• Deputy PM tells France to calm down
• François Baroin: UK economic situation 'very worrying'
• Fitch puts France on negative watch, reaffirms AAA
• Mario Monti's government wins vote over austerity plans
• Irish economy shrinks
The French AAA rating lives to fight another day, so I think we'll wrap thing up for the day (night?).
Here's an evening summary:
• Britain has hit back at France after days of criticism of the UK economy. Nick Clegg told France's prime minister that the barracking was "simply unacceptable" and must stop. The unusual move came after the French finance minister became the latest Gallic politician or official to denigrate the UK. Robert Zoellick, head of the World Bank, also weighed in by voicing concerns over the war of words between the two nations.
• Belgium's credit rating was downgraded. Moody's said the indebted Belgian state faced serious problems, and would struggle to achieve significant economic growth as the crisis across the eurozone deepens. Seperately, Fitch threatened to downgrade six eurozone countries including Belgium, and lowered France's outlook to 'negative'.
• Italy's technocratic government won a crucial confidence vote. The victory will help Mario Monti to push through a €30bn-plus austerity package.
• The EU released a draft version of its new fiscal pact. This includes controls on budget deficits, and powers to drag offending countries to the European Court of Justice.
• There was more gloom for Ireland as figures showed its economy shrank by 1.9% in the last quarter. Economist warned that the Irish government may be forced to seek a second bailout, or restructure its debts.
Have a great weekend, all. Thanks for reading, and for all the great comments. Goodnight!
We have a fascinating interview with Nick Clegg tonight, by my colleague Patrick Wintour. In it, the deputy prime minister has pledged to rebuild bridges between the UK and Europe after the EU Treaty veto last week.
Clegg also expands on his conversation with the French prime minister, explaining that:
I just think we all need to go away, have a bit of hiatus, a bit of time to have Christmas, to eat some mince pies or whatever the French equivalent is. Everyone is a bit tired.
The full piece is here.
My colleague David Gow points out that Moody's timing is rather harsh, giving Belgium little credit for finally forming a government
@gowdav waited till they got a government and then voted against it. Salauds et de la pure politique. Et nos amis francais?
The full text of Moody's downgrade of Belgium's rating to Aa3 can be read here.
It explains that there were three reasons behind the move:
(1) Heightened risks posed by the sustained deterioration in funding conditions for euro area countries with relatively high levels of public debt, like Belgium; and the potential adverse impact these risks may have on the Belgian government's fiscal consolidation and debt-reduction efforts.
(2) Increasing medium-term risks to economic growth for the small and very open Belgian economy due to the need for ongoing deleveraging and fiscal restriction in the euro area. This is likely to add to the challenges of placing the country's public debt on a downward trajectory.
(3) New risks and uncertainties for the Belgian government's balance sheet stemming from the banking sector, particularly in connection with the contingent liabilities emanating from the run-off process of Dexia Credit Local.
Breaking news - Moody's just cut Belgium's credit rating. It's a two-notch downgrade, from Aa1 (the second-highest rating) to Aa3 (the fourth-highest).
Moody's said the downgrade was partly due to "heightened risks" posed by the "sustained deterioration in funding conditions" across the eurozone. The agency also left Belgium with a negative outlook.
As mentioned earlier, it really is the night of the credit rating downgrades (following Fitch's move against six eurozone countries - including Belgium).
Standard & Poor's has just 22 minutes left to downgrade France -- I note (via Zerohedge) that it plans to shut down its operations at 10pm GMT (5pm EST) for 'server maintenance'. #ticktock
Downing Street has made it known that the Prime Minister supports Nick Clegg's decision to tell the France government to stop attacking the UK
From the Press Association:
Number 10 indicated that Mr Cameron fully backed his coalition partner's move to rebuke the French PM over the recent comments.
There have been suggestions that Clegg could bolster his reputation thanks to his robust treatment of Francois Fillon (visions of Waterloo, Agincourt, etc). That might be pushing things - but any sign of warmth between the two men at the heart of the coalition are working well should reassure international investors.
