Global bank action promise lifts markets
1535 BST: Spanish yields nearing 7 percent
Benchmark 10 year bonds are quoted at 6.98 percent bid/6.865 percent offered on electronic trading platform Tradeweb as we get closer to the European close. Italian debt is also higher at 6.05 percent.
Spain has bravely elected to test the bond market waters with 2 year, 3 year and 5 year sales on Wednesday 21 June - the same day auditors publish preliminary results of their independent assessment of the more than €300bn in assets that sit on the balance sheets of the nation's banks.
1500 BST: Lacking confidence
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European shares are going to have to work hard to hold gains to the close: US data on consumer sentiment (University of Michigan) falls to 74.1 for June, the lowest level of the year.
1445 BST: Fitch on UK Banks
Ratings group says Chancellor George Osborne's plans to ring-fence retail banking from investment activities will create safer and more stable financial institutions. Says ratings impact may be highest for Barclays and RBS if investment banking activities overwhelm ring-fenced deposit takers, but says the 2019 time table means the impact will be limited.
1430 BST: US/Canadian Open
Stocks are green in the opening minutes of trading while 10-year US Treasury note yields slip to 1.58 percent in the wake of today's (and this week's) disappointing economic data.
The Dow is up 32 points to 12,684.07 and we're seeing modest 0.15 percent gains for the Nasdaq and the S&P 500. Candian stocks are up 23 points to 11,489.26 (TSX Composite)
1425 BST: Markets weaken
Poor industrial production figures in the US (-0.1 percent for May, below +0.1 percent consensus) have added some weakness to the European trading session, with shares starting to pare gains and bond yields beginning to rise.
Spain's benchmark 10-year bonds are now quoted at around 6.92 precent while the new "front month" Bund future (September delivery) has hit an intra-day high of 142.47.
1330 BST: Italian villa for sale
Well, not quite, but Prime Minister Mario Monti did say today that his government was planning property sales that could net up to €200bn over five years - or around 12 precent of GDP, according to earlier reports in the IlSole24Ore newspaper. The funds will be targeted for debt reduction. (Italy's debt-to-GDP is 110 percent). The first phase of the sales will net €10bn.
Italy's 10-year bonds are trading at around 6 percent, according electronic trading platform Tradeweb .
1200 BST: At the Crossroads (literally)
... Carrefour, the French supermarket giant and the biggest retailer in Europe, said today it's pulling out of Greece and selling its joint-venture stake to local partner Marinopoulos. It's likely to take a €220m non-cash charge to next quarter's earnings as a result. Carrefour's Greek-related revenues fell 16 percent in the first quarter of this year from the same time last year. (In the whole of 2011, made €2.2bn in sales from Greece).
Carrefour is French for "Crossroad" ... its shares are up 3.62 percent today to €14.17
1150 BST: Soft Sterling
The pound remains welded to its sub-$1.56 level against the US dollar as it continues to trade weaker after limp export data from the Office for National Statistics showed an April goods trade deficit of £10.1bn - the second largest since records began in 1998. Bets on a Bank of England base rate cut are increasing now that Governor Mervyn King has opened the door to further monetary easing at last night's Mansion House dinner, keeping downward pressure on the pound against weakening levels of the US dollar and the Euro.
1050 BST: No change
Chancellor Angela Merkel is repeating her view that shared debt (ie, Euro bonds) would not suit the current crisis or Germany's future market needs. She's right on both counts, of course, but it might be worth following a vow of silence in the 48 hours before an epoch-changing vote in one of your European partners.
Meanwhile German Finance Ministry spokesperson Martin Kotthaus has ruled out relaxing any of the existing terms of Greece's €240bn bailout (not that Germany is the sole decision maker on this point anyway) but says the Germans will "always talk" with any new government elected in Greece.
Can't we all just get along?
1000 BST: Eurozone jobs figures
Employment around the Eurozone fell by -0.2 precent in the first three months of this year, the biggest quarterly decline in the region's workforce in at least two years.
0950 BST: Blackmail
Not the most elegant use of langue from the chief of Germany's central Bundesbank, particularly when it comes 48 hours before sovereign elections inside an economic union.
Jens Weidmann, who was quoted in a joint interview with Greece's Kathimerini, Italy's Corriere della Sera and Spain's El Pais saying: "We must not allow any country to blackmail us with the consequences of contagion."
RBS research published today suggests a 49 percent probability using Monte Carlo simulations (don't ask!) of a New Democracy/PASOK coalition, a 21 percent chance of a Syriza-led coalition and a 30 percent chance of new elections (ie no majority won or coalition formed).
It's simulations suggest a zero percent chance of anyone forming an outright majority.
0940 BST: Sunday's election
Perhaps one of the most influential results will come from France, not Greece. Exhausted French voters head to polls for a fourth time in two months as part of the second round of Parliamentary elections that suggest an outright majority for President Francois Hollande's Socialist Party is growing increasingly plausible.
Polls suggest the Socialists - who took 46.8 percent of the first round of ballots - could win between 257 and 310 seats, well within striking distance of the 289 needed to take majority control. Given the current Socialist control of the Senate, and Hollande's recent election victory, a lower-house sweep would embolden the President's ambitions both domestically and within the Eurozone, where his "pro-growth" agenda is gaining traction in every capital outside of Berlin.
