19.40 The G20 has been told off... by the Mexican Finance Ministry. The South America country said the G20 has a responsibility to re-establish confidence and restore sustainable, balanced growth.
After a meeting of officials from the group in Mexico City, the ministry added that the G20 countries held very intense talks about the global economic environment. They agree on the fragility of the global economy.
19.28 The prosecutor investigating claims that Greece?s statistics service inflated the country?s public deficit figure to justify tougher austerity measures has recommended that Parliament should investigate whether former Prime Minister George Papandreou committed any offenses, according to ekathimerini.com.
19.21 Just to round up the Greek debt talks going on at the moment.
Today, Prime Minister Lucas Papademos met for a third day with negotiators from the Institute of International Finance, which represents the private creditors who are being asked to take a loss on their bond holdings to lighten Greece's debt load by ?100bn.
A government spokesman said the the country is confident a debt relief deal with private creditors that is crucial to avoid default can be reached "very soon".
18.58 Mario Monti says he has seen a nice decline in Italian bond spreads and he hopes it will continue.
18.55 Dexia, the French-Belgian lender being broken up after losing access to short-term funding, will need to tap ?75bn to ?80bn of promised government guarantees to replace maturing debt.
The October 9 agreement between Belgium, France and Luxembourg to provide as much as ?90bn of state guarantees includes a safety margin of ?10bn to ?15bn, chief executive Pierre Mariani said.
18.44 Quick update on US markets.
Dow +0.6pc
S&P 500 -0.1pc
Nasdaq -0.1pc
18.31 A draft Franco-German paper, seen by The Daily Telegraph, reveals that the financial transaction tax is seen in Berlin and Paris as the first step to giving the EU a new power to "coordinate" taxation. We have more on this story from Bruno Waterfield in Brussels.
18.09 More from Italian PM Mario Monti after the Italian Cabinet adopted a huge plan to liberalise the economy. He said his government will pass a package of measures next week to cut red tape in a bid to spur growth. He added that Italians are convinced that the country must revamp its economy and government is reviewing spending.
He said:
The Italian economy has been held back for decades. More competition means more openness, more space for young people, less space for privileges and rent-seeking, more space for merit.
The FT claims that the country's gas network could be spun off.
18.07 China?s economy will slow in 2012, prompting policy makers to reduce interest rates and loosen lending restrictions, said Nouriel Roubini, the economist who predicted the 2008 financial crisis. He told Bloomberg:
It?s going to be a significant growth slowdown this year. Housing is deflating. Export growth is slowing down. If they don?t do something ? stimulus in monetary and fiscal credit ? the risk is that the growth will slow down well below 8pc.
18.04 The Telegraph's Jeremy Warner is tweeting on the UK economy:
And here is the graph he is talking about:
(for a larger version of this graph, click the right-hand-side of the main image at the top of this blog)
17.57 Goldman Sachs on UK GDP in the fourth quarter of 2011: "A negative reading looks likely."
17.50 We are hearing reports that the Italian Cabinet has adopted a huge plan to liberalise the economy.
The plan, which would end protectionist practices by taxi drivers, pharmacy owners and petrol stations among others, has been strongly opposed by trade unions but is seen a necessary evil by many Italians.
Italian PM Mario Monti:
Problems were insufficient competition, inadequate infrastructure and complictaed administrative measures in any field.
17.47 Wells Fargo?s headquarters in San Francisco were blocked today by more than 50 protesters, some of whom chained themselves to the bank?s entrances and were arrested by police.
Demonstrators shouted ?Give Us Our Money Back? and said they wanted the bank to stop foreclosures.
17.39 The Swiss National Bank's interim president Thomas Jordan has said further steps will be taken to maintain price stability if economic developments or deflationary reisks make them necessary. He adds that the cap on the franc will remain in force for an open-ended period and will defend it with utmost determination.
Elsewhere, Croatia votes on Sunday on whether to join the EU.
17.00 HMV shares closed up 198pc today, after the struggling music retailer agreed a deal with its banks to give it more breathing space. They rose 4.75 to 7.15p.
