After a bright start fuelled partly by positive comments about Chinese growth, markets have slipped back from their best levels on disappointment with the latest US manufacturing survey,writes Nick Fletcher.
The FTSE 100 fell 25.73 points or 0.39% to 6597.44
Germany's Dax is down 0.2% at 8314
France's Cac closed 0.43% lower at 3923
Italy's FTSE MIB edged up 0.03% to 16,238
Spain's Ibex added 1.35% to 8073
Athen's market ended up 0.02% at 842
Meanwhile in the US, the Dow Jones Industrial Average is up 20 points ore 0.13%.
And on that note, it's time to close up for the evening. Thanks for all the comments, and we're back tomorrow.
The Ministry of Finance in Nicosia. Photograph: Petros Karadjias/AP Photograph: Petros Karadjias/AP
Over in Cyprus, a government spokesman has told reporters that talks with its Troika of lenders are continuing, with a "difficult" path ahead.
It's nearly a week since officials from the Troika began their assessment of Cyprus's bailout programme. Asked about reports that there are concerns about progress regarding certain structural reforms, Christos Stylianides said:
The Government is patient. It consults with the Troika, the lenders, and will speak out when the consultation is completed. We must not run ahead. The course we traverse is long but we insist on our basic positions. On our part, we are diligent with regard to the implementation of the Memorandum and we think that only through its implementation we can get out of the Memorandum at the earliest.
The consultation with the Troika takes place on a daily basis, it takes place in a very good climate, the road is difficult, but we are waiting for the final evaluation to say what we have to say on our part, and this will in fact be stated by the President of the Republic himself.
It also emerged this afternoon that the Bank of Cyprus is considering splitting itself in two. Asked about this, Stylianides said its new shareholders must decide the future of the bank, which has already cut many hundreds of jobs and seen large depositors 'bailed in' to its rescue package.
While eurozone consumer confidence offered reasons for optimism, the latest US economic data disappointed.
The Richmond Federal Reserve's survey of manufacturing output dropped to -11 in July, sharply lower than June's +8. Particularly alarmingly, the retail sales measure tumbled by 23 points, to -22.
Photograph: European Commission Photograph: European Commission
Morale among consumers in the 17 countries which use the euro has improved, in another signal that conditions may be picking up.
Data released by the European Commission found that eurozone consumer confidence improved to -17.4 this month, better than June's -18.8. It's the best performance since August 2011.
In the European Union, consumer confidence rose to -14.8, from -17.5 in June.
Both readings still show that morale is weak, as you'd expect given the events of recent years – and the challenges ahead. The long-term average is zero (as the graph above shows).
Howard Archer of IHS Global Insight said the data was encouraging. Here's his early analysis:
Eurozone consumer confidence extended its recent improvement in July to be at a 23-month high, likely driven by increased optimism about the economic outlook and a slightly less pessimistic view of the recent economic situation. Consumers were also likely relatively sanguine about the inflation situation and outlook.
Hopefully, improving consumer confidence and the help to purchasing power coming from muted inflation across the Eurozone (just 1.6% in June) will provide increasing support to consumer spending and help Eurozone economic activity to stabilize and then finally start growing over the latter months of 2013.
Even so, a marked overall pick up in Eurozone consumer spending still looks unlikely in the near term at least. Despite being at a 23-month high in July, confidence is still limited compared to long-term norms while Eurozone consumers continue to largely face high and rising unemployment, generally muted wage growth and tight fiscal policy. This is particularly, the case in the southern periphery countries but it is also true for countries such as France and the Netherlands.
Cypriot property prices have taken quite a hoofing since the country lurched into a rescue package in March, a new survey has found.
The Cyprus arm of the Royal Institution of Chartered Surveyors (RICS) calculates that apartment price fell by 12.6% in the last three months. Office space has tumbled by 23.3% during the quarter.
And with capital controls still in place, the only way is down, as Pavlos Loizou of RICS Cyprus explained:
Definitely the market is going to deteriorate further and faster than before. There is no lending available and people's money (in banks) is blocked.
European stock markets continue to be boosted by the encouraging news from Asia overnight.
China's determination to keep GDP growth at 7% or higher, and Japan's upgraded economic forecasts (see 8.15am) has pushed mining stocks up in London - they're packing the list of top risers on the FTSE 100:
And the Spanish stock market is romping ahead, after the Bank of Spain predicted that GDP fell by just 0.1% in the last three months (see 9.44am). Spain also conducted a successful debt auction this morning, with borrowing costs.
That's sent the Spanish IBEX up 1.8%, followed by Italy's FTSE MIB which is up 1.2%.
The FTSE 100 (+0.2%) German DAX (+0.26%) and French CAC (+0.2%) are only posting meagre gains, after Asian markets pushed to six-week highs overnight.
Chris Beauchamp of IG says the City is calm and subdued:
With the eurozone mercifully quiet for now, the main driver remains corporate earnings.
