The door of the Supreme Court remains shuttered, as Linkiesta’s Alessandro Da Rold tweets:

5.38pm BST

Supporters of Silvio Berlusconi have gathered at Palazzo Grazioli, Berlusconi’s house in Rome, ahead of tonight’s verdict. Here’s a photo:

5.36pm BST

A quick catch-up

Silvio Berlusconi is caught up in three separate court cases. The appeal under consideration in Rome now relates to last October’s tax fraud conviction involving his Mediaset media empire.
Judges in a lower court concluded that Mediaset had hiked the price of film distribution rights artificially high, to cut its tax liabilities, and said Berlsuconi has spawned "a whole system of tax fraud".
Lawyers for the former Italian prime minister and media magnate have argued this week that he wasn’t really in full control of the company at the time. They also claimed that any offense was tax evasion rather than fraud, so the jail term and public office ban handed down to Berlusconi wasn’t appropriate.
Given his age, Berlusconi would serve any prison term as house arrest. But it’s the prospect of a ban from public office that could shake politics, if Berlusconi retaliated by withdrawing his party’s support for Italy’s coalition.

Here’s a few good backgrounders:

Guardian: Silvio Berlusconi: Italy’s supreme court prepares for verdict on final appeal

BBC: Ex-Italy PM Silvio Berlusconi criminal appeal to finish

Reuters: Italy’s top court to issue verdict on Berlusconi fraud appeal

5.15pm BST

Italian journalist Alessandro Da Rold of Linkiesta reports from inside the courtroom that the Berlusconi verdict might come in around 45 minutes time, at 7pm local time or 6pm BST.

4.58pm BST

Here’s a live feed from outside the Italian Supreme Court in Rome, where Silvio Berlusconi’s appeal verdict may come soon.

Updated at 5.00pm BST

4.54pm BST

Now we wait, for news from Italy…

4.46pm BST

European markets close higher

European stock markets have closed sharply higher. The stream of decent news from the world’s manufacturing sectors, in the UK, US and across the eurozone, sent all the major indices up today on hopes that the global economy strengthened last month.

• FTSE 100: up 60 points at 6681, +0.9%
• German DAX: up 134 points at 8410, +1.6%
• French CAC: up 50 points at 4035, +1.25%
• Spanish IBEX: up 106 points at 8540, + 1.2%
• Italian FTSE MIB: up 336 points at 16818, +2%

Brenda Kelly, senior market strategist at IG, commented:

Anyone backing a eurozone recovery would have been more than pleased with the manufacturing output numbers today. With the exception of Spain they all came in ahead of expectations, with Italy even seeing manufacturing output crossing into expansion territory.

ECB president Mario Draghi reiterated his usual comments with respect to downside risks within the single currency area, which had the useful effect of driving the euro lower. Financial fragmentation and the lack of credit growth, together with the unsettling lack of inflationary pressures, gave the ECB to the excuse to keep rates on hold for as long as necessary.

Increasing evidence that the UK economy is clambering back to its feet perhaps acknowledges that previous monetary policy actions have worked. It was, therefore, no surprise that new Bank of England governor Mark Carney chose to keep his powder dry for now.

Updated at 5.44pm BST

4.28pm BST

Our correspondent in Rome, Lizzy Davies, flags up that the Berlusconi verdict may come once the Italian stock market has closed, in a few minutes time….

4.07pm BST

We’re still waiting for news from Italy’s supreme court, where judges have retired to considering Silvio Berlusconi’s final appeal against his tax fraud conviction.

Deliberations began at noon local time (11am BST), and were expected to take several hours.
Reuters has a good preview here, which explains how Italian politics could be plunged into chaos if the conviction is upheld:

Italy’s top court to issue verdict on Berlusconi fraud appeal

If you’re new to the case, here are the reasons the case has political ramifications, and could raise tensions across the euro area:

1) Berlusconi faces a sentence of four years in jail – commuted to one year under a 2006 amnesty – and a five-year ban from public office, although the prosecution has now suggested cutting that to three years
2) If upheld, the sentence would need to be rubber-stamped by the Senate
3) That could destabilise the coalition, made up of Berlusconi’s right-leaning People of Freedom (PDL) party, and the left-wing Democratic Party (PD).
4) The Senate might not hold such a vote until September, which could hold back the pace of economic reforms in Italy.

3.29pm BST

Booming US factory sector sends shares soaring

The US stock market is roaring to new record high this afternoon, after new factory data showed that America’s manufacturing sector posted impressive growth last month.

The ISM measure of manufacturing activity in the world’s largest economy jumped to 55.4, up from June’s 50.9. That’s the highest level since August 2011, and well into ‘growth’ territory (50.0 or above).
This pushed shares up on Wall Street, and in the City. The S&P 500 index blasted over the 1,700 point mark for the first time, while in London the FTSE 100 is up 52 points at 6673.

The news also hit US government bond prices. A stronger US economy means more chance of the Federal Reserve pullina back its bond-buying stimulus programme, so Treasuries are being sold off with gusto.

This has pushed the yield (interest rate) on a US 10-year bond to 2.666%, from 2.58% last night. 

Updated at 3.29pm BST

3.09pm BST

See Mario Draghi’s statement

Mario Draghi’s opening statement at the ECB press conference is now online:

It concluded with another reminder to eurozone national governments to cut borrowing and reform their economies. Only then, Draghi argued, can Europe’s youth unemployment crisis be solved:

As regards fiscal policies, in order to bring debt ratios back on a downward path, euro area countries should not unravel their efforts to reduce government budget deficits. The emphasis should be on growth-friendly fiscal strategies which have a medium-term perspective and combine improving the quality and efficiency of public services with minimising distortionary effects of taxation.

To reinforce the overall impact of such a strategy, Member States must step up the implementation of the necessary structural reforms so as to foster competitiveness, growth and job creation. Removing rigidities in the labour market, lowering the administrative burden and strengthening competition in product markets will particularly support small and medium-sized enterprises.

These structural reform measures are essential to bring down the currently high level of unemployment, in particular among the younger citizens of the euro area.

2.37pm BST

And that’s the end of the press conference. Not the most thrilling one ever, and no mention of the situation in Cyprus:

Just off to a meeting — will gather more reaction when I get back…

2.34pm BST

Final question, and it’s about the possibility of releasing European Central Bank minutes. Might this help mend the idea that the ECB and the Bundesbank are at war, and might it end the (entertaining) practice of Council members trying to get their message out through the media?
All this would be nice things to achieve, but it would be highly premature to comment on the specifics, Draghi replies.