16.58 An odd, but very entertaining, TV advert by Deutsche Bank:
FTSE 100 -0.2pc
CAC -0.1pc
DAX -0.1pc
MIB +0.2pc
IBEX -0.5pc
16.27 European Union finance ministers will seek on January 24 to thrash out a deal on regulators? powers over clearing houses that handle over-the-counter derivatives, an official for Denmark?s EU presidency has said.
Officials have failed to broker an agreement on when regulators in the region can override national decisions on clearing firms. The UK government has sought to limit the overriding powers, warning that they could be used to pressure UK-based clearing firms to move part of their business to the euro area.
15.59 Citigroup has released an interesting note mulling the break-up of the UK:
We certainly do not rule out a break-up of the UK over time. ONS data suggest that an independent Scotland would have a slightly better fiscal position than the rest of the UK [assuming Scotland gets its geographic share of oil and gas receipts]. Scotland could have a viable future as an independent country, although there are a lot of questions that would have to be resolved before that happens.
15.53 Guido Westerwelle, German foreign minister, has stated that Berlin is firmly committed to fixing the eurozone and does not underestimate the severity of the crisis.
He adds that the ECB will do what is necessary and appropriate within its mandate. He goes on to say that short-term liquidity is buying time to address the roots of the European crisis, and that the G20 should ensure the IMF has sufficient resources. On the subject of euro bonds, Westerwelle says that "you can't solve debt crisis with more debt".
15.41 CNBC is reporting that no Greek deal has been reached so far. An IIF spokesman has confirmed that there will be no press conference today. The IIF represents the private creditors in their talks with Greece.
15.40 Facebook is seeking to more than double the size of its European headquarters in Dublin as the social-networking site prepares for a possible $10bn initial public offering, unnamed sources told Bloomberg.
Facebook may move and lease as much as 11,150 square meters (120,000 square feet) of office space in the Irish capital over five years, said the people. The Dublin office is responsible for all of the company?s users outside of the US and Canada.
15.15 US home sales in December were 4.61m month-on-month versus an expected 4.65m. Still rose 5pc.
15.03 Labour leader Ed Miliband has said it was "clearly wrong" for former Royal Bank of Scotland chief Fred Goodwin to be knighted.
Mr Miliband told the Daily Mail:
It was clearly wrong for him to be given a knighthood, knowing what we know now about the damage he caused, not just to RBS, but to hard-pressed ordinary families up and down Britain who are now paying the price of his failure. It's right that it should be revoked. There is a widespread recognition of the damage Fred Goodwin caused - and I think the privilege of a knighthood is a privilege you should only continue to enjoy if you haven't done such damage to the British economy.
14.35 US markets have opened.
Dow +0.3pc
S&P 500 -0.1pc
Nasdaq -0.4pc
Google shares have fallen more than 8pc after its results missed analysts estimates last night.
14.31 A very insightful comment by Damian Reece, Telegraph's head of business, on China buying 10pc of Thames Water:
14.29 ECB President Mario Draghi predicts that the take-up for the second LTRO auction on February 29 will be lower but still very high.
14.16 The risks that spurred market volatility last year will keep swaying asset prices and the global economy, according to Nouriel Roubini, the economist who predicted the 2008 financial crisis.
Roubini, co-founder of Roubini Global Economics, said that rising commodity prices, uncertainty in the Middle East, the spreading European debt crisis, increased frequency of ?extreme weather events? and US fiscal issues are ?persistent? problems that will ?stay with us?.
Last year was a year of risk, volatility, uncertainty and surprises and the question is, ?Are they going to happen again?' If you think about all these tail risks about the global economy, the reality is many of them are not temporary. Many of them are not transitory and many of them are not random events. They?re going to be sources of volatility.?
13.53 A great graph depicting global government bond returns so far this year:
(for a larger version of this graph, click the right-hand-side of the main image at the top of this blog)
13.45 Germany has pushed for quick decisions to be made on a mooted tax on financial transactions amid British fears that such a levy could drive away business from Europe.
