Wednesday, October 3, 2012

Europe financial and political news highlights for October 3rd.....


http://www.telegraph.co.uk/finance/financialcrisis/9585406/Spain-fears-harsh-rescue-terms-from-AAA-Nordic-parliaments.html


Ambrose Evans-Pritchard
By , International business editor
8:06PM BST 03 Oct 2012
Comments71 Comments
Fear of escalating demands by Germany, Finland and Holland is a key reason why Spanish premier Mariano Rajoy continues to drag his feet on a full sovereign bail-out.
Spain's refusal to act has frozen the eurozone rescue machinery and begun to rattle markets. The European Central Bank will not buy Spanish bonds until the country requests aid from the European Stability Mechanism (ESM) and signs a "Memorandum" giving up fiscal sovereignty.
Finance minister Luis de Guindos told Spain's parliament Wednesday that there will be no bail-out until the terms are clear. "The government will take the best decision for Spain and its European allies when it knows all the details," he said.
Finland has become the greatest worry. "Rajoy is terrified that the Finns will say `No' after he has requested a rescue," said a Spanish economist with close ties to the Rajoy team.
Miapetra Kumpula-Natri, head of the Grand Committee on Europe in Finland's parliament, said Finnish lawmakers must vote on any deal and would make their own decision.









Items of note from Greece today....


http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_2442_02/10/2012_464231


Prosecutor obtains list of major depositors


A list containing the names of about 2,000 Greeks who had deposits totaling some 1.5 billion euros in a branch of HSBC in Geneva, Switzerland, was in the hands of financial prosecutor Grigoris Peponis on Tuesday after the data was forwarded by PASOK leader Evangelos Venizelos.
Venizelos, an ex-finance minister, said he had the list on a memory stick, which he passed to Prime Minister Antonis Samaras. The premier gave it to the Financial Crimes Squad (SDOE), which forwarded it to Peponis.
A stir was caused after Giorgos Papaconstantinou, who preceded Venizelos as finance minister, told the Financial Times that he had received a CD in 2010 containing the names of Greek depositors from his French counterpart at the time, Christine Lagarde. Papaconstantinou said that he passed the information to SDOE but suggested that the CD had gone missing since.
Venizelos said that he had presumed the data was in the hands of authorities but came forward with the memory stick when it was suggested that SDOE did not have the information. The PASOK leader cast doubt on whether the data could be used to launch action against suspected tax evaders as it had not been obtained legally.
Sources told Kathimerini that many of the accounts on the list were not active and many belonged to Greek businessmen based abroad, although a former New Democracy politician was also among the depositors.
Peponis will investigate why the contents of the list were not probed earlier, as well as whether the deposits were made legally.
Meanwhile, the former head of procurement at the Defense Ministry, Yiannis Sbokos, was arrested on Tuesday evening. Sbokos is one of several people accused of corruption alongside ex-Defense Minister Akis Tsochatzopoulos.



and....


Trolley work stoppage, Emporiki strike, motorcycle protest rallies


Staff operating electric trolleys in Athens are participating in a six-hour work stoppage on Wednesday. Services will be halted from 10 a.m. to 4 p.m. while employees to participate in their union’s general assembly.
Also on Wednesday, Emporiki Bank staff members are holding a 24-hour strike to protest plans for the lender’s acquisition by Alpha Bank. Emporiki is a subsidiary of France’s Credit Agricole.
Meanwhile, the Panhellenic Federation of Workers Associations of the Local Government (POE OTA) is organizing a series of motorcycle protest rallies in a number of cities around the country.
Taking part in the industrial action which is expected to commence at noon, are doctors and municipal employees.
In Attica, the protest rally will take off from Karaiskaki Square in central Athens.