2.33pm BST

Key event

Draghi must be looking forward to the beach – he jokes that he can’t take all the credit for restoring confidence to the eurozone area.

Much of this was due to government action, he modestly points out.

2.31pm BST

Follow-up question: Did eurozone countries take advantage of the relief created a year ago by the ECB’s promise to buy unlimited quantities of bonds?
Draghi replies that some countries "certainly did, some of them make progress…" Others, less so.
He declines to give any views on Italy’s progress, but cites Greece, Ireland & Portugal where labour market reforms and fiscal consolidation have taken place.

2.24pm BST

Draghi: One year since THAT speech

Next question: Would Mario Draghi like to reflect on the changes over the last 12 months since he delivered his ‘whatever it takes’ speech in London?
Draghi grabs the ball and runs with it.
There are three key areas of progress, he says. The return of normalisation in the financial markets, some some progress in fighting fragmentation in the credit markets, and thirdly the beginning of capital inflows into the euro area.

He adds:

More generally, OMT [Draghi's bond-buying programme] has reduced the riskiness, the general riskiness, in the euro area.

So, borrowing costs are down, and confidence is up, and finally there are signs that the real economy is feeling the benefits.
The ECB priority now is to repair the monetary policy transmission channels so that stimulus reaches the right parts of the economy, Draghi adds.

Updated at 2.27pm BST

2.18pm BST

Lots of chatter about exactly how, and why, the ECB might start releasing minutes of its meeting.
Jamie McGeever of Reuters sums it up:

While the FT’s Peter Spiegel’s heard quite enough:

2.14pm BST

Draghi: I see no deflation

Question: Is there a risk of deflation in the euro area?
Draghi says no:

We see relative price adjustments in certain sectors, where there is a waning of one-off effects such as taxation.
We don’t see deflation for any country at this point in time.

Updated at 2.15pm BST

2.07pm BST

Just to clarify, the ECB board will present a plan for releasing minutes from its meetings later this year

2.05pm BST

Draghi appears to be in good spirits:

2.03pm BST

Question: How unanimous was the decision, really?
Draghi insists that he’s not refusing to say whether some Council members wanted to cut rates. Apparently it wasn’t talked about.
"We actually only discussed forward guidance…and the decision was unanimous."

And while Draghi repeated his forward guidance today, he might not do it every month:
We may not repeat them if we think you, and the markets, understand that guidance remains the same until it is changed, the ECB president says, adding:
"We don’t change our mind until we change our mind".

2.01pm BST

Question: Why is the ECB considering releasing minutes from the monthly meetings now, when tensions over the eurozone crisis are higher then they were in the early days of the Bank? Isn’t it riskier?
Draghi agrees that the challenge is to make more information available, without threatening the independence of those on the Council.

1.57pm BST

Question: Minutes to be released?

Next questions: Did the ECB discuss tying its forward guidance to a specific target?
And did the ECB discuss release publishing the minutes of its meetings?
Draghi says no, there was no discussion of setting specific targets. Except that the guidance is, as he explained, based within the ECB’s view on inflation, or price stability.
And on the minutes?
We don’t start from scratch here, Draghi says, All central banks have changed their communications.
You’re probably too young to remember, he flatters (or patronises) the Frankfurt press pack, but the ECB was a pioneer in publishing forecasts. Other banks have followed us, he says, with initiatives such as press conferences after monetary policy meetings.
Draghi then says he is keen to see more information from the governing council meetings released.
But it’s vital that nothing is released that threatens the independence of the members of the governing council, who come from 17 countries but are acting in the interest of the eurozone, he adds.

1.50pm BST

The next questioner asks for more clarity on whether the decision to leave interest rates unchanged was unanimous. And gets no clarity all.
Draghi also rejects the suggestion that the ECB has failed to improve credit availability in the euro area.
We did compress volatility, and had some success on lowering short-term rates, he adds.

1.48pm BST

The first journalist gets two questions in:
1) Did the ECB discuss cutting rates and was the decision unanimous?
2) Is the ECB planning to refine its guidance on forward guidance?
Draghi responds:

"We have basically unanimously confirmed the forward guidance from last time"

He then argues that the statement was unanimously supported, by the governing council, and the decision to leave rates unchanged is part of the statement. Hmmm….

And how long will the ECB maintain its accommodative stance? As long as we think inflation pressure remains subdued, Draghi adds.

Updated at 1.48pm BST

1.45pm BST

No excitement after the statement:

1.42pm BST

Onto the questions….

1.42pm BST

A few more key points from Mario Draghi’s statement (which will be online very soon)
1) Europe’s labour market remains weak and needs to be reformed to boost competition
2) The eurozone’s credit market is too fragmented – thus the need for banking union to strengthen weaker institutions in
3) Governments must not deviate from focusing on cutting deficits, but should develop ‘growth friendly’ strategies

1.37pm BST

Downside risks…

Draghi explains that the ECB still expects a "tentative" recovery in the second half of 2013.
However, the risks to economic outlook to the euro area continue to be on the downside. He cites three threats
1) Volatility in the financial markets
2) weaker than expected domestic demand, and
3) slow progress on structural reforms.

1.35pm BST

Forward guidance repeated

Mario Draghi reiterates last months’ unprecedented forward guidance on borrowing costs:
The governing council confirms that it expects borrowing costs to remain at current or lower levels for an ‘extended period of time", he says.

Draghi cited the weak eurozone economy, and "subdued monetary dynamics".

1.32pm BST

And we’re off…
Mario Draghi is reading out the ECB’s statement, explaining why rates were left unchanged.
Underlying price pressures in the eurozone are likely to remain subdued in the eurozone, and inflation expectations are ‘firmly anchored’.
At the same time, recent confidence indicators show signs of improvement from low levels and "tentatively" confirm signs of recovery, he says.

1.30pm BST

ECB press conference begins

Over in Frankfurt, the ECB press conference is about to begin. It’s being streamed live here.

Updated at 1.30pm BST

1.22pm BST

The European Central Bank’s governing council was under no real pressure to ease monetary policy further today, explained Rabobank economist Elwin de Groot to Reuters.
Here’s a flavour:

That was in line with expectations," Rabobank economist Elwin de Groot said of the decision to leave rates unchanged, almost universally expected in a Reuters poll.

