21.05 The bell just rang out on Wall Street, signaling the end of the day's trading.
It was a volatile day, with stocks spending time both in the red and the black. But most managed to hang on to the majority of their gains.
Traders felt that Europe was taking steps towards fixing the eurozone debt crisis - with Germany, Cyprus and Estonia ratifying EFSF changes - although fears remained that there was still much to be done before the global economy could return to stability. Better-than-expected US economics figures also did their part to raise optimism.
The Dow Jones ended the day 1.3pc up, the S&P 500 rose 0.81pc and the Nasdaq was off 0.43pc.
20.33 Estonia has now approved its EFSF agreement - the third country to do so today, after Germany and Cyprus.
If you scroll back down to 15.50 you can see one of the country's MPs calling the Greek people "lazy losers", so it is quite an achievment that this was passed without more debate...
That just leaves Austria, which decides tomorrow, Malta, the Netherlands and Slovakia.
20.04 The International Herald Tribune is running two debt crisis stories on their front page tomorrow.
"Victory for Merkel on euro zone aid," reads one headline, on the German chancellor's success in passing changes to the EFSF through tha nation's parliament today.
While the other says: "Easy fix? Probably not for today's debt crisis".
Thanks to the BBC's Nick Sutton on Twitter for posting the image online.
19.40 A tweet here from Zero Hedge, suggesting that there could be another Merkel/Sarkozy rendezvous on the horizon.
Sweet: more rumors of a meeting. This one will FIX.IT. ALL: Sarkozy, Merkel May Meet Oct. 1 in Paris, Le Monde Website Says
19.18 With a little under two hours of trading left on Wall Street what was a promising day following better-than-expected economic figures has just turned south.
The Dow Jones is now up just 0.27pc, while the S&P 500 is off 0.35pc - it was as high as 1.22pc just a couple of hours ago - and the Nasdaq is down by 1.78pc.
In more bad news for the US, the government is being lampooned by bloggers after two federal employees were hurt when a backup of air pressure caused two toilets to blow up at the General Services Administration's regional headquarters in Washington.
"A new way to get government employees off their butts. Now we need to install the same equipment in the halls of Congress," wrote one Huffington Post blogger.
19.02 Daniel Hannan, Conservative MEP for South East England, has written a blog today on whether or not survival of the euro is in our best interest. Not necessarily, he says:
The prosperity of the eurozone plainly is in our interests: it absorbs around 40pc of our exports, and comprises countries which are our friends and allies. But the survival of the euro and the prosperity of its constituent nations are two very different things.
True, the break-up of the euro would involve costs. But it's becoming obvious that the costs involved in holding it together are much higher.
18.39 Austerity is the only way forward for Europe says Latvian Prime Minister Valdis Dombrovksis, a man who is well qualified to speak on recession.
The small nation was battered in the crisis of 2008, but has managed to push growth targets to 5pc this year after years of brutal austerity measures.
Speaking to AFP, he said:
We had this debate in Latvia, that it's a bad idea to cut expenditure during a crisis, it's a bad idea to raise taxes, so let's wait until the economy stabilises.
But unfortunately this logic doesn't function for one simple reason. Financial stability is a precondition for economic growth. Our lesson is that you have to frontload this adjustment, do it quickly.
What's happening in Greece is that they are trying to delay this adjustment. But apparently they are not doing enough to convince markets and to convince pretty much everyone. These delaying tactics are not working.
18.09 More news from Fitch today. Earlier on they were warning that French banks could face a downgrade, and now they've bumped New Zealand down one notch to AA.
17.38 A quick update on Wall Street, which is fluctuating but remains up a healthy amount on the day. The Dow Jones is up 1.69pc, the S&P 500 by 1.22pc and the Nasdaq a more modest 0.26pc.