London-listed miners are stretching their legs this morning after some suitably sunny comments from the Chinese premier. Beijing aims to keep growth above 7%; commendable as this is, saying something doesn’t make it true, even if the latest economic data indicated that consumer spending in China was helping to pick up the slack.
The instant reaction – the lira has risen against the US dollar to a one-month high of $1.9090. Turkish government bonds also strengthened, pushing down the yields on 10-year debt to 8.49%, from 8.69% before.
Here's a headline that reeks of Dickensian London: Rise in debtors adds to prison overcrowding
But it's not Victorian history. It's Cyprus today, where the financial crisis is driving more people into jail through non-payment of fines and "other debts".
Prison Governor Giorgos Tryfonides told the Cyprus News Agency (CNA) that efforts were being made to help such convicts pay off their debts in instalments.
“We are trying our best to make plans for payment of debt so an arrangement can be made with the attorney-general to postpone any punishment as long as the instalment is accepted by the plaintiff,” he said.
Due to the crisis, the number of people facing jail for financial reasons is on the rise compared to other years, Tryfonides said, adding on certain days up to five people might be imprisoned for similar offences.
Greek prime minister Antonis Samaras has now met with senior ministers to discuss meeting the country's bailout targets.
Kathimerini reports that Samaras ordered his colleagues to speed up the pace of reforms, ahead of the Troika's next visit in early September. It explains:
Prime Minister Antonis Samaras on Tuesday told key cabinet members in the two-party coalition to speed up structural reforms in the state sector in order to meet the targets set by the country's international creditors, who want to see progress in agreed changes to the public administration as a condition for releasing further life-saving funding.
Meeting at his Maximos Mansion headquarters, Samaras, his coalition partner and Deputy Prime Minister Evangelos Venizelos, and Finance Minister Yannis Stournaras, called for more urgency from the ministers of Interior Yiannis Michelakis, Administrative Reform Kyriakos Mitsotakis, Education Constantinos Arvanitopoulos, Development Costis Hadzidakis and Health Adonis Georgiadis.
Green shoots in Ireland's property sector? For some, anyway.
Irish residential property prices have posted their first annual rise since the financial crisis began.
Ireland's central statistics office reported that property prices rose by 1.2% in June, on a year-on-year basis. That's the first rise since January 2008.
Video: Moscovici saying France is out of recession
Europe 1 has uploaded a video clip of Pierre Moscovici's interview this morning, in which the French finance minister predicts that France's recession is over.
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Back in the UK...there'll be a few celebrations in Cheshire today.
The Volkswagen Group has just announced that its first Bentley sports utility vehicle will be constructed at its headquarters in Crewe, creating up to 1,000 new jobs across the country. Bentley will invest some £800m at the site, VW added.
A nice fillip for the British economy, ahead of Thursday's GDP figures which are likely to show that growth picked up in the last three months.
A date for the diary - Spain's prime minister, Mariano Rajoy, will answer questions regarding the illegal payments scandal in parliament on August 1. More details here.
Yesterday, Rajoy bowed to pressure and announced that he would agree to be quizzed over the affair, centred on a former treasurer of his party accused of siphoning off millions of euros of secret cash payments.
#Spain update. PM #Rajoy at parliament the 1st of August at 9h00 to answer questions on #Barcenas row but also to talk about economy.
Spain's latest GDP forecasts (see 9.44am) bolster hopes that the eurozone will keep muddling through the crisis, argues Simon Nixon of the Wall Street Journal:
Latest Spanish GDP figures confirm economy is turning corner. UBS says "Spain is getting better." #muddlingthrough
In the UK, the British Bankers Association has reported that mortgage approvals rose to a 17-month high of 37,278 in June, up from 36,290 in May.
Quite an improvement on February's 31,109 – the month before UK chancellor George Osborne announced new measures to stimulate the housing market.
Osborne's been meeting with the industry this morning to discuss his Help to Buy Scheme -- which critics claim will fuel a new price bubble.
But as my colleague Rupert Jones reports, planned income checks and "stress testing" means many people with less-than-perfect credit records could be barred from the £12bn scheme.
Spain has now endured a recession for the last two years, but the pace of the downturn is finally slowing, according to official forecasts released this morning.
The Bank of Spain predicts that GDP shrank by just 0.1% in the last three months. That would be a much smaller contraction than the 0.5% drop in output recorded in the first quarter of this year.
On an annual basis, the Bank believes the Spanish economy had shrunk 1.8% over the last 12 months -- again, a small improvement on Q1's reading, of 2%.
The Bank said that 'strong exports' had helped to moderate the pace of the downturn.
We get official GDP data for April-June next month, which will show whether or not the Spanish recession has really lasted for eight quarters, having begun in the second half of 2011.
The Madrid government has pinned its hopes on the recovering beginning in the current quarter.