"At this stage, we’ve seen several indicators improving a little bit. Today, the update on the PMI surveys confirmed that point," he said of closely watched business surveys, which showed that last month euro zone manufacturing grew for the first time in two years.

Full details here from 9.08am:

Unemployment in the 17-country bloc sharing the euro fell for the first time in more than two years in June.But lending to firms is still declining in the euro zone and is especially weak across the bloc’s troubled debtor countries, which could keep calls for lower policy rates alive."There was no immediate pressure for the ECB to do more," de Groot said, but added: "There is a lot of uncertainty and if the economic recovery does not become more visible in the second half, they will be forced to do more."

12.54pm BST

The European Central Bank’s ‘no change’ decision means:

• The headline borrowing rate, or ‘refinancing rate’, remains at 0.5%

• The ‘deposit facility rate’, paid to commercial banks who leave cash with the ECB, remains at 0.0%

• The ‘marginal lending rate’, charged to banks when they borrow from the ECB, remains at 1.0%.

12.45pm BST

ECB decision

Here comes the European Central Bank… and it’s also voted to leave its key interest rates unchanged.

12.33pm BST

Can the ECB provide more fireworks when it publishes its own decision at 12.45pm BST? Probably not. Lorcan Roche Kelly, chief Europe strategist at Trend Macrolytics, jokily predicts a repeat of last month’s ‘no change’:

Updated at 12.34pm BST

12.25pm BST

Bank of England leaves rates unchanged – What the analysts say

A quick round-up of analyst reaction to the Bank of England’s decision (from 12.00pm onwards)

Lee Hopley, chief economist at EEF:

Recent data suggesting the recovery may now have some legs will have supported another no change decision this month. While the economy has moved in a more positive direction it’s unlikely that there will be major change to the Committee’s medium term view on inflation and growth in next week’s Inflation report. The main event from the MPC will now be more detail on its forward guidance plans alongside the Inflation report, which will frame the debate on monetary policy in the months ahead.

David Kern, chief economist at the British Chambers of Commerce:

Minutes from the recent MPC meeting suggest that QE is unlikely to be increased any time soon and low interest rates will be maintained for a long period, which will provide a stable environment for businesses.

This is a positive shift in emphasis – and we hope this will be confirmed when the MPC presents its response to the Chancellor on how forward guidance should be used, expected next week. When looking at the tradeoff between growth and inflation, we hope the Committee accepts that under current circumstances, more inflation is likely to damage growth. We continue to urge the MPC to consider new policy measures to help boost business lending. For example, the existing QE programme could be used to purchase private sector assets other than gilts, including securitized SME loans, as this would reduce the risk when banks are looking to lend to business.

Howard Archer of IHS Global Insight:

The Bank of England was always unlikely to act at the August MPC meeting given next Wednesday’s assessment on adopting a policy of forward guidance. Furthermore, the ongoing stream of improved news on the UK economy – evident again in the healthy manufacturing purchasing managers survey for July – suggests that the economy is not in need of any further stimulus for now at least.

 However, the improved news on the UK economy could be seen as highlighting the need for the Bank of England to make it absolutely clear that interest rates are not going to go up for some considerable time to come – so is supportive to the case for adopting forward guidance on monetary policy. While the economic recovery seems to be becoming more firmly entrenched, it is from a very low base and with fiscal policy tight, there remains a very strong case for keeping interest rates at 0.50% for a long time to come.

Vicky Redwood of Capital Economics:

Today’s Monetary Policy Committee (MPC) meeting was always looking likely to be a non-event ahead of the announcement about forward guidance due next week. Our best guess is that the MPC will commit to keep official interest rates low until an unemployment threshold is breached.

Updated at 12.25pm BST

12.11pm BST

It’s all about next week

City economists say they aren’t surprised that the Bank of England has voted to leave interest rates unchanged, and not to create more electronic money to buy government bonds.

They believe next week’s Quarterly Inflation Forecast meeting will see the real fireworks, as governor Mark Carney is likely to flesh out the Bank’s ‘forward guidance’ on future policy.

Updated at 12.28pm BST

12.10pm BST

Pound climbs higher

Sterling is gaining against the US dollar, now up a whole cent this morning at .523, following the news that the Bank of England had not cut interest rates further, increased its bond-buying programme, or released a statement.

Updated at 12.12pm BST

12.00pm BST

Bank of England leaves rates and QE unchanged

The Bank of England has voted to leave interest rates unchanged from their current record low of 0.5%, and also left its quantitative easing (bond-buying) programme as it stands.

And there’s no statement.

Recent encouraging economic data, such as this morning’s jump in manufacturing activity, must have encouraged the MPC to wait.

Reaction to follow

Updated at 12.04pm BST

11.50am BST

Just 10 minutes until the Bank of England releases its decision on monetary policy, and economists aren’t expecting a shock.

Ishaq Siddiqi, market strategist at ETX Capital, reckons the Monetary Policy Committee will sit tight:

For the BOE, growth in the UK with an uptick in most measures of economic activity build a greater excuse for Mark Carney and co to refrain from using QE as a tool to stimulate the economy.

While Shaun Richards points out that the BoE’s quarterly inflation report is due out next week:

Updated at 11.56am BST

11.21am BST

Italian political expert Alberto Nardelli has updated his blogpost on the Berlusconi appeal, explaining the various possibilities, and the pressures that a guilty verdict would put on the country’s coalition.

Silvio Berlusconi Mediaset verdict – possible scenarios

11.13am BST

Mario Draghi could produce a little surprise today and announce that the ECB Governing Council will start publishing the minutes of its monthly meetings.

Jens Weidmann, Germany’s man at the ECB, has thrown his weight behind the idea (more details on CNBC), which would improve transparency and bring it into line with the Bank of England and the Fed.

Fast FT has drawn up a few more key points to watch out for:

  • Will Mr Draghi renew or clarify his pledge to keep interest rates "at present or lower levels for an extended period of time?"
  • If he does clarify the time frame for that policy guidance, for how long?
  • Will Mr Draghi be more specific about future action; inflation remains "well-anchored" in the argot, will there be any hints as to what might trigger a further cut?

More on fastFT.

Updated at 11.16am BST

11.00am BST

Economics editor Larry Elliott has written about today’s encouraging manufacturing data:

UK manufacturing confidence highest since 2011

10.57am BST

Italy’s Supreme Court has convened to consider its ruling on Silvio Berlusconi’s tax fraud appeal.