Greek central bank cuts capital adequacy requirement


Greece's central bank has decided to lower the capital adequacy requirement for the country's battered banks due to delays in their planned recapitalization as part of the country's foreign bailout, a Bank of Greece official said on Wednesday.
The central bank has abandoned the core Tier 1 ratio requirement of 9 percent effective Sept 30 and instead adopted a total capital adequacy ratio of 8 percent until their recapitalization is complete, the official told Reuters, declining to be named.
The loosening of this threshold means Greek banks will not have to raise as much capital as they await resumption of the recapitalization process.
Greece's second, 130-billion euro bailout has earmarked a sum of 50 billion euros to recapitalize the country's viable banks and cover resolution costs for others.
A bank support fund, the Hellenic Financial Stability Fund (HFSF), set up to carry out the recapitalization, has already pumped 18 billion euros into the country's four biggest lenders, but the rest of the funding will only resume when lenders disburse the country's next, 31.5 billion euro aid tranche.
That aid has been delayed pending a review by the troika of European Union, European Central Bank and International Monetary Fund inspectors on the country's progress in meeting the terms of its bailout.
Hammered by a deep recession and rising loan impairments, Greek banks have been forced to rely on the central bank for liquidity and begun to consolidate to survive the debt crisis.
Greece's Piraeus Bank has struck a preliminary deal to buy French lender Societe Generale's loss-making Greek unit Geniki, two sources close to the talks told Reuters on Tuesday.
On Monday fellow French bank Credit Agricole said it would sell its Greek unit, Emporiki, for a symbolic one euro to Alpha Bank.



EOPYY debts pile on obligations

 State owes almost 8 billion euros to third parties, with the time of repayment remaining unknown

By Prokopis Hatzinikolaou
State debts to third parties amounted to 7.9 billion euros at the end of August, the Finance Ministry announced on Tuesday, including “forgotten” debts of 930 million euros owed by the National Organization for Healthcare Provision (EOPYY).
Data for the first eight months of the year show that state debts to third parties came to just under 8 billion euros, out of which 4.1 billion euros concern the debts of social security funds.
Data for the year to July had shown state debts at 6.7 billion euros, but that amount has now been revised after the inclusion of EOPYY’s concealed debts run up since the start of the year. That has taken the figure to 7.6 billion, which grew by 300 million euros in August to 7.9 billion.
Of the 4.1 billion euros that social security funds owe, some 1.3 billion concerns the debts of the Civil Servants’ Social Security Fund. Hospitals owe 1.7 billion, state corporations 323 million, local authorities 835 million and ministries 910 million. The ministry with the highest debts is that of National Defense, which owes 355 million euros, followed by the Infrastructure Ministry with 148 million, and the Development Ministry with 123 million.
The first draft of next year’s budget, presented on Monday, provides for the payment of debts of 7 billion euros, half of which will be covered by the end of this year and the rest in 2013. Repayment depends on the disbursement of the next bailout tranches from the European Union and International Monetary Fund. Although the government intends to pay back the debts of 7.9 billion euros, it remains unknown when the next bailout tranche will be disbursed for payments to begin or when the extra 930 million euros will be repaid.
The Finance Ministry is actually talking about a haircut on debts to third parties of 1.5 billion euros, though the exact amount will be determined by the outcome of inspections by the General Accounting Office.
Separately, the ministry announced on Tuesday that in the year’s first eight months, the deficit of the general government amounted to 9.88 billion euros, from 17.4 billion in the same period last year. The budget showed a primary surplus of 1.4 billion euros, against a primary deficit of 4.16 billion in 2011.



More and more Athens hotels face closure


Athens hotels are continuing to suffer the effects of the economic crisis of the last four years, with the local hoteliers’ association warning that more units are set to shut down this winter due to reduced demand and high operating costs.
In August the average occupancy rate at 3-, 4- and 5-star hotels posted a drop of 16.9 percent compared to the same month last year, while the average price per room fell 6.5 percent and revenues per available room contracted by 22.3 percent.
In the first eight months of 2012, the average occupancy rate was down 30.1 percent from the same period in 2008.
Among the hoteliers’ problems cited by the association is an unpaid bill of 16 million euros run up when they were hosting injured Libyans earlier this year.



and around the horn in Europe - Service PMI data out this morning....




http://www.telegraph.co.uk/finance/debt-crisis-live/9583150/Debt-crisis-live.html