17.20 The pieces are all falling into place today to get the EFSF changes approved...
German chancellor Angela Merkel managed to push through the plan without needing to rely on support from the opposition, Estonia is making plenty of reluctant noises but at least taking steps toward ratifying the upgrade and now Cyprus has also passed the changes.
That just leaves Austria, which decides tomorrow, Estonia, Malta, the Netherlands and Slovakia.
16.43 The European markets have now closed. And while most of Europe can celebrate a day of modest gains, along with Wall Street during morning trading, London dropped into negative territory.
Good economic news from the US had cheered markets around the globe - with the exception of the FTSE.
The FTSE 100 ended the day 0.4pc off, but the CAC rose 1.07pc and the DAX was up 1.1pc.
16.32 After meeting German Chancellor Angela Merkel on Tuesday, Greek Prime Minister George Papandreou is set to talk to Nicolas Sarkozy in Paris tomorrow.
The meeting at 3pm GMT is a chance for the pair to discuss "the situation that Greece is currently going through". What else?
16.20 Talks between Greece and the troika started up again today, and the mood was "positive" according to a finance ministry statement.
The climate was positive and creative after the tough measures that were decided.
16.14 An interesting and concise tweet from the BBC's business editor, Robert Peston, here: "Where economics is now". Accompanied with this image:
15.50 An Estonian politician has criticised the Greek public for being "lazy losers".
Lawmakers in the country have been debating proposed changes to the EFSF for days now, with some believing they could be unconstitutional. To get around this, a modified bill has now been put forward that sends any application for EFSF funding to parliament for approval.
Estonia's share of the EFSF would account for fractionally less than €2 billion. But the thought of handing out that cash has provoked anger. Reform party MP Tarmo Leinatamm said:
It is very hard for me, and for all of us, to explain to Estonia's inhabitants who earn many times less why we should support citizens from EU countries where people earn 2,500 or 2,600 euros a month.
Juku-Kalle Raid, an MP from the coalition's junior party, Pro Patria and Res Publica Union, went one step further:
I think I will vote against it. It is really strange that Estonia, where incomes are lower than in Greece even after its cuts, should pay for these lazy losers.
15.25 Ratings agency Fitch has warned that French banks could be downgraded on concerns over exposure to eurozone debt.
BNP Paribas, Societe Generale and Credit Agricole shares have been volatile recently, with traders optimistic that the debt crisis was in good hands one day, then fearful of a Greek default the next.
A Fitch statement said:
Concerns about French banks are mostly centred on their exposure to southern European countries. French banks have the most cross-border sovereign and non-sovereign exposure to Greece, Italy, Ireland, Portugal and Spain.
While exposure to Greece, Ireland and Portugal is modest, inclusion of Spain and, in particular Italy, significantly increases the totals. The collective impact of negative market drivers and corresponding fundamental factors reinforces enhanced downside pressure on ratings of the large French banks, along with many of their European peers.
14.50 Markets are really rallying now, with the exception of the FTSE 100, which is up but only by 0.4pc, compared to the 2.3pc climb on the Dow Jones in New York and a 1.8pc rise in French stocks.
The good economic news from the US today was welcomed by traders.
Billionaire investor Wilbur Ross told Bloomberg Television that markets have already priced in a lot of bad news in recent months, with the Dow down 11pc since the start of July. He said:
I think our markets have fairly well priced in all but the most draconian of scenarios. Unless something really calamitous happens [such as a default of a larger European country like Spain or Italy], short of that I think we've pretty well priced things in.
14.35 Wall Street is now open for the day:
The Dow Jones is up 1.8pc at 11,203 points, and the S&P 500 climbed 1.7pc as trading opened.
And European markets are also trading higher this afternoon:
The FTSE 100 is up 0.6pc at 5,247 points, while the CAC added 1.9pc in France and the German DAX is up 1.8pc.
14.00 And a second piece of good news from the US - the number of people claiming unemployment benefits fell more than predicted.
