EFSF

The EU summit that begins on Thursday has enjoyed less fanfare – and less frenzied speculation over its potential outcomes – than many others. But don’t be fooled: it still matters. Here’s why.  Read more

Could the IMF help bail out Spain? Tricky one. As goes the EU, so goes the IMF, only more so. Read more

David Cameron arrives for the EU summit. Photo: Eric Feferberg/AFP

Welcome back to our live coverage of the eurozone crisis. By Tom Burgis and Kimiko de Freytas-Tamura on the  newsdesk in London, with contributions from FT correspondents around the world. All times are GMT.

A summit  in Brussels ended in deep division, with the UK refusing to back a new treaty for all 27 EU members and leaving the eurozone countries plus at least six others to forge ahead with a pact of their own to enshrine strict new rules on deficits and debt. It was meant to be the summit that would decisively chart a course out of the eurozone’s debt crisis. 

19.03 That’s the end of our live coverage today. We’ll leave you with a quick summary of the day’s developments. See FT.com for more news and analysis through the evening.

  • The European Union’s 27 leaders, minus David Cameron, struck a deal in the early hours to draw up a treaty by March that would bind them to strict new rules on debt and deficits, with automatic sanctions for countries that break them
  • The UK courted isolation as it refused to sign up to a treaty for all 27 members after David Cameron’s early-hours pitch for safeguards to protect UK financial services met a chilly reception from his counterparts
  • Markets were volatile before a tentative rally lifted equities in Europe and the US. The euro strengthened against the dollar but yields on Italian and Spanish bonds climbed once again
  • The IMF welcomed the European deal, which included €200bn for the fund to ensure it has enough cash to deal with any more fallout from the eurozone crisis, with Christine Lagarde, its head, saying she was “hopeful that others will also do their part”

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eurocoasterWelcome back to our live coverage of the eurozone crisis. By Tom Burgis, Esther Bintliff and Kimiko de Freytas-Tamura on the  newsdesk in London, with contributions from FT correspondents around the world. All times are GMT.

Europe’s leaders gathered in Brussels for another crunch summit. Expectations are running high for a new grand bargain to restore sanity to the eurozone’s finances and chart a course out of the debt crisis. Also today:

  • The European Central Bank cut interest rates by a quarter point to 1 per cent, as expected, and announced that it would accept more forms of collateral and offer longer-term loans to try to protect the banking system
  • Mario Draghi, ECB president, poured cold water on hopes the central bank was poised to take more aggressive action
  • The European banking authority unveiled its updated stress tests of 70 banks, which tripled the capital shortfall for the German banking sector and pushed up the Europe-wide deficit from €106bn in October to €115bn now

20:15: We’re winding up the liveblog for tonight, but you can follow the rest of the action at FT.com and we’ll be back again on Friday morning. Thanks for reading and for all the comments. Bon courage!

19.54: BREAKING – Peter Spiegel, the FT’s Brussels bureau chief, has this scoop from the summit:

EU leaders have begun their late-starting summit, and they were given a 6-page draft of their conclusions at the start. According to people who have seen it, some of the most interesting new language is on the eurozone bail-out funds.

The current version says the existing €440bn fund, the EFSF, will continue running for another 2 years financing its current programmes – which would not be transferred to the new fund, the €500bn ESM.

That would free up the ESM’s resources, giving the eurozone significantly more firepower, with the two funds running in parallel.

The conclusions say the ESM would have its maximum €500bn lending capacity, regardless of how much the EFSF is committed to.

That could mean as much as €200bn in new “bazooka” weaponry.

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Welcome back to our live coverage of the eurozone crisis. By Tom Burgis on the  newsdesk in London, with contributions from FT correspondents around the world. All times are GMT.

18.25 That’s the end of our live coverage of the eurozone crisis today. We’ll be back tomorrow morning for a day that includes the ECB rates decision and Mario Draghi’s press conference, as well as the meeting of centre-right European leaders in Marseille ahead of the start of the EU summit in Brussels in the evening. And, just as the leaders tuck in their napkins for a working dinner, the European banking authority will unveil the details of which banks need to raise what capital.

We’ll leave you with a round-up of today’s developments. Read more

A tram passes the euro sign sculpture in front of the European Central Bank ( ECB) in Frankfurt, Germany. Photographer: Hannelore Foerster/Bloomberg

Welcome to our continuing coverage of the eurozone crisis. All times are GMT. By Tom Burgis, James Crabtree and John Aglionby on the news desk in London, with contributions from FT correspondents around the world.