A spokesman for Finance Minister Wolfgang Schaeuble said Berlin wanted to know quickly whether a European Commission proposal on such a tax could be implemented at EU-level. Martin Kotthaus told a regular government news briefing:
We want to know quickly, as soon as possible, at the latest by the end of the first quarter, whether this is a proposal that works, that can fly, that is worth working on. If not, we need to look to see whether there are other alternatives.
13.28 It's graph time. Here's an interesting one showing that the UK's debt level is second only to that of Japan among major economies, according to consultancy McKinsey.
13.22 Jos� Manuel Barroso, President of the European Commission, and German Chancellor Angela Merkel are to meet on Monday to discuss economy and new treaty.
13.19 Now to Ireland, and S&P has put a negative outlook on Bank of Ireland. Same for Ulster Bank, which is part of RBS.
13.11 Some breaking corporate news. The banking syndicate for HMV has agreed to amend the covenant package on its existing borrowings and will waive this month's covenant test. The banks will also re-set tests relating to the 12-month periods ending April and July.
The group aims to cut net debt by 50pc over the next three years and expects net debt to be �175m to �180m in the year to the end of April 2012.
The retailer expects to deliver a slightly larger loss of around �10m for the full year. Suppliers offered 2.5pc of the company's shares as part of deal. The shares have jumped 108pc to 5.25p on the news.
Earlier this month HMV announced it is is considering scaling back sales of video games as it reported an 8.2pc fall in like-for-like sales during the five-week Christmas period.
13.06 We are hearing rumours that new Greek bonds will most likely have 30-year maturity, with a grace period of 10 years.
They are also set to have a scaled coupon ctructure averaging 4pc. Net present value loss for investors is likely to be 65pc to 70pc. Pre-agreement could come later today with further technical discussions over the weekend.
12.59 Hungary must take ?concrete steps? to ensure the independence of its central bank, European Commission economics spokesman Amadeu Altafaj told reporters in Brussels today.
European Union Economic and Monetary Commissioner Olli Rehn and Tamas Fellegi, Hungary?s chief negotiatior for a financial bailout, met today in Brussels amid a dispute over the independence of Hungary?s central bank that has halted aid talks for the country.
Meanwhile, one of the country's ministers, Tamas Fellegi, says Hungary does not need immediate financial assistance from the International Monetary Fund and the European Union, but is seeking a precautionary, stand-by loan.
He declined to say how much money Hungary was seeking.
It is clear from our position and state of the Hungarian economy that there is no necessity to get access to financial assistance immediately. The main purpose is still some form of precautionary measure - if it is a stand-by loan, fine.
The FTSE 100 is now down just 0.07pc, the CAC is off by 0.5pc and the DAX is in the red by 0.1pc.
12.36 Debt swap negotiations with private sector bondholders have stopped in Greece, but will start up again at around 5.30pm (GMT), says finance minister Evangelos Venizelos.
12.16 Greece and its private creditors are "very close to wrapping it up", meaning a deal to write-off some of the nation's debt, according to an anonymous source who spoke to Reuters.
12.09 It's time for a poll: do you think a "bourse tax" is something the UK should sign up to?
12.02 James Quinn fears that German suggestions for a "bourse tax" could hurt the City.
11.59 Gold has slipped back below $1,650 this morning, tracking an early dip in the euro as markets await the outcome of talks between Greece and its creditors.
David Jollie, an analyst at Mitsui & Co Precious Metals, said:
There are a lot of reasons still to buy gold, but I think it's fair to say that with risk fatigue setting in, a little bit of price sensitivity coming through, and the dollar likely to show some strength, the gains for gold in the current environment are probably less exciting than they were.
11.30 More on Germany's suggestion of a "bourse tax" now...
Economy minister Philipp Roesler said this morning that Germany would see it as a compromise if it could bring Britain on board and allow EU-wide taxation of the financial sector.
Steffen Seibert, the chancellor's press secretary, said the proposal was "sensible":
There is no change in the German government's position. The government welcomes the EU Commission's proposal [on a transaction tax], because it encompasses our requests for a broad based tax with a low rate. We will fight for this proposal and for its adoption in all 27 European Union states.
He is looking at all possibilities for getting the United Kingdom on board... We need to find out in talks whether a bourse tax could be a bridge for the United Kingdom, then Germany will discuss this with its European partners.