Bank of Spain says Q2 GDP shrank 0.1% aided by better exports - is this the positive surprise De Guindos was talking about earlier this mth
In Almeria’s Cabo de Gata natural park, one of the few unspoilt stretches left of Spain’s southern coast, Hotel Tio Kiko is close to full. Its owner, Jose Venzal Alonso, isn’t optimistic though.
“I can’t say I see an economic recovery,” the 51-year-old hotel manager says in a telephone interview, speaking with a heavy southern Spanish accent. “All our clients are saying so, that they can’t afford to stay more than three days when they would happily come for six before the crisis. We used to have a full house much earlier in the season.”
France's finance minister Pierre Moscovici. Photograph: GRIGORY DUKOR/REUTERS Photograph: GRIGORY DUKOR/REUTERS
France's finance minister has declared that the French recession is over, hot on the heels of this morning's upbeat industrial morale reading (9.07am).
Speaking on Europe 1 radio, Pierre Moscovici cited forecasts from the Bank of France and INSEE for growth of 0.2% in the second quarter of this year. That would reverse the contraction of 0.2% in the first three months of 2013, which pushed France into Le Double DIp.
Moscovici declared:
Now we need to work to transform this exit from recession into a genuine recovery.
(quotes via Reuters).
France's economy has been stagnating over the last two year, as this graph shows:
There's reasons for optimism in France too this morning, where optimism among industrial firms has risen to its highest level for over a year.
Despite concerns over France's fiscal position, INSEE's monthly survey of industrial morale rose for the fourth month in a row, to 95. That's a rise on June's 93, and better than analysts expected. But it's still low in historical terms, where 100 is the long-term average.
The broader measure of business confidence also rose, to 87, from 86. Again, better, but still weak, as these charts show:
French business morale, July 23 Photograph: /Thomson Reuters Photograph: Thomson Reuters
French business morale over the last 20 years. Photograph: /Thomson Reuters Photograph: Thomson Reuters
In Greece, meanwhile, the government is cracking on with the task of meeting the targets agreed with its lenders, including cutting thousands of public sector jobs.
Prime minister Antonis Samaras has summoned his top ministers to a meeting on Greece's "mobility scheme' – a key part of the strategy to lay off tens of thousands public sector workers.
Deputy PM Evangelos Venizelos, finance minister Yannis Stournaras and administrative reform minister Kyriakos Mitsotakis are all attending.
Samaras is likely to press ministers to speed up the evaluation of staff at their ministries to ensure the project remains on track. Mitsotakis, who has been tasked with overseeing the civil service overhaul, appealed to his colleagues to join the effort. “I have repeatedly said that the job of administrative reform is being overseen by this ministry but, if we are to hit the targets, all the ministries must be involved.”
But the mobility scheme remains deeply unpopular with the workers who face being moved into it on lower pay, with the threat of being laid off. As reported in Monday's liveblog, schoolteachers held a protest rally in Athens yesterday...and medical staff are planning a strike tomorrow.
Chinese premier Li Keqiang, who pledged today to keep GDP growth at 7% or higher. Photograph: Ma Zhancheng/Xinhua Press/Corbis Photograph: Ma Zhancheng/ Ma Zhancheng/Xinhua Press/Corbis
Good morning, and welcome to our rolling coverage of the latest events across the eurozone, the financial markets and the global economy.
We start with encouraging signs from Asia, where bullish talk from Chinese premier Li Keqiang and the Japanese government have sparked a share rally overnight.
Li tried to calm fears that the Chinese economy was stalling, telling businessmen in Shanghai that the country’s “bottom line” for economic growth is 7% in future (it slowed to 7.5% in the last quarter).
The comments came amid local reports that Beijing will drive investments in high-speed railways to help reduce overcapacity in sectors such as cement and steel.
Cue optimism across the region. As Alvin Pattisahusiwa, a director of investment at PT Manulife Aset Manajemen Indonesia, put it:
Li’s statement provides assurances for investors that there won’t be negative surprises in the country.
That's welcome news in Europe too, where there are fears that China could slide into an economic hole before the eurozone manages to dig itself out of its own predicament.
And with Tokyo's Cabinet Office upgrading its economic outlook for the third month in a row, there's a little more optimism about prospects in the month ahead.
The Cabinet Office declared that the Japanese economy was "steadily picking up", and moving towards a "self-sustainable recovery", adding:
Recent price developments indicate that deflation is easing.
This stream of news sparked a decent rally in Asia, driving markets to a six week high. China's CSI 300 jumped 2.5%, driven by railway company shares, while the Hong Kong Hang Seng is up 3.5%.
And in Europe, traders are joining in - with the main indices all gaining ground (the FTSE 100's up 27 points at 6650.
Otherwise, as you may have already deduced, it's a quiet morning, as Europe slides into its summer lull. I'll be covering all the key developments through the day, though.....
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