No quick deal with China: Euro bailout fund chief

The head of the euro zone bailout fund on Friday ruled out a quick deal with China on buying more of its debt.

Euro zone sovereign debt crisis not over: ECB President Jean-Claude Trichet

European Central Bank President Jean-Claude Trichet said in an interview in a German newspaper to be published on Sunday that the euro zone sovereign debt crisis was not yet over and that it was too early for the all-clear signal.

Record borrowing costs put Italy at centre of crisis

Fear made a swift return to the eurozone yesterday as Italy faced record borrowing costs in its first attempt to tap the markets since European leaders came up with new plans to rein in the sovereign debt crisis.

World stocks up on European rescue deal for Greece

World stock markets climbed again Friday, continuing to be buoyed by a European deal aimed at slashing Greece's massive debt and preventing the crisis from engulfing "too big to bailout" countries such as Italy.

French and German relief as Greek haircut not expected to trigger CDS

Major French and German financial institutions will be saved billions of euros in payouts if – as expected – the 50pc haircut on Greek government debt does not trigger credit insurance contracts

Euro zone rescue after marathon talks

Europe’s leaders have finally agreed a euro zone rescue plan after marathon talks lasting more than eight hours.

European banks need $150B in new capital

Europe's big banks will be forced to find €108bn ($150bn) of fresh capital over the next six to nine months under a deal to strengthen the banking system agreed by European Union finance ministers.

Eurozone crisis explained

The euro, the dream of many a politician in the years following World War II, was established in Maastricht by the European Union (EU) in 1992.

To join the currency, member states had to qualify by meeting the terms of the treaty in terms of budget deficits, inflation, interest rates and other monetary requirements.
Of EU members at the time, the UK, Sweden and Denmark declined to join the currency.
Since then, there have been many twists and turns for the countries that use the single currency.

1999

On 1 January, the currency oficcialy comes into existenceence

2001

Greece joins the euro.

2002

On 1 January, notes and coins are introduced.

2008

Malta and Cyprus join the euro, following Slovenia the previous year.
In December, EU leaders agree on a 200bn-euro stimulus plan to help boost European growth following the global financial crisis.

2009

Slovakia joins the euro.
Estonia, Denmark, Latvia and Lithuania join the Exchange Rate Mechanism to bring their currencies and monetary policy into line with the euro in preparation for joining.
In April, the EU orders France, Spain, the Irish Republic and Greece to reduce their budget deficits - the difference between their spending and tax receipts.
In October, amid much anger towards the previous government over corruption and spending, George Papandreou's Socialists win an emphatic snap general election victory in Greece.
In November, concerns about some EU member states' debts start to grow following the Dubai sovereign debt crisis. following the Dubai sovereign debt crisis.
In December, Greece admits that its debts have reached 300bn euros -  the highest in modern history.
Greece is burdened with debt amounting to 113% of GDP - nearly double the eurozone limit of 60%. Ratings agencies start to downgrade Greek bank and government debt.
Mr Papandreou insists that his country is "not about to default on its debts" insists that his country is "not about to default on its debts".

2010

In January, an EU reportcondemns "severe irregularities" condemns "severe irregularities" in Greek accounting procedures. Greece's budget deficit in 2009 is revised upwards to 12.7%, from 3.7%, and more than four times the maximum allowed by EU rules.
The European Central Bank dismisses speculation that Greece will have to leave the EU.
In February, Greece unveils a series of austerity measures aimed at curbing the deficit.
Concern starts to build about all the heavily indebted countries in Europe - Portugal, Ireland, Greece and Spain.

On 11 February, the EU promises to act over Greek debts and tells Greece to make further spending cuts. The austerity plans spark strikes and riots in the streets.
In March, Mr Papandreou continues to insist that no bailout is needed. The euro continues to fall against the dollar and the pound.
The eurozone and IMF agree a safety net of 22bn euros to help Greece - but no loans.
In April, following worsening financial markets and more protests, eurozone countries agree to provide up to 30bn euros in emergency loans.
Greek borrowing costs reach yet further record highs. The EU announces that the Greek deficit is even worse than thought after reviewing its accounts - 13.6% of GDP, not 12.7%.
Finally, on 2 May, the eurozone members and the IMF agree a 110bn-euro bailout package to rescue Greece.