Nothing from S&P about France yet, but they did just affirm Trinidad and Tobago's credit rating, so a French downgrade is still possible at this late hour...
It's 9pm. Wall Street has closed (with the Dow down a meagre 5 points), and the financial world waits to see whether (as rumoured) S&P will finally carry out its threat to downgrade France's AAA rating.....
The war of words over the English Channel in recent days has caused alarm in the corridors of international power.
Robert Zoellick, head of the World Bank, revealed this evening that he was ""deeply troubled" by exchanges between Britain and France, at a time when the euro crisis is threatening the world economy.
Zoellick told the Atlantic Council, a Washington-based think tank, that:
Negotiations often leave these tensions but if the process that evolves out of Europe starts to create a deeper acrimony with Britain, I don't think that is good for where the European Union will go, I don't ultimately think it's good for Britain.
It's not clear whether Zoellick was aware of Nick Clegg's telephone bust-up with French PM François Fillon, or David Cameron's jibe at France's treatment of religious groups. But the tone of the exchanges in recent weeks has clearly alarmed the World Bank. As he put it:
I have been deeply troubled over the past couple of days to see some of the commentary going across the English Channel, not only comments from France but also from Brussels.
With rumours of an S&P downgrade of France still rattling around, Wall Street has lost all its earlier optimism. The Dow Jones industrial average is now up just 7 points, or 0.06%. Traders have been spooked by Fitch's warning this evening that a comprehensive solution to the eurozone debt crisis "is beyond reach".
As Michael Gibbs, managing director and director of equity strategy at Morgan Keegan, put it:
Fitch comes out and implies they are going to downgrade six sovereign-debt ratings, and now we're struggling to hold above the flat line.
This is turning into the night of the credit rating downgrades. Standard & Poors just slashed its ratings on six Portuguese banks to junk status. The move comes a day after Portugal cancelled a debt auction unexpectedly. More details here
Nick Clegg's stern warning to the French prime minister (see here for full details) is headline news this evening.
The Times bellows (from behind its paywall) that "France blinks first in cross Channel row":
France today dramatically backed down in the angry row with Britain that followed David Cameron's rejection of a new European Union financial treaty. Francois Fillon, the French Prime Minister, this afternoon telephoned Nick Clegg, the Deputy Prime Minister, and agreed it was time to call off hostilities.
He also insisted that he had not intended in remarks yesterday to suggest that Britain should be downgraded by international ratings agencies because of its poor economic performance. The climbdown came after Mr Clegg reportedly rebuked Mr Fillon over attacks on the British government from leading French figures, including the governor of the Banque de France.
Sky News reckons that Clegg "reacted furiously" to Fillon's explanation, forcing the French PM to agree to calm the Gallic rhetoric.
Amid all the sound and fury in the spat between Britain and France, the key question remains - Who's Econony Is In Better Shape?
My colleague Katie Allen has crunched the numbers.
Britain's deficit will stand at 7% of GDP next year, while France's will be 4.6%, according to International Monetary Fund forecasts. But Britain's net debt is put at 76.9% of GDP in 2012 and France's at 83.5%. UK inflation has been way above the government-set target of 2% this year and the IMF forecasts it will be 2.4% in 2012. In France the rate is expected to be 1.4%.
Neither company boasted decent economic growth in the last few months. While Britain faces a 1-in-3 chance of a recession in 2012, France's downturn has probably already started.
In sporting terms, neither country is sprinting for the gold medal. More akin to two steeple-chasers struggling over the hurdles and getting wet.
The French government have "noted" Fitch's decision to put their AAA rating on negative watch.
Back on his best behaviour after this morning's indiscretions, François Baroin pointed out that the French government recently agreed several measures to "boost the credibility" of its deficit reduction plans.