11.19 Angela Merkel will meet Christine Lagarde, head of the IMF, on Sunday. She'll then meet Jose Manuel Barroso and Herman Van Rompuy on Monday to prepare for the EU meeting on January 29.
11.09 This morning it emerged that China Investment Corporation, a Chinese sovereign wealth fund, had bought an 8.68pc stake in Britain's Thames Water. Do you think it should be able to invest in UK utilities?
10.53 A German Government spokesman says that an EU-wide financial transaction tax is still the goal, but that there may be a posiible bridge with the UK via a bourse tax.
Frankly, that raises more questions than it answers, but we'll bring you more on that as soon as we have it.
10.51 The EU's highest court will be able to fine any country that does not adopt a balanced budget rule in its constitution with a penalty of up to 0.1pc of GDP, shows the latest leaked draft treaty. That cash would be ploughed back into the ESM.
That makes the latest version slightly tougher on countries that don't toe the line than previous drafts:
If the court finds that the contracting party concerned has not complied with its judgement, it may impose on it a lump sum or a penalty payment appropriate in the circumstances and that shall not exceed 0.1pc of its gross domestic product.
10.40 The EU's economy chief has called for the better-off eurozone countries (read: Germany) to do more to help the bloc overcome its debt-induced crisis.
Asked whether southern European countries like Italy were right to ask Germany to do more, Olli Rehn told the German newspaper Sueddeutsche Zeitung:
First these countries must assume their own responsibility. Then, their call goes not only to the German government but to all who are now in a better position.
These governments must not forget how strongly they are benefiting from the euro through stable export markets and a stable currency.
Because currencies within the eurozone are no longer devalued, export-driven countries like Germany now sell clearly more thanks to the euro than before the euro.
10.18 A senior MP from Angela Merkel's coalition has said that Germany should not bring forward ESM payments without all participating countries.
10.01 While most of the focus today will be on Greece's debt, it's worth revisiting Ambrose Evans-Pritchard's column from last night. It reminds us that Greece is far from the only country struggling with its deficit:
While some of the latest damage reflects forced selling of Portuguese debt after Standard & Poor's cut the country's credit rating to junk status last Friday, there are deeper worries that sharp fiscal cuts by the free-market government of Pedro Passos Coelho may prove self-defeating.
09.34 UK retail sales figures are out for December, showing a strong rebound as businesses slashed prices - sacrificing profit - to lure in shoppers.
The Office for National Statistics said retail sales volumes rose 0.6pc on the month to give an annual rise of 2.6pc.
But this uptick could prove to be a flash in the pan driven by price cuts. Whether it can continue into 2012 remains to be seen.
09.29 British gilt futures have dipped this morning on signs that Greece may be nearing a deal with private bondholders.
Investors are also braced for UK retail sales data for December, which are due out any minute now and expected to show an end-of-year uptick.
The yield on 10-year gilts was up 1 basis point at 2.062pc after jumping 10 basis points yesterday.
09.15 Greek Finance Minister Evangelos Venizelos has been speaking this morning about the negotiations on a debt haircut for private investors and over the next round of bail-out cash.
Not a long statement, by any means, but quite dramatic...
Now is the critical moment for the final battle.
09.01 European markets have taken a turn for the worse in the first hour of trading after opening flat. The FTSE has closed up every day this week, but currently looks set to end its winning streak.
08.45 There are negotiations aplenty in Greece today, with talks being held with the country's private creditors and the troika, which holds the purse strings on the much-needed bail-out cash.
Prime Minister Lucas Papademos is scheduled to meet with global bank group representatives after late-night talks yesterday. The country still hopes to slash around ?100bn from its huge debt through a voluntary bond swap with creditors (the so-called "debt haircut"). That, in turn, would unlock a new eurozone rescue package worth ?130bn.
The International Institute of Finance, a group representing around 450 financial institutions worldwide, said last night that "progress" had been made.
08.39 China's manufacturing activity shrank for a third straight month in January, according to HSBC's preliminary purchasing managers' index.
It stood at 48.8 in January, up only marginally from 48.7 in December.