The turmoil in the eurozone has taken a troubling turn in recent days, with anxiety spreading from Europe’s periphery to its “core” countries. Even as Italy’s Mario Monti readies his economic agenda to be presented today, investors are looking at France, the Netherlands and Austria with increasing unease and wondering whether the ECB might yet ride to the rescue. Over in Greece, today is the anniversary of 1973′s mass student protests – with demonstrators once more planning to take to the streets. And the bond markets are showing ever more strain, with today’s Spanish bond auction souring sentiment still further. Read more

Welcome back to the FT’s live coverage of the eurozone crisis and the global fallout. By Tom Burgis and David Crouch in London with contributions from correspondents around the world. All times are GMT.

Italian bond yields are back up over 7 per cent, and French and Spanish bonds are also under pressure. Stock markets are down across Europe. Meanwhile, Mario Monti – Italy’s prime minister designate – is battling to create a new government capable of dragging Italy out of the eye of the storm.

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17.59 We are wrapping up our rolling coverage – thank you for reading. But before we go, here is a quick reminder of today’s latest FT news and insights on the eurozone crisis:

  • Italian prime minister designate Mario Monti will see president Georgio Napolitano on Wednesday morning to present his new government, after he received the backing of outgoing premier Silvio Berlusconi’s People of Lilverty party
  • Following anaemic data on European economies today, more than three quarters of fund managers predicted Europe will slide into recession next year
  • Italy’s 10-year bond yield once again soared above the 7 per cent mark and French yields hit a record spread over German Bunds, causing global markets to wobble
  • US Treasury yields were close to unchanged as better-than-expected retail sales data offset safe-haven buying due to rising eurozone yields
  • The Austrian coalition government, faced with rising yields on government debt and a possible downgrade, decided to accelerate the pace of spending cuts
  • German frustration over Britain’s approach to the eurozone crisis was laid bare after a close ally of Angela Merkel accused the UK of selfishly pursuing its own interests just days before a meeting in Berlin between the German chancellor and UK prime minister David Cameron

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Silvio Berlusconi – shutting one's eyes won't make the problems go away. Image AFP/Getty

Welcome back to the FT’s coverage of the eurozone crisis. Curated by John Aglionby, Tom Burgis and David Crouch on the news desk in London, with contributions from correspondents around the world. All times are GMT.

Greece really is expected to get a new prime minister today – 48 hours later than expected. Italy, well who knows what’s going to happen there as bond yields surge and the EU’s economic inspectors arrive … And policymakers and financiers are becoming increasingly concerned about the impact of the crisis on global liquidity levels.

18.53 That’s it for our live coverage today. We leave you with a round-up of where we stand at the end of another turbulent day in Europe – and some cold hard numbers (and letters) for your bedtime reading.

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Nicolas Sarkozy, French president and G20 host, blows a kiss to someone – presumably not the Greek prime minister (AFP/Getty)

  • Welcome back to the FT’s live coverage of the eurozone crisis. By Tom Burgis and John Aglionby on the news desk in London, with contributions from correspondents around the world. All times are GMT.

One issue dominates the agenda for as the Group of 20 leading economies enters its second and final: the fate of the eurozone amid the turmoil in Greece.

16.41: That’s it for the live blog for today. See FT.com over the coming hours for news and analysis on the G20 summit, Berlusconi’s woes and the outcome of tonight’s Greek vote.

16.31: Before we wind up the live blog, a brief re-cap of the day’s developments

  • The IMF is to monitor Italy’s progress on promises to reform its economy
  • Italian bond yields rose to fresh euro-era highs as Berlusconi said he was going nowhere
  • The Italian PM insisted his majority at home was “solid”, though it looks anything but
  • The G20 summit in Cannes ended with plenty of rhetoric urging the euorzone to get its house in order but no actual cash to help it do so
  • Any decision on boosting the IMF’s resources to help tackle the crisis was put of until when G20 finance ministers meet in February
  • Greek MPs are debating a vote of confidence in the government and will vote at midnight Athens time, 10pm London

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Welcome back to the FT’s live coverage of the eurozone crisis. By Tom Burgis and John Aglionby on the news desk in London, with contributions from correspondents around the world. All times are GMT.

One issue dominates the agenda for today and tomorrow’s summit of the Group of 20 leading economies: the fate of the eurozone amid the turmoil in Greece.

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19.30: And what will tomorrow bring? Who knows. It’s day two of the G20 summit, the confidence vote in the Greek parliament and the US non-farm payrolls (monthly unemployment data) are announced.