The hearing began on Tuesday, and the judges’ decision isn’t expected until this evening, perhaps at 4pm or 5pm BST.

Updated at 10.57am BST

10.51am BST

Europe’s financial markets have rallied again today, on the back of this morning’s decent manufacturing data – and the cautious tone of the Federal Reserve last night.

In London, Lloyds is leading the way after returning to profit (see full story here).

• FTSE 100: up 30 points at 6651, + 0.45%

• German DAX: up 101 points at 8377, +1.2%

• French CAC: up 18 points at 4011, +0.47%

• Spanish IBEX: up 51 points at 8,464, + 0.6%

• Italian FTSE MIB: up 211 points at 16,694, +1.2%

Rachel Underhill, client manager at CMC Markets, commented that the stock market bulls have "regained control after strong PMI data gives cause for optimism."

10.31am BST

Ninety minutes to go until we get the Bank of England’s rate decision meeting, and 3 hours until the European Central Bank’s press conference. Here’s RanSquawk’s preview of the two meetings:

• Bank of England decision: noon BST

• ECB decision: 12.45pm BST

• ECB press conference: 1.30pm BST

Updated at 10.34am BST

10.26am BST

Over in Greece, public hospital workers began a four-hour strike at 11am local time (9am BST), and were also planning an anti-austerity demonstration.

Kathimerini reports:

The protesters were due to gather outside the Health Ministry at 11.30 a.m.

The workers oppose plans to transfer some 1,500 healthcare workers and turn at least six hospitals in Attica into health centers.

10.18am BST

John Hooper: Rajoy’s high-risk strategy over slush fund claims

Our Southern Europe editor, John Hooper, has been watching events unfold in the Spanish Parliament where prime minister Mariano Rajoy denied wrongdoing over the illegal payments scandal (highlights from 8.43am). Here’s his early analysis:

Rajoy’s strategy today was a high-risk one. But he had little alternative if he was not to resign.

He insisted his only mistake was to have been taken in by Luis Bárcenas — a “criminal” he called him. As a Basque nationalist lawmaker was quick to point out, though, that makes Rajoy a prisoner of what else has yet to emerge from the scandal – whether ferreted out by the young judge conducting the investigation or volunteered by Bárcenas, who has been drip-feeding his disclosures to an eager press.

 With an overall majority in parliament – Rajoy’s People’s Party has 186 of the 350 seats in the lower house, the Congress of Deputies – he can live to fight another day. But the question marks over his survival remain.

 The Spanish prime minister tried to bolster his position by pointing to signs of recovery, notably a drop in unemployment in the second quarter. But the economy has been in and out of recession for the last five years and remains worryingly dependent on other countries, both for exports and tourist receipts.

 Arguably, the best news for the prime minister came in the form of today’s improved manufacturing output figures from Britain and the Eurozone.

Updated at 10.20am BST

10.10am BST

Bit late, sorry, but the Spanish parliamentary hearing over the illegal payments scandal is being streamed online – click here to see it (no translation though).

10.05am BST

The pound has jumped on the back of today’s strong manufacturing data, up three-quarters of a cent against the US dollar to just above .52.

9.37am BST

UK ‘March of the Makers is underway’

Britain’s manufacturing revival has started at last. So argues David Noble, Chief Executive Officer at the Chartered Institute of Purchasing & Supply, following the news that activity hit a 28-month high last month (see 9.33am).

Noble commented:

The much vaunted march of the makers has finally materialised.

Exports have been critical to this success, but it is the broad based nature of the sector’s performance which endorses the view we are on track for solid and accelerated growth in the coming months.

The ability of British manufacturers to market themselves abroad was always seen as crucial to long-term success and so it has proved. New export business has grown at its quickest rate in two years in a sign that macro-economic conditions are improving. Domestic performance has also been strong.

Markit’s data is online here:

It shows that confidence among factories is high, with jobs growth at a two-year peak.

Updated at 9.38am BST

9.33am BST

UK manufacturing activity beats forecasts

Britain’s manufacturers have also posted strong growth in July, according to Markit’s monthly survey of the sector.

Hot on the heels of the decent eurozone data (9.08am), the UK PMI index jumped to 54.6 –the strongest reading in 28-months, and well over the 50 point mark that shows growth.

Economists had expected a reading of 52.8.

This must bolster hopes that the UK’s economic recovery continued in July, following the 0.6% increase in GDP recorded in the previous three months.

9.26am BST

Rajoy: I won’t resign over corruption claims

Back in the Spanish parliament, prime minister Mariano Rajoy continues to deliver a lengthy speech defending himself over the slush fund scandal (see 8.43am onwards).

Rajoy has told MPs that he will not step down, and pledged to keep implementing his economic reform programme:

Nothing related to this affair has stopped me or will stop me from governing.

9.20am BST

Lloyds selloff moves closer

In the City, the big news is that Lloyds Banking Group has posted a profit, which will help the UK government sell off its 38% stake in the bank.

And Lloyds’ army of long-suffering shareholders will be interested to hear that the bank has begun talks over resuming its dividend.

My colleague Jill Treanor writes:

The 39%-government-owned bank reported first half profits of £2.1bn – compared with a £456m loss this time a year ago – even though it took an extra £500m charge for mis-selling payment protection insurance, taking the total cost of paying redress to customers to £7.3bn.

The return to profitability had been expected and the City was awaiting guidance on the bank’s future plans to pay dividends – blocked by Brussels when the bank was bailed out in 2008 – which is expected to make the shares easier for George Osborne to sell off. The shares were the biggest risers in the FTSE 100 in early trading, gaining 5% to over 71p.

Lloyds sell-off moves nearer as bank returns to profit

Updated at 9.44am BST

9.11am BST

Graph: Eurozone manufacturing returns to grow

And here’s the graph showing how eurozone manufacturing activity has revived after several dire years:

Updated at 9.12am BST

9.08am BST

Eurozone manufacturing sector returns to growth

Good news. The eurozone manufacturing sector has returned to growth, according to the final survey of the sector carried out by data firm Markit.

Markit’s manufacturing PMI survey (based on interviews by purchasing managers across the euro area) came in at 50.3, beating a ‘flash’ estimate of 50.1. That’s the best reading in two years, and means activity increased (50.0 = the cutoff point between growth and contraction).