0910 BST: Spain's regional debt
The Bank of Spain reports some troubling figures on the debt burden of Spain's 17 semi-autonomous regions: at the end of March, the figure stood at €145.1bn, up €15bn from the 31 December 2011 tally.
Overall, Spain's debt-to-GDP was measured at 72.1 percent by the BoS, but that figure is likely to rise to at least 90 percent by the end of the year as Spain takes on the commitment of the €100bn bank rescue pledge from the European Union.
RBS analysts Michael Michaelides, Frank Will and Jan King estimate that a full-fledged Spanish bailout would require around €300bn - which is around €50bn more than the maximum capacity of the temporary European Financial Stability Fund (EFSF) but well within the purview of the yet-to-be ratified European Stability Mechanism (ESM).
0900 BST: Cautious gains
European shares are up modestly, with a 0.5 percent gain for the broad FTSE Eurofirst 300 (4.97 points; 988.75) and similar gains across the region's major bourses. Investors seem mostly swayed by the idea of a coordinated policy response by global central banks should this weekend's elections in Greece accelerate the prospect of an exit from the single currency, although central bank spokespeople around the world have been silent on the subject this morning.
Bond yields for Spanish and Italy 10-year debt are improving in the optimistic mood, trading at 6.88 percent and 6.05 percent respectively. Greek stocks are also trending, with the Athens Stock Exchange General Index touching a one-month high of 555.42 following leaked reports yesterday showing an increasing likelihood of a New Democracy/PASOK coalition government after Sunday's vote. Both parties have pledge to remain faithful to previous loan commitments and remain inside the Eurozone and the single currency.
0845 BST: BoE rate cut?
Mervyn King has been long reluctant to add further monetary stimulus to an economy where inflation has long trended well past his preferred level of comfort. His decision last night to offer a further liquidity, and to allude to a "growing" case for further easing has the markets betting heavily on a Bank of England base rate cut before the end of the year.
Index-traded interest rates swaps, known in the market as SONIA, are implying a 75 percent chance of a BoE cut before the end of the year (tellingly, King will depart the BoE when his five-year term expires this autumn) and a 90 percent chance by June of next year.
0840 BST: British banks gain
UKI banks are outpacing gains across Europe this morning after George Osborne's funding lending programme was announced last night at the Mansion House speech. State-owned RBS and Lloyds Banking Group are up 5.6 percent and 4 precent respectively, while Barclays has gained 3.7 percent. The gains are a sharp contrast to an overall 1 precent weekly decline for the Euro STOXX Bank index.
0825 BST: Fancy a flutter?
British bookmaker William Hill is offering 13/8 odds that the Euro will be a "defunct currency" by 31 December 2015. It offers only 4/9 odds the currency will be "fully functioning" at that date.
Hill says it's 1/8 on that Greece will be the first country to quit the Euro (meaning a £20 bet wins you £2.50 plus your bet).
0820 BST: Bank of England
The Bank of England has activated its emergency repo programme, a method by which the Bank can lend 6-month money to financial institutions against accepted collateral at an effective "free" rate (in this case, 0.25 percent, or 25 basis points below the Bank of England's record base rate of 0.5 percent). Minimum bid sizes will be £5bn
The first auction in the programme will be Wednesday 20 June.
BoE Governor made public his plans for new liquidity measures at a speech to City of London financial community last night at Mansion House, the official residence of the Lord Mayor of London, alongside a speech from the Chancellor George Osborne. Both men pledged what many are calling "Plan-A maxed out": the idea of fulfilling supply the market with monetary stimulus while maintain fiscal discipline.
0805 BST: Green open
And not the golf (Gosh, Tiger's playing well, isn't he?) ... anyway ... European markets are gaining in the opening minutes of trading, with a 0.5 percent pop for the FTSE 100 and similar percentage gains in France and Germany.
ECB President Mario Draghi is making some comments this morning regarding bank liquidity provision to "solvent" banks around the Eurozone if there's disruption in the markets next week. Interestingly, he tosses a bit of a flaming potato to the increasingly isolated Angela Merkel, saying the political decisions at this stage of the crisis are far more potent than those made by financial policymakers. He also says the objectives of the 3-year LTRO (their €1tn in ECB liquidity operations) have been broadly met.
In other words, don't expect any great miracles from Frankfurt.
0755 BST: Good Morning!
Asia markets rose after news last night that G20 leaders were preparing a coordinated policy response to the European debt crisis if this weekend's elections in Greece bring the nation close to an exit from the single currency. Britain last night, through Chancellor George Osborne and Bank of England Governor Mervyn King, pledged to supply a $140bn financial lifeline to the nation's financial system in order to prevent any market chaos from the Greek vote and to stimulate the moribund economy.
However, gains across the board have been muted by the ongoing turmoil in Europe and markets are likely to be cautious today ahead of the weekend vote. That said, financial bookmakers are calling for Europe's biggest stock markets in London, France and German to open between 20 and 30 points higher in the first moments of trading.
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