More ratings action from Fitch - the Paris-based ratings agency has reaffirmed France's AAA rating, but lowered its outlook to negative.
That's not as serious as being put on Rating Watch Negative (see last post), but it is the first step towards being downgraded.
Fitch said it was putting France on negative watch as it believes that its debt-to-GDP ratio would peak at 92% in 2014, which is higher than any other AAA-rating nation.
The means the country is "the most exposed to a further intensification of the crisis"
Fitch said there was a "slightly greater than 50%" chance of hitting France with a downgrade, but added that it does not expect to resolve the issue until 2013 (!). Unless there is "a material adverse shock".
So Fitch has nibbled on the bullet, but given France a lot of breathing room....
...and do remember that we're still waiting for S&P.
Breaking news from the rating agencies, but it's not the announcement we're all waiting for*.
Fitch has put eight eurozone countries on Rating Watch Negative -- Belgium, Spain, Slovenia, Italy, Ireland and Cyprus. The decision means each country could soon see its credit rating cut, by at least one notch.
Fitch said it took the decision having analysed last week's EU Summit, and concluded that:
a 'comprehensive solution' to the eurozone crisis is technically and politically beyond reach.
Fitch said it was particularly concerned by "the absence of a credible financial backstop:, adding that:
In Fitch's opinion this requires more active and explicit commitment from the European Central Bank to mitigate the risk of self-fulfilling liquidity crises for potentially illiquid but solvent Euro Area Member States.
None of the six countries have a AAA rating - the highest is Belgium with AA+ (one notch below). They were already on negative watch, but Rating Watch Negative moves each one closer to a downgrade - with a decision due by the end of next month.
* - there is a lot of chatter in the City and elsewhere that Standard & Poor's will do the deed tonight, and cut France's AAA rating.
Nick Clegg's no-holds-barred comments to the French prime minister came as quite a shock to Westminster.
It's pretty unusual to be told officially about this level of diplomatic rough stuff - usually it is kept behind the scenes.
In the Spectator, James Forsyth comments that "the willingness of the deputy Prime Minister to be quite so sharp with the French is striking".
Iain Dale, publisher of Total Politics and a former Conservative parliamentary candidate, hailed Clegg's move on Twitter:
@IainDale Wow, Nick Clegg has grown a pair of Euro sized cojones. Good on him for taking the French Finance Minister to task!
Nick Clegg has rebuked France's prime minister for the attacks on the UK economy in recent days, in a move that underlines how France's AAA rating is turning into a major polical row.
The Deputy Prime Minister's office revealed in the last few minutes that Clegg spoke on the phone with Francois Fillon this afternoon, and told him that recent remarks were "simply unacceptable". French officials and politicians, Clegg said, need to calm down.
Here's the official statement:
Fillon made clear it had not been his intention to call into question the UK's rating but to highlight that ratings agencies appeared more focused on economic governance than deficit levels.
The Deputy Prime Minister accepted his explanation but made the point that recent remarks from members of the French Government about the UK economy were simply unacceptable and that steps should be taken to calm the rhetoric.
It appears that Fillon made the call to Clegg from Brazil.
Yesterday Fillon told reporters that "Our British friends have a higher deficit and debt [than us] but it seems the ratings agencies have not yet noticed." That, along with Christian Noyer's sniping at the UK AAA rating yesterday, and this morning's criticism from François Baroin, appear to have stretched Downing Street's patience.
David Cameron took a mischievous swipe at the French this afternoon, in a sign that the jibes from across the Channel have hit a nerve in Westminster.
And he did it surrounded by the cream of the Church of England too, in a speech in Christ Church Cathedral, Oxford. In a speech marking the 400 anniversary of the King James Bible, Cameron declared that:
Many people tell me it is much easier to be Jewish or Muslim here in Britain than it is in a secular country like France.
Why? Because the tolerance that Christianity demands of our society provides greater space for other religious faiths too.
And because many of the values of a Christian country are shared by people of all faiths and indeed by people of no faith at all.