The number of new applicants for benefits fell by 37,000 last week to 391,000, the lowest figure since April.
However, there's a but - the US Labour Department said the size of the fall was probably down to an unusual calender alignment, which made it harder to make an accurate year-on-year comparison...
13.45 The US growth figures for the second quarter have come in and they are in line with forecasts.
As forecast for economists, US GDP increased by 1.3pc in the second quarter, revised estimates show. That's faster than the 1pc growth estimated last month.
Exports and spending on services picked up, according to the Commerce Department numbers.
13.35 Reports of a disagreement between the European Commission and the group of leaders from the various member states (the European Council) over what to do about the eurozone crisis.
From Paul Mason of the BBC's Newsnight:
@paulmasonnews I am told European Commission at wits end with European Council, who "do not get it": Commission look for ways 2 avoid debt-deflation doom
13.15 Banks are coming under pressure to raise their capital levels even higher - Bank of England Monetary Policy Committee member David Miles has said capital buffers should be more than double the minimum level set out by the latest regulations.
Mr Miles believes banks should hold 18 to 20pc of their risk-weighted assets in the form of equity, compared with the 7pc required under Basel III rules coming into force between 2013 and 2019.
13.00 Telegraph political commentator Janet Daley has responded to the resounding vote in favour of expanding the eurozone bail-out in Germany. The decision by parliament "ignores the people". She writes:
In the face of huge public resentment, Germany's political class has decided to put "saving the euro" above all other considerations.
Its obligation to its own national electorate has been deemed inconsequential in this hopeless last-ditch attempt to salvage an unworkable system.
12.20 Spain has had to abandon the stock market flotation of its highly lucrative national lottery, because of the opposition of banks and politicans.
Famous for its "El Gordo" (the Fat One) bumper prize each Christmas, state-owned Loterias planned to float a 30pc stake on the stock market, with the aim of raising €9bn for indebted Spain.
But banks are opposed to the plan because they feared cash-strapped Spaniards would put their money into lottery shares rather than depositing it in the bank, according to Reuters. The banks need that money to shore up their balance sheets.
The IPO was also opposed by the centre-right People's Party, who are expected to win the general election in November.
12.15 Of the 17 nations using the euro, 11 have already approved the vote. They are: Germany, Finland, Belgium, France, Greece, Ireland, Italy, Luxembourg, Portugal, Spain and Slovenia.
The countries who have yet to cast their votes are Austria, which decides tomorrow, Cyprus, Estonia, Malta, Netherlands and Slovakia.
12.00 A tiny bit more politics - it seems German Chancellor Angela Merkel won the vote on expanding the eurozone bail-out programme (see 10.20 post) without needing to rely on the support of the opposition.
She secured a narrow majority from her own side, with 315 members of the coalition voting in favour, more than expected.
11.45 It's back to business as usual in Berlin, says Sky's economics correspondent and Telegraph contributor Ed Conway:
@EdConwaySky So Germany's brief flirtation with edge-of-seat politics comes to an end as EFSF is approved with a comfortable majority
11.20 So it's a sigh of relief for Chancellor Angela Merkel, with a resounding majority in Germany for the expansion of the bail-out fund. However markets have taken the announcement in their stride.
The euro rose 0.9pc against the dollar, and markets in France and Germany extended their gains slightly, trading up 0.8pc and 0.7pc respectively.
However the FTSE 100 carried on as it was, pointing lower. Our markets reporter Rachel Cooper tweets:
@cooperrachel German parliament backs more powers for European bail-out fund, but #FTSE 100 underwhelmed - down 25 points to 5191
11.13 BREAKING The German parliament has backed the expansion of the European bail-out fund.
Reuters reports 523 politicians voted in favour of it, 85 opposed and three abstained.
11.00 German MPs are casting their votes now so we should have an answer shortly. New ITV business Editor Laura Kuenssberg is in Germany and reports "Merkel looks jolly".
