- Brussels Summit begins with low expectations
- France, Italy and Spain untie to isolate Germany on debt-sharing stance
- Greece's new Prime Minister stays home due to ill health
1550 BST: Weaker to the close
Caution prevails as the major European markets - outside of Spain and Italy, paradoxically - sputter towards the close. Investment bank heavy indices in France, German and the UK all suffer from steep declines in bank shares in the wake of the spreading Libor scandal that's taken more than £3bn in market cap from Barclays alone. Full reporting on all aspects of the story on the www.ibtimes.co.uk/economy
1530 BST: Greek respite?
An IMF Spokesman, in detailing next week's "fact finding" mission to Greece and Cyprus, says current loan programme agreements are the "basis" of talks with Athens, but if the new government has any new ideas on the easing of costs associated with structural reforms, the IMF is "open to discussing them".
1510 BST: Not exactly "European Crisis" ...
..but nonetheless: the United States Supreme Court, in a landmark ruling, has rejected a legal challenge to President Barak Obama's massive overhaul of the American healthcare system and upheld, as Constitutional the so-called "individual mandate" that seeks medical coverage for the more than 30 million of those with no health insurance.
1420 BST: New Idea
Retuers is reporting a topic up for discussion at today's Summit in Brussels is the activation of both the EFSF and the ESM (the temporary and permanent bailout funds respectively) that would allow them buy Spanish and Italian bonds in the so-called primary market (ie, when they're auctioned or sold first by the government).
While this might allow countries to avoid the costly increases in yield that have plagued debt-raising efforts by Spain and Italy for most of this year, it's hard to see how (or if) the purchases would ease conditions in the secondary market (ie after they're sold).
1235 BST: Libor Scandal
Our news desk has been chasing the Libor scandal for most of the morning, which is a fitting deployment of resources while we wait for the likely disappointing conclusion of this week's Leaders' Summit in Brussels. You can read a few pieces on the story by my colleague Lianna Brinded here.
1020 BST: Italian bond auction
Italy's borrowing costs surged again this morning to a 2012 high after 5-year and 10-year bond sales worth around €5.42bn. The 10-year bonds priced to yield 6.19 percent (up from 6.03 percent in May) while the 5-year portion priced to yield 5.84 percent (from 5.66 percent in May). Both are the highest effective borrowing rates at auction since December of last year.
1010 BST: Eurozone confidence wanes
Economic sentiment in the Eurozone fell in June, according to the European Commission's index, to 89.9 from a revised 90.5 in May. Consumer confidence declined further from May, as well, to -19.8 from -19.3 while the business climate poll dipped to -0.94 from May's revised -0.79.
0940 BST: Italian 'abyss'
Confindustria, the powerful Italian employers' lobby group, has cut its forecast for Italian GDP growth to this year and is now forecasting a deeper-than-expected recession that will shrink the economy by -2.4 percent. It doesn't expect any growth next year, either (-0.3 percent) and says both debt-to-GDP and the nation's budget deficit will rise more than expected this year as tax revenues dry-up in the teeth of the third Italian recession in a decade. The group says Italy is "in the abyss".
To put the view into context, however, it's worth remembering that Italy's Prime Minister, Mario Monti, won approval yesterday from Italy's Lower House of Parliament for a far-reaching labour market reform bill that he says will "protect individuals, not thier jobs".
0930 BST: No change in the bad news
Britain's economy shrank 0.3 precent in the first quarter, as previously measured, and 0.2 precent on the year, a slightly larger than expected slowing from the prior report. The UK's current account balance came in at -£11.179bn compared to a deficit of -£7.228bn ih the final three months of last year. It's a bigger than expected shortfall that represents around 2.9 percent of GDP.
0920 BST: Swing low
European shares are slipping fast as the Euro sinks closer to 1.2407 in advance of a Brussels Summit that is unlikey to satisfy investor concerns about the long-term future of the Eurozone. We're looking at full percentage losses (and more) for markets in Germany, the UK and France.
0915 BST: Softer Sterling
Sterling is trading at a two-week low against the US dollar of 1.5529 ahead of the final reading for first quarter UK GDP at 0930 BST. Here's what Societe Generale thinks of the UK's growth prospects:
...we have lowered our UKgrowth forecasts from 0.3% to 0.1% for this year andfrom 1.6% to 1.3% for 2013. The market and the Bank ofEngland are both aware that there is an unusually highdegree of uncertainty about the underlying path of growththis year because of the known distortions of theDiamond Jubilee and the Olympics, which will make GDPexceptionally volatile. However, looking behind thatexpected volatility, it is clear that the economy isstruggling to achieve any growth at all.
0855 BST: German unemployment rises
Some rare weakening in Germany's job market has been reported for June, with the total number of jobless rising 7,000 to 2.822m, according to national labour office. That takes the rate of unemployment to 6.8 percent from an upwardly revised 6.8 percent in May (the original reading was 6.7 percent), although with adjustments for seasonality, the June figure is a mild improvement from May.
0830 BST: First Summit leaks
A "German government source" is speaking to Retuers this morning, saying his/her government would reject the idea of EFSF or ESM funds being used for bank recapitalisations is banking supervision stays "at the national level".
This is interesting in that common Euro-wide banking supervision is one of the key pillars of EU President Herman Van Rompuy's recent vision for a long-term crisis solution. Of course, a few of this complimentary pillars - including debt-sharing - are roundly rejected by Chancellor Angela Merkel and her opposite number in The Netherlands, but it's a start, I suppose, to hear that they're creeping towards agreement on at least one issue.
Dutifullu, the source also tells Reuters that Germany is "sceptial" of Italy's ECB bond buying idea.
0810 BST: Yields rising
Spanish benchmark 10-year bond yields are edging closer to 7 percent (6.98 percent) while benchmark Italian bonds are marked at 6.24 percent.
0805 BST: Small pop
Britain's FTSE 100 is up around 0.1 percent to kick-off the session, pretty much in line with expectations and the same level of gain we're seeing on the DAX and the CAC-40. Spain's IBEX is little changed while Italy's FTSE MIB has a mildy firmer tone but is only up around 0.2 percent.
It's worth remembering, as well, that aside from the event-risk created by this two-day summit, we're also into the last two trading days of a very difficult quarter, which typically means a large amount of "window dressing" by institutional investors as they square positions and tinker with holdings in their portfolios as they prepare to establish the final valuation for the three-month and half-year periods.
0750 BST: Good Morning!
A relatively quiet - but mildly bullish - session in Asia gives way to what could be a very interesting day here in Europe as the region's leaders gather for their two-day Summit in Brussels. European stocks are set to open 15 to 20 points higher across the major indices after a solid 0.7 percent gain for the broadest measure of Asian equities, the MSCI Asia Pacific Index, overnight. The European single currency was also firmer, trading north of 1.25 for most of the session in advance of the two-day Brussels meetings.
There's a busy slate of economic data on today's docket, as well, including unemployment figures from Germany, consumer and industrial confidence from the Eurozone and a final reading of first quarter GDP here in the UK at 0930 BST. In between we'll get another interesting test of the bond markets from Italy with a €9bn sale of medium-term debt later this morning.
Bond markets are up and running, of course, with a 17 tick to the upside for September Bund futures (141.28) but a lot of today's talk will focus on the brewing row between Germany and its Eurozone partners over the need for the European Central Bank to actively purchase debt in the secondary market. Italian Prime Minister Mario Monti will raise the issue at today's meeting, but ECB chief economist Peter Praet has already fired a broadside reply in the FT Deutschland, saying "I am very sceptical about this proposal."