You can see the full speech here on PoliticsHome.
European stock markets have just closed for the week, in rather pensive mood.
The FTSE 100 ended 13 points lower at 5387, and other EU markets generally posted small losses. The mood in the City is that Christmas can't come quickly enough....
Ben Brogan, the Daily Telegraph's Deputy Editor, is in fine form today on the deterioration of relations between the UK and France. He kicks off with that Telegraph favourite - a war story:
The last time France was in deep trouble, Winston Churchill offered to merge our two countries and make common cause against the Germans, who had driven what remained of French authority from Paris.
That proposal was rejected, leading to the Vichy government, but was a sign of the strong bonds between the two nations. Brogan continues....
A spat between London and Paris is always good sport, and should not undermine the fundamentals of what is an exceptionally strong relationship. But our two economies are so embedded in each other, and our economic interests so entwined, that what appears to be a French government strategy to talk down the UK in order to distract attention from their own difficulties could have dire consequences for both.
Bill Gross, who runs PIMCO (the world's biggest bond trader), has given Angela Merkel a 'hurry-up' - declaring on Twitter that PIMCO's patience is running out:
@pimco Gross: Merkel said "process won't last days but years." Well too late for us. With respect Ms. M: Buy your own bonds w/ your own currency.
A draft version of Europe's new fiscal compact is circulating this afternoon. Reuters has the early details.
The pact includes a requirement that countries would not be allowed to run a primary deficit greater than 0.5% of GDP over the economic cycle. Offenders could be taken to the European Court of Justice.
The draft states that eurozone summits will take place "at least twice a year" (oh goody). It also says that deeper eurozone fiscal union "should not undermine" the wider EU single market. Not immediately clear how that would be achieved in practice.
The proposal also says that the fiscal compact would come into effect across the eurozone once nine members have ratified it.
The news that Ireland's GNP shrank by 1.9% in the last quarter continues to alarm economists.
Megan Greene, head of European economics at Roubini Global Economics, said the data underlines Ireland's creaky position. She explained to my colleague Lisa O'Carroll believes Ireland will either need another baiilout to cover its funding costs or face a debt restructuring:
The government doesn't have any room to manoeuvre in terms of spending the bailout money if it wants to hit its bailout programme targets (which are based on overly optimistic GDP figures, so will be more difficult to hit than the government expects). All the bailout money is going towards financing the deficit and debt.
Noonan said yesterday that the plan is for Ireland to issue a lot of debt in the markets in 2012 (it has to issue a little in the markets next year but then a lot in 2013 according to the bailout programme, so significant issuance next year would reduce the huge funding hump in 2013). Irish bond yields have decoupled from the other bailout countries' and have come down, but still exceed 8%, which is completely unsustainable.
With unemployment soaring, domestic demand plummeting and Ireland's 3 biggest export markets - the UK, the US and the eurozone - either going into stall speed or recession, I don't think there's any chance Ireland can return to the markets for long-term debt next year.
Ireland will therefore either need another bailout in the same fashion as Greece next year to cover its funding costs, or it will face a bail-in (debt restructuring). Considering that Greece is likely to default and exit the eurozone towards the end of next year, Ireland may choose to default rather than accept the conditionality of another bailout. If other weaker eurozone countries aren't making their creditors whole, the Irish may wonder why they are going through such a painful structural adjustment to do so.
Great comments below the line as ever. Particularly tickled by this from Kyza06, who asks:
Is it just me, or does Baroin look like some kind of unholy merging of Cameron, Clegg & Gideon*?
* Gideon = George Osborne.
Looking at the image below, I can see Kyza06's point. Clegg's hair, Cameron's chin, and Osborne's pallor? Or do you think differently?...
Here's a video clip showing exactly what French finance minister François Baroin said about the UK economy today.
The clip suggests that Paris is still smarting from recent comments made by British politicians recently. Baroin said that the French government "didn't want to be given any lessons", adding:
We're not giving any, we don't want to receive any either.