Within the data, Germany’s manufacturing sector posted its strongest PMI reading in 18 months, and Italy also cheered analysts with a reading of 50.4.

And there’s even a better result in Greece, where the PMI was its least weak in more than three and a half years.

Rob Dobson, senior economist at Markit said the eurozone’s manufacturing sector had made a positive start to the third quarter of 2013:

Manufacturing output rose again in Germany, Italy, the Netherlands and Ireland during July, while there were welcome returns to growth for France and Austria. The breadth of the expansion will hopefully aid in its sustainability. Even the downturn in Greece showed signs of easing, while Spain saw its second-weakest contraction for over two years.

The bugbear of eurozone manufacturing remains its lacklustre labour market, which contributes to the persistent joblessness of the region as a whole.

Even here there were tentative signs of recovery, with the rate of manufacturing job losses easing to a one-and-a-half year low. Meanwhile, falling commodity prices and intense competition are still keeping inflationary pressures in the sector at bay and posing no real issues for policymakers.

8.53am BST

Rajoy: Justice must do its job

Mariano Rajoy also told MPs in the Madrid parliament that justice must take its course, over disgraced former treasurer Luis Barcenas. The Spanish PM added that he’s confident the courts will decide that neither he, nor his party, committed any crime.And here’s the key quote:

I was mistaken in trusting the wrong person. I didn’t cover up a guilty person. He tricked me, but it was easy because I don’t jump at condemning anyone.

MPs will question Rajoy on the affair once he’s completed his speech.

Updated at 8.53am BST

8.43am BST

Rajoy: Slush fund scandal has hurt Spain

Spanish prime minister Mariano Rajoy has begun testifying in the Madrid parliament over the illegal payments scandal, and admitted that the revelations of corruption and secret payments has hurt Spain’s image abroad.
The embattled PM insisted that claims his party received millions of euros in secret illegal payments are untrue, saying he had ‘made a mistake’ in his relationship with the party treasurer Luis Barcenas.
Barcenas is at the heart of the scandal, and faces a string of charges including money laundering, bribery, and tax fraud.
Here are the first Reuters newswire snaps from the court:



We’ll have more details and analysis later…

Updated at 8.43am BST

8.32am BST

Today’s meetings come after the US Federal Reserve got the ball rolling with its own meeting yesterday.

The Fed left its stimulus package unchanged, and warned that the US economy still faces difficulties. My colleague Heidi Moore explains:

The unemployment rate "remains elevated," members said, while mortgage rates are rising and a deadlocked Congress holding up budget policy is "restraining economic growth."

The committee’s wary tone on the economy is in marked contrast to its more chipper pronouncements just last month, when chairman Ben Bernanke said "generally speaking, financial conditions are improving" and "the fundamentals look a little better to us," crediting the housing sector in particular for creating construction jobs and supporting consumer spending.

Here’s the full story: Fed to keep interest rates at zero amid debate over future leadership

Updated at 8.32am BST

8.22am BST

Poll: Economists expect no change from the ECB

Reuters polled 70 economists ahead of today’s European Central bank meeting, and 69 of them said they don’t expect an interest rate cut today.

However, the ECB governing council could still discuss easing monetary policy.

Last month it surprised the City, and sent the euro tumbling, by declaring that rates would remain at their current record lows, or lower, for an extended period of time. Surely the Frankfurt press pack will ask Mario Draghi to clarify this forward guidance?….

Updated at 8.23am BST

8.10am BST

Central Banks in focus

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

It’s a big day for monetary policy, as the European Central Bank and the Bank of England hold their monthly meetings to set interest rates and stimulus packages.

Despite recent encouraging data suggesting the recession is ending, the ECB is expected to remain dovish. And as ever, Mario Draghi’s press conference will be a highlight. What will the man who promised a year ago to do ‘whatever it takes’ make of the situation today?

The Bank of England is also expected to keep its hands off the levers of monetary policy — analysts don’t expect any increases in its bond-buying programme ahead of next week’s quarterly inflation report. But with new boy Mark Carney in the governor’s chair, there’s a frisson of excitement. Will the BOE release another statement, as it surprisingly did last month after Carney’s first Monetary Policy Committee?

There’s also the prospect of drama in the political sphere. After two days of legal argument, Italy’s Supreme Court is expected to give its final verdict on Silvio Berluconi’s appeal against a jail sentence and public office ban for tax fraud. If the sentence is upheld, the Italian coalition government could look shakier.

While in Spain, prime minister Mariano Rajoy is appearing in parliament to answer questions over the illegal payments scandal. MPs will demand answers over allegations that Rajoy himself received money through a secret scheme in which cash from businesspeople was funneled to senior party figures. More details here.

Also, new manufacturing data for the eurozone, UK and US should show how the world economy fared in July.

I’ll be tracking the action through the day…

Updated at 8.22am BST

<a href="" rel="nofollow"> <img src="" alt="Ads by The Guardian" /> </a> © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

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


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

5.46pm BST

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

Until then, thanks, and goodnight. GW

5.41pm BST

French jobless levels hits new record high

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

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

Reuters has more details:

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

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

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

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

5.25pm BST

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

5.19pm BST

Europeahn markets close up

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

European market closing price
Photograph: Thomson Reuters

Michael Hewson of CMC Markets commented:

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

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

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

4.45pm BST

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

4.43pm BST

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

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

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

Here's a couple of photos:

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

4.03pm BST

Greece one step away from next bailout payment

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

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

Here's the full statement:

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

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

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

3.49pm BST

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

3.33pm BST

Jane Austen gets nod to grace £10

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

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

Here's the full story:

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

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

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

Jane Austen £10
Jane Austen £10 Bank of England

I preferred our own version:

Updated at 3.58pm BST

3.26pm BST

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

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

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

More details here.

3.00pm BST

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

10 reasons the US economy is stuck

2.38pm BST

US manufacturing activity hits four-month high

Flash estimate of US PMI, July 2013
Photograph: Markit

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

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

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

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

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

He said:

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

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

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

2.20pm BST

1.38pm BST

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

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

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

Updated at 1.38pm BST

1.24pm BST

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

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

Reuters has the story:

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

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

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

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

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

1.13pm BST

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

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

12.59pm BST

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

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

12.54pm BST

Larry Elliott: Eurozone’s problems aren’t over

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

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

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

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

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

12.25pm BST

GSK warns of China hit

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

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

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

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

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

11.42am BST

Golden Dawn banned from food handout

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

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

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

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

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

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

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

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

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

He argued:

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

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

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

And here's some reaction:

Updated at 12.24pm BST

10.46am BST

Protests in Greece

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

University lecturer Spyros Gkelis tweets a photo:

10.16am BST

PMI data and corporate results push markets up

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

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

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

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

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

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

10.01am BST

Economist: eurozone downturn is over

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

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

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

9.55am BST

See the data yourself

9.52am BST

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

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

Updated at 9.54am BST

9.45am BST

Graph: Eurozone PMI

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

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

Eurozone composite PMI, July
Photograph: Markit

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

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

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

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

But it's better than losing a fingernail….