@ITVLauraK Merkel looks jolly - they have to put ballot papers into ballot boxes, so unlike ayes and noes at westminster might take a while to count.
10.40 European markets are showing a mixed picture this morning:
The FTSE 100 is still down, off 0.6pc at 5,187 points. However the CAC is up 0.5pc in Paris and the DAX has climbed 0.5pc in Germany.
10.20 Just to recap, here are the key measures the Germans are voting on today - as agreed by European leaders at a summit in July and now subject to the agreement of national parliaments:
• Expanding the power of the EFSF (bail-out fund) so that it can buy government bonds in the secondary market and lend money to governments to recapitalize banks.
• An extra €109bn (£95bn) for bailing out Greece
• Private investors, ie. banks and insurers, agreeing a debt 'swap' with Greece, which amounts to a 21pc cut in the value of the debt they hold.
10.15 The debate in the German parliament is dragging on, so it will be a bit later than 10.15 when the vote arrives (thanks to ITV's Laura Kuenssberg for this info via Twitter).
10.00 Noone could accuse Greek Prime Minister George Papandreou of not trying - after his meeting with German business leaders and Chancellor Merkel on Tuesday, tomorrow he's off to France to catch up with President Nicolas Sarkozy.
09.45 Some good news! Unemployment in Germany fell more than expected this month, with 26,000 fewer unemployed people compared with the 8,000 drop expected by economists.
That takes the country's unemployment rate to 6.6pc, down from 7pc in August.
09.30 And speaking of doom - Telegraph commentator Jeremy Warner has called on the eurozone's leaders to acknowledge that the euro is at the root of the region's problems.
As it stands, the single currency has become a doomsday machine, driving Europe and the rest of the world ever closer to financial collapse.
Angela Merkel this week insisted that this is not a euro crisis at all, but a debt crisis. She's half right: the imbalances at the heart of the eurozone are part of a global problem which affects Britain and the US almost as badly as Spain or Ireland.
But what the euro has done is fan the flames, as well as removing the mechanisms with which free-floating currencies can correct such problems.
09.15 Doomsday scenario of the day - Europe's debt crisis will lead to an economic slump, a financial meltdown and social unrest in the next year, investors surveyed by Bloomberg say.
Some 72pc of the 1,031 investors, analysts and traders from around the world believe one country will exit the eurozone within the next five years. And 40pc expect a euro-nation to go it alone in the next year.
And the icing on the cake? Three-quarters of investors expect the eurozone to go into recession in the coming year.
09.10 The German parliament is due to deliver its vote on expanding the bail-out fund at about 10.15 this morning.
08.55 The private letter sent to Italian Prime Minister Silvio Berlusconi by the leaders of the European Central Bank, ordering him to take action on the country's debts has been published in the newspaper Corriere della Sera.
Courtesy of the BBC's Robert Peston on Twitter, read a translation here of the seven direct orders dished out by the ECB, shortly before the central bank started buying Italian debt in order to drive down the country's borrowing costs.
I won't recite the whole thing here, but here is the summing up by the ECB's Jean-Claude Trichet and Mario Draghi:
We regard as crucial that all actions listed in section 1 and 2 above be taken as soon as possible with decree-laws, followed by Parliamentary ratification by end September 2011. A constitutional reform tightening fiscal rules would also be appropriate.
What will Italian voters make of the ECB over-ruling their democratically-elected government in this way?
08.45 While all eyes have been on the eurozone, with the occasional Glance at the US, our International Business Editor, Ambrose Evans-Pritchard, today reports that a funding crunch has reached Asia, Latin America and Eastern Europe.
While China dances to its own tune, fears are growing that a global relapse could strike as the country's debt excesses come back to haunt it.
The International Monetary Fund (IMF) warns that emerging markets face the risk of "sharp reversals" in capital flows if Europe fails to contain its debt crisis.