18.18 Surprise surprise. Portugal's main union has called a general strike on the back of today's announcement of austerity measures. CGTP said in a statement:
QuoteThis is an authentic programme of aggression against the workers and the people ... The consequences for the workers and their families are brutal -- general impoverishment, drastic worsening of living conditions and life expectancy.
18.08 ...while a third official told Reuters that Greece and the troika were arguing over how much the economy will contract next year. The debt inspectors expect Greece's economy to shrink by 5pc, more than the government's 3.8pc forecast.
17.43 Another Greek official told AFP that the country hopes to reach accord with international creditors by Monday. He said:
QuoteMore meetings will be held...we will know where we are on Monday [when eurozone finance ministers are to meet in Luxembourg].
17.15 Greece's talks with European debt inspectors are progressing well, but there is still "a large gap" between the two parties, according to the country's finance minister.
Yannis Stournaras told reporters:
QuoteDiscussions with the troika are on a good track. There is still a large gap, we are trying to reach a compromise to seal a deal.
15.35 It also plans to introduce a financial transactions tax next year. The government is still working on further spending cuts, says Mr Gaspar.
15.32 The government will also introduce a "4pc income tax surcharge" in 2013. A new capital tax and luxury property tax will also kick in this year.
15.29 The country will reduce the number of income tax brackets to boost revenues. This will effectively take the average rate of income tax to 11.8pc, from the current level of 9.8pc.
Portugal currently has eight income tax brackets.
15.23 Now for the meaty bit.
The government reiterates its forecast that the economy will contract by 1pc in 2013, and grow by 1.2pc the following year. Unemployment will rise to 16.4pc next year, he adds.
Mr Gaspar says that additional measures worth 3pc of GDP are needed next year so the country can meet its targets.
15.15 Mr Gaspar says that the country is now considering issuing medium-term debt.
15.11 The crisis was caused by too much debt, says Mr Gaspar, but today's successful bond swap (see 12.07) shows that the country is making good progress.
He compares Portugal's progress to that of austerity poster child,Ireland.
15.08 Portugal's finance minister Vitor Gaspar has started his press conference on the country's bail-out and new austerity measures.
He starts by saying that there has been "intensive" public debate over the country's adjustment programme (aka lots of protests), but reform is at risk if there is no consensus.
15.01 European Commission president Jose Manuel Barroso has attempted to address the confusion over EU plans to recapitalise struggling banks.
QuoteWe had an exchange of views on the Commission's proposals for a banking union, in particular the single supervisory mechanism. We are both determined to see the single supervisor in place as soon as possible, not least because it is an essential condition for the ESM to directly recapitalize banks. I will make clear at the next European Council in October that we must stick to the commitments we made in June European Council. It is a question of credibility for the EU and for all the member states that are our Union.
However, this still doesn't address the issue of "legacy debt" - whichGermany, Finland and the Netherlands said last month could not be taken on by the European Stability Fund (ESM).
14.42 A post-lunchtime blog by Ambrose Evans-Pritchard this afternoon. The title? Multiplying Europe's fiscal suicide (technical). I'll leave him to explain...
The entire EU austerity plan is based on a false premise. This disastrous error is now clear beyond any reasonable doubt.
The Teuto-Calvinists believe – or profess to believe, since much of their dogma is national self-interest dressed up as theory – that the fiscal multiplier is around 0.5.
That is to say, fiscal retrenchment worth 1pc of GDP will cut output by half as much, or around 0.5pc over two years. There is pain, but at least there is gain.
This is based on the IMF's analysis of fiscal crises over the decades.
Well, it has not worked out like that. Ireland has contracted at nearly seven times the speed, Spain four times, and Greece three times.
Here is a table put together by Jean-Michel Six from S&P using IMF data:
(Apologies for the size of the table, you can see a larger version here.)
As you can see, the multiplier is around 1.0 for the big countries, which is why France can expect a devastating year in 2013 as it tightens pointless by 2pc to comply with EU rules.
And why the world faces a full-blown shock if the US goes over the fiscal cliff and tightens by 4pc next year.
13.59 A full-scale Spanish bail-out is "inevitable", according to the president of Catalonia.
Artur Mas said that Madrid should ask for help without delay:
QuoteExternal aid will be inevitable, so it would be better to face it without a lot of delays [...] Spain has the potential to emerge from this situation ... but it needs help for a period.
Mr Mas also said there was no need to dramatise the situation. He said that the European Union had previously supported Spain's economic development:
QuoteSpain is already used to being helped.
13.41 Portugal may still have a funding gap of €9bn by the end of next year, despite today's debt exchange, according to economists atBNP Paribas.
Portugal exchanged €3.76bn today of a €9.7bn bond maturing in September 2013 (see 12.07). However, in a note today, Ricardo Santossaid that Portugal's revised budget deficit targets (to 5pc from 4.5pc in 2012, and 4.5pc in 2013 from 3pc) meant that its funding needs could increase by €800m this year and €2.5bn in 2013.
Based on these calculations, Portugal will still have a funding gap close to €9bn that will need to be covered via market financing or additional aid,BNP said.
13.05 Cyprus is playing hardball with the IMF over the terms of a potential bail-out
President Demetris Christofias told Greek state broadcaster NET that he would not sign any deal which called for the sale of profitable state-owned assets, or the abolition of inflation-linked salary increases.
However, Mr Christofias added:
QuoteWe aren't just saying 'no' to them. We are giving them counterproposals.
Cyprus is currently talking to Russia, which has already lent Cyprus€2.5bn, about another bail-out loan.
Russia's finance minister Anton Siluanov said last week that it would only grant a bailout loan to Cyprus as part of a co-ordinated rescue with the European Union.
12.35 More details about Spain's "bad bank" are emerging. Economy minister Luis de Guindos has said that the bank will buy assets at conservative prices and that its creation will "dynamise" the country's battered housing market
The bank will only accept loans above €200,000 and property assets above €100,000, he added.