Updated at 9.48am BST

9.25am BST

9.09am BST

Eurozone PMI suggests recession may soon end

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

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

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

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

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

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

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

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

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

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

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

Details and reaction to follow

Updated at 9.25am BST

8.59am BST

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

8.46am BST

8.45am BST

Early reaction

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

8.40am BST

Graph: Germany’s PMI

German PMI, July 2013
Photograph: Markit

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

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

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

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

8.35am BST

German PMI beats forecasts

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

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

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

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

Encouraging stuff. Details to folllow….

8.19am BST

Graph: Does French PMI show recession ending?

French private sector PMI, to July 2013
Photograph: Markit

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

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

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

8.08am BST

French PMI data

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

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

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

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

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

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

Here's the full report.

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

Updated at 8.11am BST

8.00am BST

Portuguese reshuffle

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

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

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

7.49am BST

Chinese manufacturing activity hits 11-month low

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

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

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

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

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

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

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

This adds more pressure on the labour market.

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

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

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

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

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

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

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

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

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

Updated at 8.03am BST © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

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


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

5.17pm BST

Closing summary

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

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

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

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

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

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

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

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

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

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

5.00pm BST

Relief rally on Portuguese stock market

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

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

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

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

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

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

Closing prices.

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

• FTSE 100: down 7.5 points at 6623, -0.1%

• German DAX: down 0.5 points at 8331, – 0.01%

• French CAC: up 14 points at 3939, +0.37%

• Spanish IBEX: up 22 points at 7966, + 0.29%

• Italian FTSE MIB: up 109 points at 16233, + 0.68%

David Jones, chief market strategist at IG, sums up the situation in London:

It has been a drowsy day on the market, with the FTSE 100 drifting aimlessly for most of the day, as London enjoys what might be the end of the current heatwave. Economic data has been a touch poorer, but not bad enough to inspire panic or change expectations about central bank policy.

Overall, today’s market has something of the 'coiled spring' about it, seeming to be waiting for an excuse to move higher.

4.36pm BST

And here are the key quotes from Spanish PM Mariano Rajoy this afternoon (via Reuters)

I have talked to the head of parliament and I have told him that I would ask to appear at the end of the month or at the beginning of August.

I will appear before parliament in order to give full explanations because I believe that's where I should do it.

4.22pm BST

Rajoy will answer slush fund questions

Spanish Prime Minister  Mariano Rajoy (R), and his Romanian counterpart, Victor Ponta, during a joint press conference held after their meeting at La Moncloa Palace in Madrid, Spain, 22 July 2013.
Spanish Prime Minister Mariano Rajoy (right) with Romanian counterpart, Victor Ponta, during a joint press conference today. Photograph: BALLESTEROS/EPA

Important developments in Spain. The prime minister has announced he will appear in parliament in the next few weeks to answer questions over the slush fund scandal that has dominated Spanish politics for months.

Mariano Rajoy told a press conference this afternoon that he will answer questions over allegations that Luis Barcenas, former Popular Party treasurer, ran an illegal payments operation which benefitted top party officials, includign Rajoy himself.

The session is likely to take place at the end of July, or the beginning of August.

Rajoy announced the plan at a press confernence with the prime minister of Romania today, as journalist José Miguel Sardo explains:

Rajoy has been under mounting pressure since new documents and text messages released this month appeared to move him closer to the scandal. The PM has repeatedly denied any involvement, while avoiding answering questions about the allegations.

Many protests have taken place in Spain, with people calling for his resignation. And a poll published on Sunday found that almost 90% of Spaniards believe Rajoy should give a full account.

Sounds like they may get their wish….

4.09pm BST

On a lighter note, former Bank of England governor Sir Mervyn King has been enrolled into the House of Lords today.

Lord King (in the middle of the ermine-clad trio in the tweet above) won't be gracing the red leather benches every day — as he's also accepted a position of visiting professor at New York University's Stern School of Business and School of Law.

3.36pm BST

Key event

Open Europe, the think tank, has blogged on the latest developments in Portugal, here:

Beyond appearances, the recent political crisis has changed things in Portugal

It argues that the promotion of junior coalition leader Paulo Portas to deputy PM (see 1.10pm) with responsibility for dealing with the troika, is an important change:

Let's not forget Portas tendered his resignation from the government because he disagreed with Prime Minister Pedro Passos Coelho over the appointment of Maria Luís Albuquerque as new Finance Minister. On that occasion, Portas made clear that he was hoping for a change in the country's economic policy approach (in substance, less austerity).

That could mean further tensions between the coalition, with Portas's conservatives pushing for less austerity, while the prime minister's Social Democrats stick to the current policy.

3.04pm BST

Photos: Greek teachers protests in Athens

And here's a few photos from Athens of the protest held today by Greek schoolteachers (10.01am), against plans to move 2,000 staff in a mobility scheme, which could lead to being laid off.

A protesting high-school teacher chants slogans in central Athens, Monday, July 22, 2013.
A protesting high-school teacher chants slogans in central Athens, Monday, July 22, 2013. Photograph: Thanassis Stavrakis/AP
A teacher stands in front of riot police during a protest against public sector reforms and layoffs outside the Finance Ministry in Athens July 22, 2013.
A teacher stands in front of riot police outside the Finance Ministry. Photograph: JOHN KOLESIDIS/REUTERS
A protesting high-school teacher stands in front of riot police officers outside the Finance Ministry, in central Athens, Monday, July 22, 2013.
Photograph: Thanassis Stavrakis/AP

2.54pm BST

Greek healthcare workers to strike

More industrial unrest in Greece. Kathimerini reports that heathcare workers will be striking on Wednesday, in protest at plans to transfer workers to the new 'labour pool' (part of the programme for cutting thousands of public sector jobs)

It reports:

Public hospitals, health centers and the ambulance service will operate with skeleton staff on Wednesday due to a strike by employees.