The euro continues to fall and other EU member state debt starts to come under scrutiny, starting with the Republic of Ireland.
In November, the EU and IMF agree to a bailout package to the Irish Republic totalling 85bn euros. The Irish Republic soon passes the toughest budget in the country's history.
Amid growing speculation, the EU denies that Portugal will be next for a bailout.

2011

On 1 January, Estonia joins the euro, taking the number of countries with the single currency to 17.
In February, eurozone finance ministers set up a permanent bailout fund, called the European Stability Mechanism, worth about 500bn euros.

In April, Portugal admits it cannot deal with its finances itself and asks the EU for help.
In May, the eurozone and the IMF approve a 78bn-euro bailout for Portugal.
In June, eurozone ministers say Greece must impose new austerity measures before it gets the next tranche of its loan, without which the country will probably default on its enormous debts.
Talk abounds that Greece will be forced to become the first country to leave the eurozone.
In July, the Greek parliament votes in favour of a fresh round of drastic austerity measures, the EU approves the latest tranche of the Greek loan, worth 12bn euros.

A second bailout for Greece is agreed. The eurozone agrees a comprehensive 109bn-euro ($155bn; £96.3bn) package designed to resolve the Greek crisis and prevent contagion among other European economies.

In August, European Commission President Jose Manuel Barroso warns that the sovereign debt crisis is spreading beyond the periphery of the eurozone.
The yields on government bonds from Spain and Italy rise sharply - and Germany's falls to record lows - as investors demand huge returns to borrow.
On 7 August, the European Central Bank says it will buy Italian and Spanish government bonds to try to bring down their borrowing costs, as concern grows that the debt crisis may spread to the larger economies of Italy and Spain.
The G7 group of countries also says it is "determined to react in a co-ordinated manner," in an attempt to reassure investors in the wake of massive falls on global stock markets.
During September, Spain passes a constititional amendment to add in a "golden rule," keeping future budget deficits to a strict limit.

Italy passes a 50bn-euro austerity budget to balance the budget by 2013 after weeks of haggling in parliament. There is fierce public opposition to the measures - and several key measures were watered down.
The European Commission predicts that economic growth in the eurozone will come "to a virtual standstill" in the second half of 2011, growing just 0.2% and putting more pressure on countries' budgets.
Greek Finance Minister Evangelos Venizelos says his country has been "blackmailed and humiliated" and a "scapegoat" for the EU's incompetence.
On 19 September, Greece holds "productive and substantive" talks with its international supporters, the European Central Bank, European Commission and IMF.
The following day, Italy has its debt rating cut by Standard & Poor's, to A from A+. Italy says the move was influenced by "political considerations".
That same day, in its World Economic Outlook, the IMF cuts growth forecasts and warns that countries are entering a 'dangerous new phase'.

The gloomy mood continues on 22 September, with data showing that growth in the eurozone's private sector shrank for the first time in two years.

The sense of urgency is heightened on 23 October, when IMF head Christine Lagarde urges countries to "act now and act together" to keep the path to economic recovery on track.
On the same day, UK Prime Minister David Cameron calls for swift action on the debt crisis.
The next day US Treasury Secretary Timothy Geithner tells Europe to create a "firewall" around its problems to stop the crisis spreading.
A meeting of finance ministers and central bankers in Washington on 24 September leads to more calls for urgent action, but a lack of concrete proposals sparks further falls in share markets.

After days of intense speculation that Greece will fail to meet its budget cut targets, there are signs of a eurozone rescue plan emerging to write down Greek debt and increase the size of the bloc's bailout fund.
But when, on 28 September, European Union head Jose Manuel Barroso warns that the EU "faces its greatest challenge", there is a widespread view that the latest efforts to thrash out a deal have failed.
The sense that events are spinning out of control are underlined by Foreign Secretary William Hague, who calls the euro a "burning building with no exits".
On 4 October, Eurozone finance ministers delay a decision on giving Greece its next instalment of bailout cash, sending European shares down sharply.
Speculation intensifies that European leaders are working on plans to recapitalise the banking system.
On 6 October the Bank of England injects a further £75bn into the UK economy through quantitative easing, while the European Central Bank unveils emergency loans measures to help banks.
Financial markets are bolstered by news on 8 October that the leaders of Germany and France have reached an accord on measures to help resolve the debt crisis. But without publication of any details, nervousness remains.

Relief in the markets that the authorities will help the banking sector grows on 10 October, when struggling Franco-Belgium bank Dexia receives a huge bailout.
On 10 October, an EU summit on the debt crisis is delayed by a week so that ministers can finalise plans that would allow Greece its next bailout money and bolster debt-laden banks.