12.07 Portugal dipped its toe back into the bond market this morning, successfully exchanging short for longer-term bonds in its first debt swap since it agreed a €78bn international bail-out last year.
Portugal's debt agency sold €3.76bn of three year debt at a coupon of 3.35pc, exchanging the bonds for debt maturing in September 2013 (5.45pc).
Commenting on the debt sale, Sergio Calpadi at Intesa SanPaolo toldReuters:
QuoteThis is a very positive development for Portugal. We've seen Portuguese bonds performing well like Ireland and so not everything in Europe is going to rot.
11.48 This morning, Luis Morais Sarmento, the budget secretary, told parliament that Portugal's 5pc of GDP budget deficit target was achieveable.
Mr Sarmento said that while the deficit goal for this year was currently off by about 1.6 percentage points, the sale of airport operator ANA-Aeroportos de Portugal would help it to narrow the gap.
11.30 Portugal is preparing to present a fresh package of austerity measures to parliament, after backtracking on previous cuts following mass protests.
The new measures, which are expected to include several tax hikes, were given provisional approval yesterday by the European Commission.
Protests forced the government to shelve a proposal on increasing workers' social security payments, which would have cut wages by about 7pc.
Unemployment has become a rising problem in Portugal. The jobless rate has jumped by one percentage point to 15pc since the start of 2012.




10.32 One of Spain's biggest housebuilders has collapsed (hat tip to reader poitierslimoges for this).
Rivero y Soler - controlled by the Joaquín Rivero family and ally Bautista Soler, has presented one of the largest bankruptcy proceedings in Spanish corporate history, according to El Pais, with liabilities of €1.6bn.
Among the major creditors is state-owned RBS, for €212m, or 13pc of Rivero y Soler's total liabilities.
10.18 A report yesterday by the Financial Times has caused a bit of a stir this morning.
Under EU draft proposals seen by the pink 'un, eurozone countries would be required to to sign binding contracts with Brussels, in another step towards fiscal union that would increase the bloc’s control over national economic policies.
More from Alex Barker and Peter Spiegel:
QuoteThe provision, included in a report distributed to EU countries before this month’s summit, would require all 17 eurozone members to sign on to the kinds of Brussels-approved policy programmes and timelines now negotiated only with bailout countries.
If adopted, the plan could help to meet demands in Germany for tighter control over the economies of highly indebted countries such as Italy and France that have a mixed record on economic reform.
The proposals reflect how far some EU leaders believe they need to overhaul the eurozone with more centralised decision-making. It is a shift that many policy makers conclude will require a wholesale change in EU treaties.

10.09 Eurozone retail sales ticked up in August, according to official data.
The 0.1pc monthly rise was largely driven by "food, drinks and tobacco,"Eurostat said. Non-food sales fell 0.7pc.
Across the EU, sales fell 0.1pc.
The highest increases were registered in Luxembourg (+2.9pc), Portugal (+2.8pc), Slovenia (+2.2pc) and Spain (+2.1pc), and the largest decreases in Poland (-1.3pc), Denmark (-1.1pc), France and Lithuania (both -0.8pc).
09.53 Spain's economy minister has outlined more details of the "bad bank" it plans to set up to take on the country's toxic property assets.
Luis de Guindos told parliament this morning that private investors would hold a majority stake in the vehicle (at least 55pc), with equity (equal to 10pc of the value of the bad bank's assets) to come from theFondo de reestructuración ordenada bancaria - or FROB - or bank buffer fund.
The full details will be published within days, Mr de Guindos added.


