ANOTHER KEY DAY IN EURO ZONE CRISIS - Events in Frankfurt and Athens today will be closely watched here to see what impact they could have on us. In Frankfurt, Finance Minster Michael Noonan will hold talks with the President of the ECB, Mario Draghi. The two men will be discussing ways to reduce Ireland's debt burden. In Brussels, EU Finance Ministers have been meeting and in Athens talks are continuing to agree a restructuring deal with private Greek bondholders after it was sent back for further negotiations by euro zone finance ministers.
Justin Urquhart-Stewart, director of Seven Investment Management in London, says the latest rejection by euro zone finance ministers of the deal on Greek debt is a serious development. He says that hanging over the talks is the question of whether Greece can afford the repayments at all. The analyst says the talks at this stage could still go either way, but the sooner the better a decision is reached so as to bring certainty to the euro zone as a whole.
European stocks closed at their highest level since August yesterday and the analyst says that this is due to the big corporate companies still doing rather well on profits and revenues with companies building up cash positions. But he says that they are not making any big investments because of the euro zone debt crisis and the uncertainty that brings. He says that while the euro zone is still facing a crisis on both the debts and lack of political leadership fronts, banks are in a better place than they had been. He says that a bit of confidence is creeping back into the markets, but warns that we must not be over confident that the crisis is coming to an end.
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MORNING BRIEFS - Analysts will be keeping an eye on European stocks again today after a relatively good day yesterday when they hit their highest close since early August. Euro zone banks gained sharply after a report that France and Germany were calling for a relaxation of global bank capital rules to prevent a credit crunch. The German Finance Minister, Wolfgang Schaeuble, has denied the story. However banks including Commerzbank, SocGen and UniCredit all made gains.
*** India's central bank has said the outlook for the Indian economy has weakened more than expected. However inflation in the country remains high, ahead of an interest rate decision. Inflation rose at over 7% in December, which despite being a two-year low is still well above government targets. The Reserve Bank of India has raised key rates 13 times since March 2010 to curb consumer prices.
*** Carphone Warehouse, Europe's biggest independent mobile phone retailer, said it would make forecasts for year earnings even though underlying sales fell over the Christmas quarter. It said said sales at European stores open over a year fell 4.7% in the three months to December 31.
*** On the currency markets the euro is trading at $1.30 cents and 83.68 pence sterling.