Source: www.bbc.co.uk

George Osborne: Eurozone crisis threatens all Europe

UK Chancellor George Osborne has said the eurozone debt crisis is a "real danger" to all of Europe as he arrived for a summit in Brussels.

All of Europe's finance ministers are meeting to try to find a solution to the bloc's ongoing economic problems.
The eurozone has already approved the next tranche of Greek bailout loans, potentially saving the country from a disastrous default.

But the French and German governments are divided over a lasting solution.
The finance ministers from all 27 European Union states are meeting for the talks. Heads of government will then gather on Sunday, and have announced plans for an extra meeting on Wednesday.

"We've had enough of short-term measures, sticking plaster that just gets us through the next few weeks," Mr Osborne said.
"The crisis of the eurozone is a real danger to all of Europe's economies, including Britain."
BBC business editor Robert Peston said that new forecasts from the bailout lenders - the so-called "troika" - showed that the current plan to revive the Greek economy had failed.

"The unavoidable implication is that the IMF will not provide any more bailout finance for Greece unless there are much bigger write-offs of Greek government debt by private sectors lenders," he said.
On Friday, the 17 nations that use the euro approved the next tranche of bailout loans to Greece - an 8bn-euro ($11bn; £7bn) loan that must still be signed off by the International Monetary Fund and that Athens should get in mid-November, officials said.

Debt-addled Greece has been bailed out - twice - along with the Irish Republic and Portugal. The eurozone is working on a third package for Greece now, as well as a solution that could help the huge-but-faltering economies of Spain and Italy.

But there have been widespread reports of deep divisions between France and Germany.

Greece 'not problem'

The German government has promised its taxpayers that its contribution will not go above 211bn euros so is looking for a way to increase the size of the fund without increasing the liabilities of German taxpayers.

In particular, France and Germany need to agree on how to increase the firepower of the eurozone's bailout fund, the European Financial Stability Facility (EFSF), from its current 440bn euros.

France has proposed turning the EFSF into a bank so that it could borrow from the European Central Bank (ECB), but Germany has refused to sanction such a move, arguing it would compromise the ECB's impartiality.

But that idea "is no longer an option," according to the Dutch Finance Minister, Jan Kees De Jager.
It is not clear how the eurozone would expand the fund now - which observers say needs to be closer in size to 2tn euros.

De Jager said two options remain for "leveraging" the rescue fund, but neither would involve the ECB. He did not say what those options are.
Previous disagreements between France and Germany about the bailout plans have centred on how much the private sector would have to contribute to any package.

Germany has been leading the push for the private sector to take steeper losses, but France and the ECB fear that this would destabilise the banking sector and worsen market turmoil.
French and German banks hold much of external Greek debt, as do Greek banks - meaning they would need to be recapitalised.

"Greece is not a central problem for the eurozone," insisted Evangelos Venizelos, finance minister of Greece - which has been racked by strikes and numerous difficult parlaimentary votes on austerity measures.
"The point now is to adopt a general more constructive decision for the eurozone as a whole."

Negotiations have not yet begun properly with private sector lenders to Greece on a further reduction of what the Greek government will repay them.

Banks have already agreed to take a 21% loss, or "haircut", on their loans to Greece but there is growing pressure for them to accept higher losses. One diplomat told AFP that the eurozone wants banks to at accept an "at least 50%" loss on their Greek debt.

Jean-Claude Juncker, the chairman of the eurogroup and the prime minister of Luxembourg, said on Saturday that banks must share "a substantial increase" in Greece's debt burden.
And Sweden's Anders Borg said that banks should not expect "freebies" from taxpayers.
The European Banking Authority has estimated that between 80bn and 100bn euros is needed to boost the capital reserves of banks.

A deal on the euro had been expected to be signed on Sunday, but France and Germany said they would not be able to reach an agreement by then and announced that leaders would meet again on Wednesday.
Sunday's summit had already been delayed from 17-18 October because more time was needed to finalise a plan.



Source: www.bbc.co.uk

Euro crisis weighing on east European growth

A major development bank sharply reduced its growth forecast for Eastern Europe on Tuesday and warned of risks to the region’s banks, another example of how the sovereign debt crisis is radiating outside the euro zone.

The European Bank for Reconstruction and Development, which lends to businesses and governments in the former Soviet bloc and is underwritten by Europe and the United States, cut its growth estimate for Central Europe and the Baltics to 1.7 percent for 2012.