As reported earlier, Baroin also said that: "It's true that the economic situation in the UK is very worrying.... from an economic standpoint we prefer being French than British."
More European economic gloom this lunchtime -- this time from Ireland, where the economy has just suffered its fastest decline in two years.
My colleague Lisa O'Carroll has the details:
Central Statistics Office figures show a sharp quarterly fall of 1.9% in gross domestic product during the three months between July and September. This fell significantly short of expectations of a 0.5% drop for the quarter
The fall comes despite continued growth in exports and reflects the lack of growth in the domestic economy depressed by the lack of consumer spending and cutbacks in government expenditure as a result of last year's austerity budget.
Gross national product, which excludes the profits generated by multi-nationals was down by 2.2%.
The CSO said there had been a 20% fall in investment compared with the previous quarter, figures which can be heavily influenced by the purchase of valuable aircraft.
"Overall these figures again highlight the two-speed nature of the Irish economy with domestic demand still very weak and exports the only real shining light," said Alan McQuaid, chief economist at Dublin based Bloxham stockbrokers.
Bloxham has now downgraded its overall forecast for the year. Yesterday it was predicting GDP growth of 1.1% for both 2011. Today, McQuaid said that even allowing for "the erratic and volatile nature of industrial output" the projections look overly optimistic" and he is now forecasting 0.5% for this year.
Phillip Inman, our economics correspondent, argues that the slump in Irish GNP undermines Irish finance minister Michael Noonan's "confidence trick" - that the Irish people are best served by remaining in the eurozone.
Obviously it is not an unusual stance. It is the same message from every indebted government in the eurozone.
Irish ministers love the popular T-shirt slogans "Ireland isn't Greece" and "Ireland isn't Portugal". The trouble is, Dublin is closer to Lisbon and Athens than Noonan cares to admit.
More here.
In France, the criticism of Britain's economy in recent days is even alarming the right-of-centre Le Figaro, which warned in a headline that "Franco-British relations become even more strained."
Our Paris correspondent, Kim Willsher, writes that:
French politics descended to the level of the school playground as two cabinet ministers and a senior bank official were reduced to shouting names at Britain from across the Channel.
Having sidelined Britain over a new treaty designed to save the crisis-hit eurozone a week ago, the French launched an ours-is-bigger-than-yours row over the state of each country's economy.
Kim flags up that French prime minister François Fillon also took a pop at the UK during a during a visit to Brazil, saying
Our British friends have a higher deficit and debt [than us] but it seems the ratings agencies have not yet noticed.
Breaking news from Italy -- Mario Monti has won a confidence vote over his government's budget plans, including a €33bn austerity plan.
Monti triumphed by 495 votes to 88.
A second vote will take place tonight, but as we explained earlier, that should now become a formality.
The old urban myth that you're never more than six feet away from a rat has a modern rival -- you're never more than six weeks away from a European summit.
European Voice is reporting today that Herman Van Rompuy is hoping to hold a new summit of the EU's national leaders at the end of January or early February.
The summit will "discuss the text of an inter-governmental treaty designed to boost economic discipline in the eurozone."
According to European Voice:
Van Rompuy has invited all 27 member states to join a working group which will draft the text of the fiscal compact treaty, including the UK even though it is refusing to sign up to the new treaty.
A first draft of the treaty is expected to be ready at the start of next week and the working group should start work next week.
News from Germany -- eurosceptic members of Angela Merkel's coalition have failed in an attempt to unstitch the European rescue plan.
An internal vote among the Free Democrats party defeated attempts by the eurosceptic wing of the party to block the creation of the European Stability Mechanism (ESM).
The result will be a relief to Merkel. The Free Democrats are the junior partner in her coalition -- had the referendum opposed the ESM (the eurozone's future rescue mechanism) it was hard to see how they could remain in government.