09.40 In Britain, the Markit/CIPS services PMI fell to 52.2 in September, from 53.7 in August. Markit said that "anecdotal evidence suggested an underlying improvement in demand and a post-Olympics boost to business activity."
However, the boost is likely to be minimal, as Chris Williamson at Markit explains:
QuoteThe September service sector PMI adds to evidence to suggest that the UK economy barely expanded in the third quarter. GDP is likely to have grown by perhaps 0.1% as modest growth of services activity was offset by a slight drop in construction sector output and a steeper decline in manufacturing, according to the PMIs.
09.21 Markit's eurozone composite PMI (which includes services data) fell to 46.1 in September, from 46.3 in August.
Ireland remained the only country to report an increase in overall activity, with its rate of growth hitting a near one-and-a-half year high of 53.0 in September.
Chris Williamson, Chief Economist at Markit said:
QuoteThe final Eurozone PMI came in slightly higher than the flash estimate but still signalled one of the steepest monthly downturns seen over the past three years.
It seems inevitable that the region will have fallen back into recession in the third quarter. After falling by 0.2% in the second quarter, a steeper fall in output is likely for the third quarter.
Prospects do not look good due to cost cutting and rising redundancies. Although there were some signs of stabilisation in Germany, any hopes for optimism that the current downturn has bottomed out are tempered by news of steepening rates of contraction in France and Spain, and an ongoing severe downturn in Italy.
09.12 Europe's two largest economies are also struggling.
However, a flash estimate at the end of September had suggested the sector was back in growth territory (50.6). Markit said that there were signs of "fragile business sentiment across the service economy" in Germany last month.
In France, the PMI fell to 45, from 49.2 in August, as the rate of job cuts accelerated to the sharpest for 33 months.
Jack Kennedy, senior economist at Markit, said:
QuoteThe French service sector sank further into contraction in September, mirroring the trend in manufacturing. The weak PMI data suggest it is highly unlikely that French GDP will have avoided slipping into decline in Q3. The disappointing news on business activity was accompanied by an accelerated rate of job cutting, which points to further labour market weakening following last week’s news that unemployment has risen above three million.
09.01 In Italy, the Markit/ADACI services PMI ticked up to 44.5 in September, from 44 in August. This still means the sector is contracting.
Markit also said this:
QuoteWith workloads down further on the month and efforts to reduce costs continuing, Italian service providers shed staff again during September. Moreover, the rate of decline in employment accelerated to the fastest since the series record in June 2009.
08.52 Lots of data out this morning. After Monday's dismal manufacturing data, today's news on services isn't much better.
Markit's Spain services PMI fell to 40.2 in September, from 44 in August. This is well below the 50 level that divides growth from contraction, and represents the sharpest fall since November 2011.
Markit said that job cuts continued for a 55th - yes, 55th, straight month. The hotels and restaurants sector was the only sector that took on extra staff in September, Markit said.
Commenting on the data, Andrew Harker, economist at Markit, said:
QuoteThe deterioration in the Spanish service sector intensified in September, with PMI data pointing to the sharpest drop in activity for almost a year. The rise in VAT added another hurdle for companies as they were less able to offer the sort of discounts required to support new business intakes. Taken alongside the manufacturing PMI data, the latest survey suggests that Spanish GDP looks set to have fallen for yet another quarter in Q3, with little prospect of improvement apparent in the near future.
Best from Before October 3rd .....

Tuesday, October 02, 2012 1:26 PM

Foreigners Dump €89.6 Billion Spanish Bonds; Spanish Bank Exposure Increases by €108.8 Billion


European banks are supposed to be deleveraging. By now, most realize they are headed the opposite direction. In Spain, the increased leverage is pro-cyclical, 100% certain to cause a bigger problem down the road.

Here is a Mish-modified translation of an El Economista article on Spanish Bond Purchases.

Financial institutions have become the main investor in Spanish government bonds after foreigners withdrawn €89.6 billion in the first eight months of the year, according to Treasury data.

In these eight months, Spanish exposure has risen €108.8 Billion, a record 106.84% increase. 
Meanwhile, foreign investment in Spanish debt has dropped 31.8% during the same period, standing at €191.836 billion euros, compared to €281.439 at the end of 2011.

This is the second consecutive time since 2008 that the debt in foreign hands is below the €200 billion.

Banks are now the main investor, ahead of foreigners, accumulating now 34.07% of the public debt, compared to 33.49% by foreign investors. This situation has not occurred since 2003. 