Both months were on the wrong side of 50 - a reading above that indicates expansion while a reading below it suggests a contraction.
08.32 Benedict Brogan's morning briefing email is landing in inboxes all over the world as we speak (sign up here), summing up reaction to David Cameron's "responsible capitalism" speech:
There was also a lot of rhetoric about Dave?s ideas for capitalism. Fraser Nelson was impressed. In his excellent column, he writes: ?His speech yesterday was a paean to those who create wealth and take risks. It was an economic version of the Hippocratic Oath: to help the economy, his Government will first seek to do no harm.?
And it was serious stuff. In his sketch, Michael Deacon notes that Dave ?wore throughout what I suppose we can term his ?Vision face?: frowning, earnest, devout, as if what he was declaiming were not typed out on paper in front of him but instead being beamed directly into his brain by some higher power.?
08.20 Hungary has abandoned its planned merger of its central bank and its financial markets regulator, says PM Viktor Orban. The plan was causing a great deal of conflict between Hungary and the EU.
Orban had made a broad pledge to the European Parliament earlier this week to back down on laws that have prompted charges he was seeking to take control of the country's major independent institutions, but many were concerned that he'd carry on regardless.
Regarding the central bank law, they questioned the merger of the central bank and (financial markets regulator) PSZAF (...) the easiest will be to abandon the merger of the two institutions. They have been operating separately and they will do fine separately in the future.
08.11 More downgrades now, this time it's Panasonic and Sony by Moody's.
08.05 The European markets have now opened for the day, mostly flat in London, Frankfurt and Paris.
07.15 Looking ahead to Monday, Michel Barnier, the official in charge of regulating finance in the EU, will meet George Osborne to discuss the effect of European regulation on the City.
Relations between Brussels, where the EC sets regulation for banking and finance, and London, which fears losing its autonomy, have reached a low ebb.
At a December meeting of EU leaders, David Cameron made a series of demands to shield the City from some EU rules in return for his backing for a treaty to underpin tighter state-budget controls.
But the demands, which one diplomat compared to seeking "offshore" status for London, were rejected in a split that saw Cameron use his veto, a move that won him few friends at the EU.
06.52 The eurozone could have a financial transaction tax by 2014, says Austrian chancellor Werner Faymann, after a meeting with Angela Merkel and counterparts from Sweden and Portugal.
If we take the decision this year in the eurozone - or mainly in the eurozone, perhaps with this or that country also from outside the eurozone that joins in - then we could put that [revenue] in budgets from 2014 and we would need it.
We hope that Europe doesn't count its chickens before they've hatched and start spending that budget...
06.41 Last night the IMF slashed its growth forecast because of the eurozone crisis and called on the ECB to boost liquidity to stop matters worsening.
"The global recovery is threatened by the growing tensions in the euro area," the fund said, according to a leaked draft of its World Economic Outlook which is due to be published next week.
We'll be watching closely as the European markets open to see what effect that will have, although Asian markets seem to have rallied overnight despite the news.
In the meantime, Jeremy Warner's latest blog is well worth a read. In it he claims that the IMF is no longer serving its purpose and has a problem with "slavish support for the euro".
06.34 Asian markets haven risen for a fourth day on strong French and Spanish bond sales yesterday, the lowest US jobs claims for almost four years and hopes Greece will agree a debt deal with its creditors.
Yesterday Paris and Madrid raised funds at much lower rates on the bond markets in their first auctions since their ratings were cut last Friday by Standard & Poor's.
Spain sold ?6.6bn, while the average rate on its 10-year bonds plunged to 5.403pc from the 6.975pcent paid at a comparable auction on November 17.
France raised ?9.5bn in a sale closely watched as a test of appetite for its debt after S&P stripped the country of its triple-A rating. The average yield on 10-year bonds dropped to 1.07pc from 2.32pc on November 17.
06.25 This morning's business pages are focused on the IMF cutting growth forecasts and who the ECB is lending to, while the Financial Times has a scoop about China preparing to buy a tenth of Thames Water:
06.15 Good morning and welcome back to our live coverage of the debt crisis.
Debt crisis live: archive
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