Merkel Says EU Summit Will Be Important, Not Final, Crisis Step

Oct. 18 (Bloomberg) -- German Chancellor Angela Merkel said that a European Union summit in five days will mark an “important step,” though not the final one in solving the euro-area sovereign debt crisis.

“These sovereign debts have built up over decades, so they won’t be ended with one summit,” Merkel told reporters in Berlin late today. While European officials recognize their responsibility to stop the crisis, “this will require tough, long-term work.”

UK CPI inflation rate rises to 5.2% in September

The rate of Consumer Prices Index (CPI) inflation in the UK matched its record high in September, rising to 5.2% from 4.5% the month before.

An increase in energy costs was behind a large proportion of the rise.

The 5.2% rate is the highest CPI measure since September 2008, and it has never been higher since the CPI measure was introduced in 1997.

European Stocks Fall on Debt Crisis, China

European stocks fell as concern that France may lose its top credit rating added pressure on the region’s leaders to find a solution to the debt crisis and as China’s economy grew at the slowest pace in two years. Asian shares dropped and U.S. index futures fluctuated.

BHP Billiton Ltd. (BHP) and Rio Tinto Group led mining shares lower as metals dropped. BNP Paribas (BNP) SA and Societe Generale (GLE) SA sank more than 6 percent as Moody’s Investors Service said France’s Aaa rating is under pressure. Dexia SA (DEXB) tumbled 13 percent as the European Commission opened an in-depth probe into Belgium’s takeover of its local consumer-lending unit.

European banks may need to raise 200bn euros

European banks may have to raise a collective 200bn euros ($276bn; £175bn) to boost their capital reserves.

The proposal is being made by the European Banking Authority (EBA), which wants the banks to have more funds in reserve to help protect them from any future shocks in the financial markets.

BBC business editor Robert Peston said banks may struggle to raise the money.

Slovakia's failure to ratify eurozone bailout expansion "no big drama": EU official

BRUSSELS, Oct. 12 (Xinhua) -- The European Union (EU) on Wednesday called on all parties in the Slovak parliament to rise above short-term politics, and support bolstering the eurozone's safety net European Financial Stability Facility (EFSF) in their next vote this week.

In a joint statement by European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso, the two leaders urged Slovak parties to seize the next opportunity to ensure a swift ratification of expanded powers for the EFSF.

German exporters shrug off crisis as shipments rise

German exports rose in August for the first time in three months.

Shipments grew 3.5% over the month, according to seasonally adjusted data from the Federal Statistics Office.

About 90.5bn euros ($122.9bn, £78.5bn) of goods were exported. Imports were unchanged at 76.7bn euros.

Eurozone bailout fund faces key Slovakian vote

Slovakia faces a key vote later on measures to bolster the powers of the eurozone bailout fund, seen as vital in combating the bloc's debt crisis.

With one coalition party vowing to abstain, the goverment looks set to lose the vote, but may keep trying.

After Malta approved the plans late on Monday, Slovakia is now the last of the eurozone's 17 member states to vote.

Euro crisis: a torrent of words, but no clarity

Europe can't stop talking. Take yesterday. The German Chancellor, Angela Merkel, was in Brussels. Greece, she said, must remain part of the eurozone and get "a chance to get back on its feet".

Of course, to state the ambition that Greece should stay in the eurozone is the easy part. The more important questions, however, are these: Does Germany believe a Greek default inevitable? And, is Germany preparing a plan to manage such a default in the weeks ahead?

Merkel to hold talks on eurozone crisis

BRUSSELS — German leader Angela Merkel was to hold talks at the European Commission Wednesday amid efforts to contain the eurozone debt crisis, as markets reacted nervously to an EU plan to help troubled banks.

The talks come after two days of negotiations between EU finance ministers ended without a breakthrough and as Athens was again denied the next eight billion euro ($10.7 billion) tranche of bailout cash it needs to avoid default.

Euro Drops to Eight-Month Low Versus Dollar Before Europe Crisis Meeting

The euro fell to an eight-month low against the dollar as European finance ministers prepared to weigh the threat of a default in Greece, which is making fresh budget cuts to secure an international bailout.

The 17-nation currency slid after falling in the third quarter the most since June 2010. The yen rose against the dollar on demand for a refuge as sentiment at Japan’s biggest manufacturers remained below levels seen before a record earthquake struck in March. The Turkish lira approached a record low as inflation slowed in September.