Mike "Mish" Shedlock

and a look at Italy's Five Star Movement .....

http://brucekrasting.com/on-politics-italian-and-american-style/?utm_source=rss&utm_medium=rss&utm_campaign=on-politics-italian-and-american-style

On Politics, Italian and American Style

 An interesting article from WaPo about a rising political star in Italy. (Link) Some details:
 

Beppe Grillo is a well know TV personality/comedian in Italy. At age 64 he ran for political office in Parma, and won. He has been doing a lot of talking since, and his philosophies have become very popular. His message is Italian nationalism, an end to the link with the Euro, he has even advocating defaulting on Italy’s debt. From the WaPo article:
Four months after his Five Star Movement swept into government here in a surprise victory that sent his national profile soaring, he stood in a town square and delivered a breathless tirade against “the forces” seeking to destroy Italian society.

He called for a referendum on the euro and said Rome should follow in the footsteps of Argentina and Ecuador by suspending payments on the national debt.

In the country that could make or break the future of the euro with its next election, he described Germany and France as European paymasters who would bleed Italy dry.

“He is a thermometer of Italy’s political temperature, and the success of a demagogue like him would send a dangerous message to our allies in Europe that credibility and sacrifice are no longer on Italy’s agenda.”
Recent surveys suggest that almost one in five Italians now back it, placing his movement only single digits behind the nation’s two leading parties in popularity.

I have no real understanding of Italian politics, but I think there is an important message in Grillo’s meteoric rise in popularity. My conclusion is that Mario Draghi’s effort to save the EU (and the Euro) is doomed to failure.

We have a bizarre status quo today, there is calm in the Euro bond markets. The stability is driven by the belief that Spain will soon accept a bailout (and all of the very bad things that this implies). And when Spain does get down on its knees and begs, the ECB will quickly act, and begin to buy unlimited amounts of dodgy Spanish paper. The problem is that Spain is very reluctant to ask for that ECB bailout.

We are in financial fairyland today. It won’t last. In the not too distant future the markets will push Spain to the edge, and the country will be forced to accept the ECB/IMF terms. Very shortly thereafter, the pressure will grow for Italy to accept the same terms as Spain. And that gets us back to Beppe Grillo.
When these events unfold in Italy, the “Italy First” message now being sent by Grillo will rise higher and higher. It’s possible that Spain will be forced to accept the strict conditionality of an ECB/IMF bailout, but there is no way that Italy will. The Italian people will simply not accept their country becoming a (bigger) serfdom of Germany.

Mario Draghi knows what the political mood in Italy is. He is keenly aware of the rise in popularity of Grillo, and his message. Mario also understands what Grillo could mean to his efforts to put his home country into economic jail.

Draghi has always spoken with great confidence. He has used words like “unlimited” and “forever”. But he also reads his hometown newspapers. He has to know that he can’t carry off his plan. The economics of his bailout might work, but the political side of the equation is going to fail. I’m sure Draghi is aware of all this; that means he is one hell of a bluffer.
and from The Telegraph... 

http://www.telegraph.co.uk/finance/financialcrisis/9582524/Debt-crisis-troika-demand-even-tougher-austerity-on-stricken-Greece.html


Louise Armitstead
By , Chief Business Correspondent
6:18PM BST 02 Oct 2012
Comments81 Comments

On the second day of negotiations in Athens, the troika - officials representing the European Union, European Central Bank and International Monetary Fund - reportedly pushed for Greece to make deeper cuts to the minimum wage and pensions, while imposing longer working hours.
Greece, which this week warned its economy was heading for a sixth year of recession, has asked Brussels to relax the terms of its bail-out conditions to allow the economy time to recover. The troika is reviewing Greece’s progress on austerity measures and its 2013 draft Budget to determine whether to approve the release of the next tranche of bail-out money worth €31bn.
But with awkward timing, it emerged that Greece has “unblocked” €30bn in order to push ahead with its plans to building a motor-racing circuit capable of hosting Formula 1 Grand Prix. The total cost of constructing the track in Xalandritsa, near Patras, is expected to be €94.6m.
Spain’s prime minister Mariano Rajoy firmly denied reports that the country was ready to request a full bail-out. At a press conference following a highly anticipated meeting with Spain’s rebellious regional heads, Mr Rajoy was asked if “a bail-out request is imminent”; to which he said: “No.”
Traders reacted badly having hoped the uncertainty over Spain would end soon. The US’s Dow Jones dropped immediately. Most European bourses closed marginally down, except Spain’s Ibex which climbed 1pc.
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