The process has already begun. The currencies of Brazil, India, Indonesia, Korea, South Africa, Turkey, Poland and Hungary have all plunged over the past month, some by 10pc or more, dashing the hopes of a "decoupling" from the travails of the Old World.
08.10 Nick Clegg, the deputy prime minster, is in Poland today for talks with other European leaders including Angela Merkel, where he will give a major speech on the EU.
He is expected to say:
The danger we face is of change leading to fragmentation. That we become divided, turning away from each other, both within the European Union and with our partners who are not, or not yet, members of it.
His remarks contrast pretty strongly with those of the Foreign Secretary, William Hague, who says in this week's Spectator that "the EU does have too much power".
He also described the euro as a "burning building with no exits".
Another harmonious day for the Coalition then.
08.05 As predicted, markets have opened lower:
The FTSE 100 was off 36 points, or 0.7pc, at 5,181 shortly after trading started.
07.50 Time for a look at this morning's business pages:
The Telegraph: Banks urged to cut bonuses and dividends
The Times: Wrangle over £500m bait for Northern Rock bidders
The Financial Times: Business lashes out at Tobin tax plans
The Guardian: FSA demands seat in board meetings of highest-risk City firms
07.40 Looking ahead to the market opening in Europe, here is what the futures traders are betting:
The FTSE 100 is set to fall 0.8pc, while the CAC is expected to trade 0.5pc down in France and the German DAX to lose 0.6pc.
07.35 We'll also be getting some important economic statistics from the US later today - GDP figures for the second quarter, and unemployment numbers.
Ben Bernanke, the chairman of the US Federal Reserve, has made some unusally outspoken remarks about the problem of unemployment in the US. he said the numbers of long-term unemployed has become a "national crisis".
This is unheard of. This has never happened in the post-war period in the United States. They are losing the skills they had, they are losing their connections, their attachment to the labor force.
He called on the government to do more to address the problem of long-term unemployment. Some 45pc of Americans who are out of work have been so for six months or more.
07.25 Raw materials prices have fallen again, with the outlook for global growth weakening, as investors struggle to see where demand will come from.
Copper fell 5.9pc to $6,821 a metric tonne, and other industrial metals including aluminium and zinc also declined.
Commodities are heading for their wors quarter since 2008, Bloomberg reports today, on concern the failure to contain the eurozone debt crisis will hurt growth in the rest of the world.
07.20 The big event on the eurozone calender today is in Germany, where parliament will vote on giving more power to the European Financial Stability Facility (EFSF), aka the bail-out fund.
These are the measures agreed back in July - but many German politicians are concerned agreeing to the expansion will open the door for even more financial support for Greece and other indebted nations.
Finland's parliament approved the expansion of the EFSF yesterday, becoming the ninth country in the euro area to do so, and briefly lifting some uncertainty over the issue, which has been dogging financial markets since late July.
07.15 Asian shares have had a lacklustre day, as investors were held back by doubts about Europe's ability to stem its worsening debt crisis.
Japan's Nikkei 225 rose 1pc after falling 1pc earlier, while Australia's S&P/ASX 200 fell 0.8pc. Trading in Hong Kong was suspended due to an approaching typhoon.
Investment sentiment was hindered by remarks from German Chancellor Angela Merkel yesterday afternoon suggesting that the second bailout package for Greece might have to be renegotiated.
Several European leaders want banks to take bigger losses on Greek bonds, but France and the European Central Bank oppose the idea.
On Wall Street yesterday, the Dow Jones fell 1.6pc to close at 11,010.90 and the S&P 500 lost 2.1pc.
The declines followed three days of gains.
Stocks rose earlier this week on hopes that Europe was moving closer to resolving its debt problems.
07.10 Good morning and welcome back to our live coverage of the continuing global debt crisis. Log on throughout the day for the latest news and views.
Read all our latest news on the financial crisis, or take an in-depth look at events over the past month.
Debt crisis live: archive
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