EURO ZONE LEADERS TO FOCUS ON DEBT AND EGYPT - EU leaders gather in Brussels this morning for a council meeting which will be dominated by the ongoing euro zone debt crisis and turmoil in Egypt. Leaders will also consider how to improve Europe's energy supply, as well as job creation proposals from EU Commissioner Máire Geoghegan-Quinn.
Phyllis Reed - head of economic, fixed income and currency research at the London office of Kleinwort Benson - says there is a risk that communication between the states in danger of breaking down. She says the summit will debate whether it can and should increase the size of European Financial Stability Facility (EFSF). The issue of possible harmonisation of tax rates may also be discussed with Ireland's low rate of corporation tax under scrutiny. She says the union works on a give-and-take basis and states who are contributing substantially to the bail-out funds want to see the smaller bailed-out countries give something back. She acknowledges that more fiscal austerity measures for peripheral states may be hard but are necessary.
Ms Reed says that the Opposition parties here are very concerned at the interest rates charged on the loans - about 5.8% - and rates which are higher than those charged to Greece. The Opposition would like to see them reduced and the term of the loans extended. She believes it may be possible for some renegotiation and make some progress towards a more affordable interest rate.
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MORNING BRIEFS - Spain auctioned sovereign debt yesterday, and while the auctions were not massively oversubscribed by investors, the yield on Spanish three and five year money yesterday was 0.5 points lower than when Spain's last auction took place in early December. The risk spread or the margin between Spanish debt and the German bunds was is at a three month low.
*** The American Chamber of Commerce, which lobbies on behalf of US multinationals, reminds us that our corporate tax rate of 12.5% remains a sovereign issue and efforts to raise it must be realised. It says the EU needs Ireland to be able to repay its bail-out funding and maintaining the rate puts us in the best position to do that.
*** Permanent TSB, which yesterday confirmed it will be raising its standard variable rate by a percentage point, has said it will also suspend new fixed rate business for a period today while it reviews pricing. It says that fixed rates represent a small and declining percentage of its mortgage book.
*** The UN's Food and Agricultural Organisation says that world food prices rose to a record high in January, up 3.4% compared to December - the seventh consecutive monthly rise. The organisation's wholesale price index, which measures the cost of a basket of basic foods, averaged 231 points last month. That is the highest since records began two decades ago.
*** The first local company to list on the Rwandan stock exchange successfully completed its IPO yesterday. It involved the sale of 25% stake in the country's brewery Bralirwa. The brewery is licensed by Diageo to brew Guinness. Bralirwa becomes the third company overall and the first Rwandan company to list in the country. Two Kenyan companies, Kenya Commercial Bank and Nation Media Group, listed on what was at the time the Rwanda over-the-counter market, are now also on the official Rwanda stock exchange.
*** On the currency markets, the euro is worth $1.3635 and 84.5 pence sterling.