Doctors and nurses have called the action to protest the government’s plans to place 2,500 healthcare staff in a mobility scheme which will lead to them being transferred or dismissed.

Updated at 2.54pm BST

2.38pm BST

First UK fine for high-frequency trader

Meanwhile in the City, the Financial Conduct Authority (FCA) has slapped a fine of nearly £600,000 on a high-frequency trader for manipulating the oil price.

The City watchdog has announced this lunchtime that Michael Coscia had been penalised for running an "abusive trading strategy" in which he would place a small buy order, then flood the market with large sell orders to move the oil price. The instant the buy order was taken he'd cancel the large sell orders, then repeat the process in reverse to square out the position.

That strategy yielded decent profits for Coscia, at the expense of the rest of the market. As the FCA explains (full details here):

Between 6 September 2011 and 18 October 2011 Coscia used an algorithmic programme of his own design to instigate an abusive trading strategy known as “layering”.

During this time, Coscia placed thousands of false orders for Brent Crude, Gas Oil and Western Texas Intermediate (WTI) futures from the US on the ICE Futures Europe exchange (ICE) in the UK.

Taking advantage of the price movements generated by his layering strategy, Coscia made a profit of US 9,920 over the 6 week period of trading at the expense of other market participants – primarily other High Frequency Traders or traders using algorithmic and/or automated systems.

This is the first time the FCA has taken enforcement action against a High Frequency Trader.

American regulators are also imposing financial penalties, relating to trading on US oil exchanges.

High-frequency trading uses high-powered computers, high-speed links and sophisticated algorithms to execute trades in fractions of a second. Supporters of HFT say it increases liquidity and means the gap between buy and sell orders is narrowed.

However, it has been blamed for sparking wild swings in prices, such as in the Wall Street Flash Crash of 2010.

Its critics include many MEPs, who voted last autumn to ban HFT in a clampdown on 'purely speculative' financial activity – even though it (unlike Coscia's activities) does not breach any rules. That ban has yet to come into law, and was opposed by the UK.

Updated at 2.41pm BST

1.10pm BST

Portuguese reshuffle on the way

Portugal's PM has now announced that Paulo Portas, his junior coalition partner will be given responsibility for "co-ordinating" negotiations with the Troika.

Pedro Passos Coehlo also confirmed that Portas will become Portugal's new deputy prime minister — proving that old adage that a well-timed resignation can do wonders for a career*.

It was Portas's shock decision to quit on July 2 that inflamed the crisis, a day after former finance minister Vitor Gaspar threw in the towel.

There's going to be a wider cabinet reshuffle too – but the details aren't available yet.

Latest newsflashes:


* – don't try this in the office, folks….

Updated at 1.23pm BST

12.38pm BST

Portuguese 10-year bond yields in July
Portuguese 10-year bond yields in July. Photograph: Thomson Reuters

12.33pm BST

Portuguese borrowing costs back at pre-Gaspar levels

Portuguese bond yields have now fallen back to the levels seen at the start of July, before finance minister Vitor Gaspar sparked the crisis by resigning.

12.12pm BST

Key event

Portuguese government bonds are on a roll this morning, leaping in value as investors welcome prime minister Passos Coelho's commitment to Portugal's bailout plan, and the news that early elections have been ruled out.

The yield (interest rate) on its 10-year bonds has now tumbled to 6.4%, down from 6.92% on Friday night.

Portuguese 10-year bond yields, July 22 2013
Photograph: /Thomson Reuters

12.03pm BST

Portugal’s PM: we will rebuild confidence

Portugal's prime minister has vowed to stick to the country's bailout programme, and rebuild confidence in the country following the confusion and discord of the last fortnightthree weeks.

Pedro Passos Coelho said that his government remained to delivering the targets agreed with its Troika of lenders. That includes exiting its bailout in 2014, he insisted. 

In his first speech since president Cavaco Silva ruled out early elections last night, Passos Coelho declared:

We will rebuild the confidence without raising any doubts about the process we are carrying out, saying 'yes, we want to complete the assistance programme on the agreed date'.

Passos Coelho also argued that Portugal's difficult circumstances means its auterity programme must continue, as flagged up at 11.34am.

Updated at 12.30pm BST

11.34am BST

Hot off the terminal

News flashes from Portugal:





More to follow….

11.20am BST

Worst debt/GDP performers

Another point on today's eurozone government borrowing figures (see 10.27am onwards) — the countries suffering the biggest rise in debt, as a percentage of GDP, are all in bailout programmes or trying desperately to avoid one.

Over the last year, the highest increases in the GDP/debt ratios were recorded in Greece (+24.1 percentage points), Ireland (+18.3%), Spain (+15.25%), Portugal (+14.9%) and Cyprus (+12.6%).

Across the EU, twenty-four Member States registered an increase in their debt to GDP ratio at the end of the first quarter of 2013.

The three who achieved a decrease over the last 12 months were Latvia (-5.1%), Lithuania (-1.9%) and Denmark (-0.2%). [Germany posted a fall over the last three months, but not year-on-year].

Updated at 11.25am BST

11.11am BST

The BBC's Gavin Hewitt agrees that today's eurozone debt levels (see 10.27am) shows how the region's austerity programmes have failed to lower the region's borrowing, as a percentage of national output.

Both Greece and Italy's figures show the negative impact of those austerity programmes – it's hard to cut your debt-to-GDP ratio if your economy is shrinking.

Updated at 11.17am BST

10.52am BST

Eurasia Group: Portugal unlikely to exit bailout smoothly

Back to Portugal. Mujtaba Rahman, Europe director at Eurasia Group, agrees that Pedro Passos Coelho's coalition government is unlikely to hang on until 2015.

Rahman also warns that Portugal's chances of exiting its bailout next year are receding, following the collapse of the 'national salvation' talks on Friday night (see 7.59am).

We'll get a clearer picture of the situation this autumn, when Portugal's lenders return to assess the situation, as Rahman explains:

As a result of the political impasse over the course of the last month, the eighth Troika review will now most likely take place alongside the ninth review, at some point in late September/early October.

As we've previously argued, there is implicit policy space within the program to account for the developments of recent days. The next big milestones are the passage of a number of bills related to state reform (for example, measures on voluntary dismissals; streamlining the expenditures of line ministries and pension reforms, among others) that are supposed to inform the draft budget for mid/late-October and, in so doing, the fiscal targets for 2014-15. As long as these bills are passed by the parliament by mid/late-October, the fiscal situation-at least in terms of government effort-should still be on track.