The French war of words against the UK in recent days has stirred up quite a bit of unhappiness in the UK.
Christian Noyer's claim yesterday that the UK didn't deserve its AAA rating caused particular disquiet in the corridors of power - with one UK Treasury official hissily telling the Financial Times that "The markets clearly don't agree with Noyer."
Should France end up being downgraded, I fear the news may be greeted with little sympathy in 'Perfidious Albion'.
Conservative MP Douglas Carswell, though, has warned against being too smug about France's predicament. He blogged this morning that Britain still has a problem with debt (one of Noyer's arguments), and isn't generating the economic growth needed to deal with it.
Here's a flavour:
Our debt reduction strategy isn't cutting debt. Our growth strategy has produced no growth. Indeed, our debts are no increasing faster than our GDP. Sound familiar?
Like some of those Eurozone countries, market distortions are allowing us to keep on borrowing long after it became imprudent to do so. In their case it was the fantasy that Greek, Spanish and Italian debt was the same things as German and Finnish debt. In our case, it is the fantasy that this bond bubble will last.
The laws of maths apply in any language. We must not get cocky. Without a change in direction, we are heading for trouble too.
The full blogpost, is is here.
The gap between French and British government debt has narrowed this morning -- following Francois Baroin's claim that:
The economic situation in Britain today is very worrying, and you'd rather be French than British in economic terms.
British readers shouldn't panic, though. Although the yield on 10-year gilts has risen slightly, it is still very low in historic terms at just 2.12%. The French equivalent debt is trading at a yield of 3%.
We've seen more evidence this morning that Europe's economy is staggering towards a recession.
The latest trade data showed that the Eurozone's external trade surplus shrank to just €0.3bn in October, from €2.2bn in September. Alarmingly, exports fell by 1.9% month-on-month and imports contracted by a lesser 0.7%.
Economists warned that the sharper drop in exports shows that European manufacturers are suffering from the global slowdown.
Howard Archer, European economist at IHS Global Insight, said there is now a danger that "net trade will be negative in the fourth quarter, thereby adding to the already high risk that Eurozone GDP will contract."
Conservative MP Bernard Jenkin has defended Britain against the volley of criticism from France over the past few days.
Speaking on the BBC's Today Programme this morning, Jenkin - something of a eurosceptic - said:
The problem France is going to have is if countries like Greece start to fall out of the euro, which virtually everyone now accepts is inevitable, the euro may well start to rise in value and begin to look more and more like the deutschmark, in which case France is going to be in an even less competitive position.
They are paying the price for first of all joining the euro and ballooning their debt with lots of cheap money and now they are in the same position as all the countries in the euro - that they are not really competitive in essentially an extended deutschmark.
Jenkin also admitted that the UK's AAA rating would be vulnerable if the eurozone collapsed. He said:
I don't think there is any guarantee the UK will keep its triple A rating. If the euro goes down and we suffer a decline in economic growth as a consequence, our rating may well be affected. But we do have flexibility, we have our own central bank, we can set our own interest rates.
Over in Italy, Tom Kington reports that Silvio Berlusconi is continuing to stir things up now he's out of office:
Just when you thought Silvio Berlusconi had faded from the scene, he was back yesterday, promising at a press conference his party would back Mario Monti's confidence vote on his austerity budget today, but warning the prime minister's technical government could collapse any day.
The result of the vote of confidence is expected at noon, while a second vote on the actual text of the law will take place in early evening, with the result expected at 7.30pm. The confidence vote is expected to pass, at which point the later vote becomes a formality.
Tom continues:
Berlusconi's dig at Monti was however clearly designed to remind him he depends on the former prime minister's votes in parliament. And Berlusconi's refusal yesterday to criticise the privileges enjoyed by Italy's taxi drivers and chemists suggests it is his party members who are helping Italy's entrenched lobbies fight off Monti's bid to open them up to competition.
