German Chancellor Angela Merkel has sought to calm market nerves over a possible Greek debt default, saying the eurozone must stick together. The collapse of Greece and its exit from the euro would have a domino effect, she told German radio. Her comments came after reports that Germany was preparing for Greece to potentially leave the euro. Fears of a Greek default caused sharp falls in shares on Monday, but markets ultimately rose on Tuesday. Read More
Angela Merkel tries to allay Greece default fears
Jobs Act: Obama plan eyes taxes on rich
US President Barack Obama is proposing to pay for his $447bn (£282bn) jobs plan with taxes on the wealthy. Republicans objected to the proposal, saying the president wanted to bill “job creators”. Read More
European and US shares rise in volatile trading
European and US shares rise in volatile trading
Shares have risen on both sides of the Atlantic in a day of volatile trading on the stock markets. Despite continuing concerns about weak economic growth and high levels of national debt in both the US and eurozone, the UK’s FTSE 100 index ended up 1.9%, while France’s Cac added 1.6%. Read More
Shell says North Sea oil spill is under control
A plane has been monitoring the water's surface around the platform
Oil giant Shell says a leak in a North Sea pipeline is under control. A leak in a flow line leading to the Gannet Alpha oil platform, 180 km (113 miles) east of Aberdeen, was found on Wednesday. Read More
Google to buy Motorola Mobility for $12.5bn
Google to buy Motorola Mobility for $12.5bn
Internet giant Google has announced a deal to buy Motorola Mobility for $12.5bn (£7.7bn). A joint statement said the boards of both companies had unanimously approved the deal, which should be completed by the end of this year, or early in 2012. Read More
Four EU nations ban short-selling on banking stocks
French banking shares have been most affected by the recent market turbulence
France, Italy, Spain and Belgium have banned short-selling on the shares of banks and other financial companies. It follows sharp gains and losses in bank stocks in recent days, especially in France, on fears about their exposure to eurozone government debt. Read More
Chinese authorities find 22 more fake Apple stores
Fake iPhones are displayed at a mobile phone stall in Shanghai August 11, 2011.
Authorities in China’s southwestern city of Kunming have identified another 22 unauthorized Apple retailers weeks after a fake of the company’s store in the city sparked an international storm. Read More
European stocks up after US Fed puts rates on hold
Simon Derrick from Bank of New York Mellon says 'this is good news for the stock market'
European shares have risen after the US central bank said it was likely to hold interest rates until 2013. Read More
ECB to buy Italian, Spanish bonds to stop contagion
The ECB headquarters is pictured in Frankfurt, August 4, 2011.
The European Central Bank will intervene decisively on markets to protect Italy and Spain from an accelerating debt crisis, a monetary source said on Sunday, indicating it would buy government bonds of the euro zone’s third and fourth biggest economies. Read More
Emergency talks called to calm global markets turmoil
World leaders fear more turmoil when markets reopen on Monday
The European Central Bank is due to hold emergency talks on whether to start buying Italian debt to contain spreading turmoil on financial markets.
The BBC’s Business Editor Robert Peston says the ECB is split on the move.
Growing worries over debt in the eurozone and the US caused sharp falls on world stock markets last week.
Finance ministers from the G7 major economic powers are also to hold emergency talks on how to calm the markets before they reopen on Monday.
The governing council of the ECB, which includes the central bank governors of all 17 eurozone countries, will hold a telephone conference on Sunday afternoon, the BBC has learned.
According to an ECB source cited by Reuters news agency, the bank’s president Jean-Claude Trichet wants a final decision on whether to buy Italian debt to be made at the meeting.
Middle East markets, which are open for trading on Sunday, lost ground, with Israel’s main exchange dropping by more than 6%.
There are fears that unless leaders can announce a decisive plan of action before Asian and European markets open on Monday, global shares could plunge even further.
Low growth
Italy is the latest and biggest economy to be hit by the eurozone crisis.
The price Italy pays on its government bonds has shot up amid growing doubts it can keep its debt level so high while economic growth is so slow.
Spain, too, has been caught up in the crisis – hammered by high unemployment, high government debt and anaemic growth.
Continue reading the main story “
Start Quote
Although bankers say the downgrading of America’s credit rating was unwelcome, their more pressing worry is the rising price that Italy has to pay to borrow – the falling price of Italian government debt”
End Quote
Robert Peston
Business editor, BBC News
——————————————————————————–
Europe’s Lehman moment?
The high levels of debt coupled with low growth and an uncertain response among eurozone leaders to the crisis has sparked fears that both countries could become engulfed in the same cycle which has led to Greece, the Irish Republic and Portugal already being bailed out.
Last week, European Commission President Jose Manuel Barroso said authorities in the eurozone were failing to prevent the sovereign debt crisis from spreading.
Both Italy and Spain insist they can service their debt.
On Friday, Italian Prime Minister Silvio Berlusconi said he was bringing forward austerity measures and would balance the government budget by 2013, one year ahead of schedule.
Last week, the gap between German bonds – seen as the safest in Europe – and Spanish and Italian debt reached a record high since the euro was introduced in 1999.
There have been rumours that the ECB was preparing to buy Spanish and Italian bonds to try to help those countries. Last week the ECB bought Irish and Portuguese bonds but did not include Spanish and Italian debt in its purchases.
The BBC’s Business Editor Robert Peston says the ECB’s governing council is divided on whether to buy Italian bonds.
A decision not to buy would risk further turmoil in share and bond markets on Monday, he says.
Some analysts argue that investors expected the bank to buy Italian and Spanish debt soon after the eurozone leaders summit on 21 July, and the fact that it has not has undermined confidence in the markets.
Not impressed
Finance ministers and central bankers from the G7 are to hold emergency talks by telephone before markets open in East Asia on Monday morning, aiming to craft a global response on the eurozone debt crisis and ease fears over rating agency Standard & Poor’s downgrading of US credit-worthiness.
Continue reading the main story
S&P ratings (selected)
AAA: UK, France, Germany, Canada, Australia
AA+: USA, Belgium, New Zealand
AA: Spain, Bermuda
AA-: Japan, China
A+: Italy, Chile, Slovakia
BBB-: Portugal, Iceland, Morocco
CC: Greece
Source: S&P
What is a rating agency?
The rating agency Standard & Poor’s (S&P) on Friday downgraded America’s top-notch AAA rating to AA+.
S&P, one of the world’s three major rating agencies, failed to be impressed by a last-minute deal in the US last week to raise the US debt limit by up to $2.4tn (£1.5tn) from $14.3tn.
It staved off a potential US government default on its debt but was only achieved after months of wrangling between Democrats and Republicans in Congress.
The credit rating downgrade is seen as a major embarrassment for President Obama’s administration. It could also raise the cost of US government borrowing.
An economic adviser to the White House condemned the S&P move.
“It smacked of an institution starting with a conclusion and shaping any argument to fit,” said Gene Sperling, the head of President Obama’s National Economic Council.
White House spokesman Jay Carney said on Saturday that last week’s debt deal had been “an important step in the right direction”, but that “the path to getting there took too long and was at times too divisive”.
He said the US must now “do better”.