Still, given the developments of the last several weeks, this is unlikely to improve the prospects for smooth program exit and follow-up next year.

10.27am BST

Europe’s debt pile keeps growing

The collective national debt of the eurozone jumped to 92.2% of annual economic output in the first quarter of 2013, from 90.6% three months earlier.

Only two euro-area countries cut their debt, as a percentage of GDP, over the last year – Germany and Estonia – according to new data released by Eurostat this morning.

Across the wider European Union, the government debt pile rose to 85.9% in the first three months of 2013, up from 85.2% in the previous quarter.

A year ago, the eurozone debt-to-GDP ratio was 88.2%, compared to 83.3% for the EU. So, after another year of austerity programmes and a recession, Europe's debt position has worsened.

Eurostat's full release is online here, and explains:

The highest ratios of government debt to GDP at the end of the first quarter of 2013 were recorded in Greece (160.5%), Italy (130.3%), Portugal (127.2%) and Ireland (125.1%), and the lowest in Estonia (10.0%), Bulgaria (18.0%) and Luxembourg (22.4%).

Eurozone debt/GDP levels
Photograph: Eurostat

10.01am BST

Greek teachers to protest today

Over in Greece, schoolteachers are planning another protest as the first wave of public sector job losses begins.

The Federation of Secondary Schoolteachers (OLME) has called a demonstration for noon today (10am BST). It is unhappy that 2,000 teachers are being removed from their technical and vocational high schools, and transferred to the 'labour reserve'. They could be laid off early next year, if new positions have not been found for them.

OLME is planning legal action to prevent the transfers going ahead, despite MPs approving the legislation to bring in public sector job cuts last week.

Updated at 10.07am BST

9.32am BST

Portuguese debt continues to rise in value…

8.53am BST

A second bailout for Portugal? What the analysts say

Several analysts, are suggesting today that Portugal will need a second aid programme, when its existing €78bn bailout ends in 2014.

Jamie McGeever of Reuters sums up this morning's research notes:

Michael Hewson of CMC Markets commented:

With the next troika report delayed until after the German elections, both parties are expected to stagger on trying to implement the bailout agreement as the Portuguese president decides on what steps to take next. This failure to adopt consensus is becoming all too familiar in the politics of southern Europe and is likely to jeopardise any prospect of Portugal being able to return to the markets next year.

What seems more likely is that the country will probably need another bailout.

While David Buik of Panmure Gordon agrees that debt restructuring is inevitable, in Portugal and beyond:

Even if an election is avoided, Portugal economically is still hanging in rags, as is Spain and Greece!…

The sooner there is a realisation that Ireland, Portugal, Greece and probably Spain has no chance of repaying or sustaining its debt and that haircuts will need to be taken across the spectrum, the quicker we can all get on with our lives.

8.37am BST

Portuguese stock market rises

Shares have also risen on the Lisbon stock market, although we've seen more vigorous relief rallies in our time.

The PSI 20 is up 31 points at 5556, +0.57%

Most other European markets are sliding a little, but it's all rather tame:

FTSE 100: down 16 points at 6614, -0.25%

German DAX: down 6 points at 8325, – 0.1%

French CAC: down 5 points at 3920, -0.1%

Spanish IBEX: down 5 points at 7937, -0.07%

• Italian FTSE MIB: up 16 points at 16141, + 0.1%

There's little major economic news on the calendar, so it could be a quiet day in the City….

8.30am BST

Portuguese bonds strengthen

Portuguese government debt has risen in value this morning, as investors welcome the decision not to call early elections in Portugal.

This has pushed the interest rate, or yield, on Portuguese 10-year bonds down to 6.84% (as measuresd by Tradeweb), from 6.92% on Friday. Further away from the 7% 'danger zone', where a country is priced out of the markets [Portugal's immediate borrowing needs are covered by its bailout, of course].

Updated at 10.50am BST

7.59am BST

Portuguese president backs coalition after turbulent days

Portuguese President Anibal Cavaco Silva arrives prior to addressing the nation from Belem Presidential palace in Lisbon on July 21, 2013.
Portuguese president Anibal Cavaco Silva arriving to address the nation from Belem Presidential palace in Lisbon last night. Photograph: PATRICIA DE MELO MOREIRA/AFP/Getty Images

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

Like the thunder over London early this morning, Portugal's political crisis is rumbling on.

After nearly three weeks of turmoil, Portuguese president Anibal Cavaco Silva has backed the present government and ruled out early elections. This despite the country's main political parties failing to agree the 'National Salvation' deal he had called for.

Speaking to the nation last night, Cavaco Silva declared:

The best solution is to keep the current government in power….

I think in the current context of national emergency, calling elections is not a solution for the problems Portugal is facing.


It is important to show our European partners that Portugal is a governable country.

Cavaco Silva adressed the Portuguese people after a week of talks between the centre-right coalition and the socialist opposition broke up without an agreement on Friday night. The Socialists, it seems, were not prepared to back Portugal's painful bailout programme.

So having failed to whisk up a government of national salvation, Cavaco Silva has now thrown his support behind prime minister Pedro Passos Coelho. He'll continue to lead the coalition, alongside deputy leader Paulo Portas whose resignation 13 days ago ignited the tinderbox of austerity fatigue and economic gloom.

By not calling for early elections, Cavaco Silva has dampened down fears over Portugal's immediate future. But its chances of returning to the financial markets in 2014 are looking thinner. Without a unity government, it will be harder to push through any further austerity measures that may be needed to keep Portugal's financial programme on track.

Unlike lightning, eurozone bailouts certainly can strike twice. Will Portugal need another?

I'll be tracking the situation in Portugal through the day, along with the latest developments across the eurozone and beyond...

Updated at 12.30pm BST © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

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 article titled “Ben Bernanke: ‘We’re very focused on Main Street’ – as it happened” was written by Tom McCarthy, for 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. © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

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 article titled “Greek protests amid general strike over austerity job cuts – eurozone crisis as it happened” was written by Graeme Wearden, for 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 © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

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 article titled “Eurozone crisis: Greek police officers protest; Spain’s PM refuses to resign – as it happened” was written by Graeme Wearden, for 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…. © Guardian News & Media Limited 2010

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