Thanks for all your comments and tweets today – especially the song suggestions! For further updates from the late-night meetings in Cannes follow ft.com Read more

Welcome back to our continuing coverage of the eurozone crisis. In the early hours of the morning, eurozone leaders emerged from their summit in Brussels with a deal designed to stem the sovereign debt crisis. The markets seem pleased but big questions on the details remain. We’ll bring you reactions, news and commentary as we get it throughout the day.

All times are London time. By Tom Burgis on the news desk in London, with contributions from FT correspondents around the world.

18.34: It’s time to wrap up the live blog for today. But keep reading FT.com through the evening for:

18.13: Der Spiegel has a nice tale about whether or not Angela Merkel did in fact apologise to Silvio Berlusconi for appearing to smirk when asked publicly if she still had faith in his leadership.

18.07: Chatham House has just published a paper arguing that international debt bailout systems are ill-equipped to handle any further instability.

“As the problems in the eurozone deepen and threaten to spread globally, action is required to strengthen financial safety nets beyond what was agreed by EU Heads of State on 27 October 2011.”

Read the full report by Stephen Pickford, former managing director at the UK Treasury and former executive director at the IMF.

18.00: An evening update of the day’s developments:

  • At the end of trading in Europe, the FTSE Eurofirst 300 finished 3.69 per cent higher for the day at 1,020. US stocks rose too, with GDP numbers that matched expectations adding to a positive reception for the EU’s moves
  • Despite the ebullience in equities markets, concerns remained over soveriegn debt in the eurozone. Italian government bond yields first sank to 5.7 per cent, before rebounding to 5.9 per cent, near their euro-era highs
  • Questions remain over the details of the eurozone deal, notably over the terms of the new bonds that will replace existing Greek debt as part of the agreed 50 per cent “haircut” (see 13.17), how banks will go about raising new capital and where the cash to fund the various eurozone plans will come from
  • European officials are keen to involve China and other Bric nations in a fund to buy eurozone debt, though here too there are no firm plans yet

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Welcome back to our continuing coverage of the eurozone crisis as we head into the evening. Europe’s leaders have gathered in Brussels to try to deliver a solution to the sovereign debt crisis. It has been a nervy day in the markets and national capitals – all of which you can read about on our live coverage from earlier on. Tonight we should discover whether Europe’s leaders can overcome their differences and chart a course towards recovery or whether they will once again fail to reach a deal. We’ll bring you news and commentary as we get it.

All times are London time. By Tom Burgis on the news desk in London, with contributions from FT correspondents around the world.

22.38: We’re going to wrap up our live coverage from London now. But fear not, the FT reporters at the summit will not rest until we have an outcome from the evening’s second summit, of all 17 eurozone leaders. See ft.com for all the latest news.

It seems only right to give the final word on today’s developments to Justin Timberlake, whose new film, In Time, has the strap line: “Tomorrow is a luxury you can’t afford.” Over the coming hours we’ll discover whether European leaders – and the markets – share that sentiment.

22.35: A quick recap on what we know so far

  • The 27 EU leaders agreed a statement as per a leaked draft, fleshing out some headline details of how the bank recapitalisation will work
  • Silvio Berlusconi’s letter to his fellow eurozone leaders included a commitment to raise the Italian retirement age to 67
  • Nicolas Sarkozy will call his Chinese counterpart tomorrow in what seems to be part of efforts to win Chinese investment for a fund to buy eurozone debt
  • US markets dealt with all of this pretty calmly, finishing the day in the black

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Welcome to our continuing coverage of the eurozone crisis. Today’s summit in Brussels could, in years to come, be viewed as a turning point in the eurozone crisis. Or, it could be just one more extended meeting at which policymakers tried – and failed – to agree on a plan big enough to calm the storm in Europe’s sovereign debt markets. We’ll bring you news and commentary until the summit begins.

All times are London time. By Esther Bintliff and David Crouch on the world news desk in London, with contributions from FT correspondents around the world.

17.10: The summit is about to begin and we’re continuing in a fresh post: Eurozone crisis: the evening session.

16.45: A reminder of the timetable for tonight:

  • 17.00 – 18.00 (London time): the leaders of all 27 EU member states meet
  • 18:15 onwards: the summit of eurozone leaders begins

Statements and possibly a press conference are expected when the meetings close, but they will likely continue long into the night.

Stanley Pignal, Brussels correspondents, reports:

“EU leaders have been arriving for the first of tonight’s two meetings, which will involve all 27 member states before the eurozone-only leaders convene afterwards.

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Slovakian PM Radicova listens to the leader of the Freedom and Solidarity Party Sulik. Credit: Petr Josek/Reuters Welcome to our continuing coverage of the eurozone crisis. All times are London time. By Esther Bintliff and John Aglionby on the world news desk in London, with contributions from FT correspondents around the world.

