Around the horn in europe...

Items of interest from the live blog at The Guardian....

http://www.guardian.co.uk/business/2012/mar/02/eurozone-crisis-live-eu-summit-growth#block-5

8.02am: Right on cue, new unemployment figures from Spain underline that last point. The jobless rate rose 2.4% in February compared to January, leaving well over 5 million people out of work. Spain already has the highest unemployment in Europe.

8.23am: Figures just released show that banks are holding onto the cash they have taken from the ECB and depositing back with the central bank. With balances swollen by the huge loans under the longer-term refinancing operation, banks deposited a total of €777bn overnight with the ECB. Pretty certain that's a new record.

8.16am: Barclays has confirmed this morning that it has helped itself to €8.2bn, or £6.7bn, under the European
Central Bank's scheme of bolstering banks with cheap money.

Barclays said the money would be used to plug gaps in its operations in crisis-hit Spain and Portugal. €6.2bn has been earmarked just for Spain.

The second phase of the so-called longer-term refinancing operation was announced on Wednesday and saw banks take €529bn of loans at 1% from the ECB. They took €489bn just before Christmas in a scheme likened to quantitative easing used in the UK and US to support the financial system. Barclays did not take part in the first round of the LTRO.

10.46am: We should get an instant test of how the fiscal compact might (or might not) work today with Spain due to announce new spending cuts, according to Reuters. Problem is the €15bn worth of cuts won't be enough to reduce its budget deficit to this year's target of 4.4% as our report points out.

It will make for a pretty sticky morning for Spanish prime minister Mariano Rajoy, who will have to try to convince his counterparts to relax the rules and let him off the fine. Should be interesting. Bit like a Mulligan in golf where if a player duffs their shot into the bushes they can have another go. Well, Bill Clinton likes them. As in politics as in life.

1.01pm: Spain has admitted that it will miss its budget deficit targets for this year, risking possible sanctions from the EU.

Prime minister Mariano Rajoy said the deficit will reach 5.8% of GDP this year, busting this year's target of 4.4% promised to other EU states. But he said Spain would still meet next year's target of 3%. Spain missed last year's 6 percent deficit target it recorded a 8.5 percent total instead.

11.18am: On a more serious note, figures out this morning show that the prices eurozone manufacturers are charging for their goods went up 0.7% in January due to higher fuel costs. That equals a 3.7% rise on a year ago, which higher inflation currently running at 2.7%.

As several commentators have already noted, the ECB will be disappointed with the prospect of inflation creeping up again - just when it looked the eurozone was beginning to stabilise. (Some would say, of course, that it's their own fault for throwing money at the banks, but that's another matter).

Howard Archer, of IHS Global Insight, reckons:

Following on from news that Eurozone consumer price inflation edged back up to 2.7% in February from 2.6% in January, this fuels (no pun intended – well maybe!) concern that higher oil prices will lead to inflation being markedly stickier than hoped for over the coming months, thereby maintaining a significant squeeze on consumers' purchasing power and making it harder for the ECB to cut interest rates further if the Eurozone economy continues to contract.

It is odds-on that the ECB will keep interest rates unchanged at 1.00% at its 8 March policy meeting. Indeed, the ECB seems likely to remain firmly in "wait and see" mode for some time. Even so, we still expect interest rates to be eventually trimmed from 1.00% to 0.75% as Eurozone economic activity remains soft overall and fragile