Monti knows he must follow up his cuts – designed to reduce Italy's budget deficit -- with such liberalisation measures to spur growth, particularly after employers group Confindustria on Thursday cut its growth forecast for Italy in 2012 to minus 1.6 percent and said the country was already in recession.
Peter O'Flanagan of Clear Currency is unimpressed by France's regular barracking of the UK this week (culminating in finance minister François Baroin's criticism this morning):
David Cameron's veto of a reformed EU Treaty has now clearly turned into a playground spat as French authorities attempt to deflect interest from their pending downgrade from AAA status.
Amid the escalating barrage of criticism of the UK from Paris, there are signs of optimism in the financial markets today. Spanish and Italian government debt has risen in value, pushing down the interest rates (or yield) on the bonds (to 6.7% for Italian 10-year bonds, and 5.2% for Spain).
With stock markets also relaxed (the FTSE 100 is up 36 points at 5437), we could see a calm end to a tense week....
Sacré bleu! France's finance minister has just claimed that it is better to be French than British, when it comes to the economy,
Continuing the war of words that began yesterday when French central bank governor Christian Noyer claimed the UK, rather than France, should lose its AAA rating, François Baroin told the Europe 1 radio station this morning that the economic situation in the UK as "now very worrying", so:
On préfère être français que britannique en ce moment sur le plan économique.
Which roughly translates as:
We'd rather be French than British now, economically.
Entente cordiale is clearly cancelled for Christmas. Downgraded to Entente hostile perhaps?
Baroin was speaking after France's national statistics body INSEE warned that the country is now in a shallow recession. He insisted that:
We will achieve our deficit-reduction targests just as we said.
A week may be a long time in politics, but David Cameron's decision to veto EU treaty changes last Friday continues to reverberate.
In today's Financial Times (registration) Ed Miliband accuses the prime minister of an "act of economic vandalism", and questioned Cameron's claim that he had protected Britain's interests:
He didn't get anything for the City of London, he left the City of London marginalised.
The Labour leader also argued that Cameron "doesn't understand the forces he's unleashed" among his more eurosceptic backbenchers,
He's reaped the whirlwind of the last five years and of his failure to modernise the party on Europe.
Miliband remains unclear over exactly how he would have played his cards during the summit, but insists that Cameron failed the key litmus test -- "the French seem delighted with the outcome".
In the City, shares are expected to open a little higher. That's despite Fitch's decision late last night to downgrade eight of the world's biggest banks, including Barclays (more details in yesterday's blog).
Peter Stanhope of IG Markets explained that:
Equity markets remain relatively upbeat with traders across Asia focusing more on the generally positive data that's continuing to emerge from the world's largest economy.
The Italian parliament is expected to vote on Mario Monti's emergency budget at around 11am GMT (noon local time) with a second vote due tonight. The vote has been called in an attempt by Monti to speed up the implementation of his austerity package, and to reassure the financial markets that he can make the changes he has promised.
It's less than six weeks since Berlusconi's own reign as Italy's prime minister was sunk by another confidence vote. Hopefully today's will be less dramatic.....
The budget should be passed -- as neither Silvio Berlusconi's centre-right PDL party or the centre-left Democratic Party wish to be blamed for inflaming the crisis. But Michael Hewson, market analyst at CMC Markets, believes the vote could still cause volatility in the markets.
Good morning, and welcome to another day of rolling coverage of the eurozone crisis.
Yesterday's warning by Christine Lagarde that the world risks a repeat of the depression of the 1930s continues to reverberate around the financial markets today. It dominates most of the UK front pages today, alongside France's broadside attack on the Britain's AAA credit rating.
It's now eleven days since Standard & Poor's warned it could cut France's credit rating by two notches -- can the Gallic Triple-A last another day? We'll also be watching events in Italy, where Mario Monti's government of technocrats faces a confidence vote over its emergency budget plans.
And two of Europe's top central bankers, Mario Draghi and Mervyn King, will both be speaking at a conference in Rome later today.