Today’s main events are in Greece – where the troika published a long-anticipated statement, and in Bratislava, where the Slovakian parliament is voting on whether to back the expanded eurozone rescue fund, the EFSF.

21.38: As we close up for the day, a markets update. The S&P 500 closed flat at 1,195.54 as investors remained cautious after the delay in the vote to expand the rescue package. The euro surrendered all gains and changed little against the dollar at $1.3642. That’s all from us.

21.30: Here is the latest FT story and Alphaville blog post.

21.20: Slovakia’s government has lost a confidence vote on a plan to bolster the EFSF rescue fund, toppling the government. But it is expected that the package will go through in a later vote with help from the opposition. Smer, the largest opposition party, said it would support the changes in a second vote. A total of 55 lawmakers of the 124 present backed the motion, falling short of the required majority of 76.

19.30: We’re going to take a little break on the blog now – but we’ll be sure to update you when (if?) the Slovak deputies vote. In the meantime, thanks for reading, and for all your comments! You can follow our coverage at ft.com and of course on twitter, @ftworldnews

19.20: European authorities plan to set a higher-than-expected capital threshold for the region’s banks and give them six to nine months to achieve that level or face government recapitalisations under the auspices of the eurozone’s €440bn rescue fund, senior regulators have told the FT. Patrick Jenkins in London, Ralph Atkins in Frankfurt and Peter Spiegel in Brussels report:

The European Banking Authority’s board of supervisors has approved in principle the idea that banks should be made to raise their core tier one capital ratios – the key measure of financial strength – to 9 per cent, well beyond the current expections of banks and analysts, even after absorbing writedowns on the value of their sovereign debt holdings.

Officials cautioned, however, that the 9 per cent threshold – which could see dozens of banks forced to raise a combined €275bn, according to Morgan Stanley estimates – is still being debated in national capitals and in Brussels.

Some senior officials at the European Commission, which is due to unveil its own plan for bank recapitalisations, support the higher levels and could announce their backing as early as on Wednesday.

Full story.

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Welcome to our continuing coverage of the eurozone crisis. All times are London time. Curated by Esther Bintliff and John Aglionby on the world news desk in London, with contributions from FT correspondents around the world.

 

14.44: We’re now handing over to our colleagues on Money Supply, who are  liveblogging the testimony of Ben Bernanke, US Federal Reserve chairman, before Congress. Thanks for reading today and we’ll be back soon.

14.37: A quick round-up of today’s events:

  • Eurozone finance ministers postponed the disbursement of the next tranche of Greece’s bailout money until November
  • However, the Eurogroup also indicated they were preparing to paper over Greece’s failure to meet international lenders’ mandated budget targets for 2011, saying they would now evaluate Athens’ performance based on goals that combine both this year’s and next year’s finances
  • Jean-Claude Juncker confirmed that the eurogroup will review the losses imposed on private sector bondholders (mainly banks) as part of the Greek bailout agreed in July. Last week, the FT reported that as many as seven of the eurozone members wanted private creditors to swallow a bigger writedown on their Greek bondholdings
  • The French and Belgian governments stepped in to stem investor panic on Tuesday by saying they would guarantee loans made by Dexia, amid fears of a funding crisis at the Franco-Belgian bank
  • Shares in Deutsche Bank fell after it said it was going to take an approximately €250m impairment charge on its Greek sovereign debt holdings
  • Ireland’s central bank downgraded its growth forecasts for Ireland in 2012 (see our 13.15 update) while upgrading its forecast for 2011

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Welcome to day four of our rolling coverage of the eurozone crisis.

All times are London time. Curated by Esther Bintliff and John Aglionby on the world news desk in London, with contributions from FT correspondents around the world.

19.20: We’re wrapping up the blog here, but many thanks for reading (and commenting). You can follow the rest of our coverage at ft.com/world and on twitter, @FTWorldNews

19.15: What are the chances of Greece being able to meet its commitment to cut the general government deficit from €24.1bn to €17.1bn this year?

It’s an incredibly tough task – equivalent to about 7.5 per cent of gross domestic product.

Kerin Hope, our Athens correspondent, has taken a good look at the numbers:

Greece faces a desperate catch-up effort to achieve this year’s budget targets after reporting the central government deficit widened an annual 22.2 per cent for the first eight months of this year.

Talks with international lenders, which resumed on Thursday, are intended to wrap up details of the 2012 budget and of structural reforms to reduce public sector spending so that Athens can receive its next €8bn slice of bail-out funding, according to Greek officials.

But the current shortfall in this year’s budget indicates new measures may be needed…

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