The European Parliament has voted in some proposals for, effectively, trying to regulate the credit ratings agencies.
The agencies have great power in the markets when it comes to changing their sovereign debt ratings, usually downgrading them in the current climate of course. And losing their prized rating can upset countries. But whether passing proposals in the European Parliament to try and limit their power will have any effect is a moot point.
Still, that's what's happened, and here's what the Parliament says:
Since sovereign debt ratings affect the credibility of states, and hence their borrowing costs, MEPs see a need to regulate their quality, timing and frequency. These ratings should reflect each country's specific characteristics, and should in no way advocate policy changes, they add.
MEPs inserted amendments to require each agency to prepare and publish an annual timetable of dates for publishing its sovereign ratings, so as to give states time to prepare for them.
This timetable would have to comply with the general rule that sovereign credit ratings may be published only after close of business in all trading venues established in the EU and at least one hour before they reopen.
The full statement is here.
Since there appeared to be some confusion about what the Parliament had actually done, I thought we'd open up the blog again for this final post. Really going now.....
Investors have had a cheerier time of it today, with European markets closing substantially higher and Wall Street also on the rise.
Forget Spain's problems, disagreements among EU bigwigs about how to tackle the endless eurozone crisis, Greece's plans to renegotiate its bailout, a bad German confidence figure - markets are hoping for a lift from US Federal Reserve chairman Ben Bernanke tomorrow, with the expectation of new moves to boost the world's largest economy (and woe betide Ben if they don't get what they want...)
So the FTSE 100 has finished 95.22 points higher at 5586.31, Germany's Dax is up 1.84%, and France's Cac is 1.69% better. Even the eurozone's (increasingly) poor relations have done well - Spain's Ibex has ended 2.67% better, Italy's FTSE MIB is up 3.35% and the Athens market has risen 3.34%.
Across the Atlantic the Dow Jones Industrial Average is up 118 points at the moment.
Elsewhere Spanish bond yields have edged down to 7.03%, despite worries about the implications of the country delaying the announcement of audit reports on its banks until September. The country also got its latest bond sale away, albeit at a price.
So as Greece edges towards forming a new government, it's time to close the blog for another day. Thanks for all your comments, and we're back tomorrow.
Back at the G20, Spanish prime minister Mariano Rajoy has reportedly failed to persuade eurozone colleagues that the €100bn bank bailout should not be counted as national debt.
Such a move would have relieved pressure for a full bailout, my colleague Giles Tremlett reports (full story here):
"Connecting banking risk and sovereign risk has become very damaging," Rajoy told fellow world leaders at the G20 meeting in Mexico, according to Spanish reporters who accompanied him.Although others in Europe would also like to reduce the link between banking risk and country risk, the eurozone finance ministers who decide on bailouts were reportedly against the idea. "The rules do not permit it," one senior official told El País newspaper.
More progress on the formation of a Greek government (see 2.32.)
Apparently the country's conservative, socialist and democratic left parties are due to meet to discuss the terms of a coalition.
Wall Street is off to a bright start despite the vicissitudes of the eurozone crisis.
Of course, it is less the idea that the G20 or the EU leaders can actually come up with something to fend off disaster, and more the hope that Ben Bernanke will ride to the rescue tomorrow. As my colleague Dominic Rushe reported earlier, the US Federal Reserve chairman is widely expected to unveil further measures to stimulate the world's largest economy following a series of lacklustre data (today's housing figures were the latest to give a mixed picture).
So the Dow Jones Industrial Average is up more than 100 points in the first hour or so of trading, which has helped push the FTSE 100 even higher. The UK index is up 102 points or 1.87%, partially on the prospect of the Bank of England acting too, with more quantitative easing on the cards after benign inflation figures.
European markets too are recovering ground, with Italy up 3%, Spain 2.6% better and Germany's Dax up 1.3%.
Even Spanish bond yields have edged lower, although they are still above the 7% level widely believed to be unsustainable.
Of course, all this market fervour could easily meet with disappointment if Bernanke does not deliver....
Where the eurozone crisis overlaps with Euro 2012 (from our football blog).
Still on the theme of the Mexico summit, campaiging group One has criticised the G20 leaders for failing to take concrete action to tackle extreme poverty, despite past promises. Commenting on the leaked draft communique One's chief executive Michael Elliott said:
The Seoul and Cannes summits gave us hope that a new drive on development had begun, but too much of the work that was started has not been progressed by leaders in Los Cabos. There is no mention of the important work done by Bill Gates last year looking at financing for development, and the progress report on food price volatility promised in Cannes has not yet been delivered.
Leaders must prove that there is substance behind their rhetoric by ensuring that their stated desire to address global poverty is backed-up by concrete action in the months ahead.
Bear in mind, that is based on a leaked draft rather than the final communique, but it's a fair point.
G20 leaders meet in Los Cabos, Mexico. Photograph: KeystoneUSA-ZUMA / Rex Features
German chancellor Angela Merkel expects Spain to make a formal request for aid for its banks soon.
This is the €100bn bailout money previously announced, but news of the delay to the audit report on the country's banks has prompted speculation that €100bn may not be enough.
Speaking at the G20 in Mexico, Merkel said banks that were not sufficiently capitalised posed a danger to a stable economy. The key question surely is, though, how much extra funding is needed to make sure global banks are sufficiently capitalised.
Nor would she speculate on any easing of the terms of the Greek bailout (something which seems to be causing some confusion among Brussels officialdom).
Meanwhile French president François Hollande said both he and Merkel were aware the eurozone must find its own solution to the crisis, and not rely on outside help. The IMF was not there to provide a backstop for the eurozone, even if it did that for countries like Greece.
As reported earlier, Denmark had a hugely successful debt auction that resulted in investors essentially paying the country to lend it money (see 9.34am). RoversExile has asked how that works.
Essentially it's a bet on foreign exchange movements. Mark Dowding of credit hedge fund BlueBay Asset Management explains:
The Danish krone is pegged to the euro. In a way, you are prepared to buy Danish bonds with a negative yield in the hope of the euro breaking up and the Danish krone going up in value vs. the euro.
Arguably if you are buying a bond with a negative yield you are guaranteeing you get back less than you are paying for it in the first place. Your only chance of making a profit is in the hope you make a foreign exchange gain. Looked at another way you have more money seeking a safe home than there are safe assets available. That's why you end up with prices which look ridiculous.
And with that, I'm handing over to my colleague Nick Fletcher.
News in from Greece where our correspondent Helena Smith reports that headway is being made on the formation of a new multi-party National Salvation government.
A government could be formed by the end of the day – and if not then certainly by tomorrow when it will likely also be sworn in. After months of political paralysis spawned by the failure of their political elite to agree on anything, Greeks are experiencing something quite new: smiley faces and lots of talk about consensus.
Antonis Samaras, the conservative New Democracy leader who emerged as the victor of Sunday's poll, is in accordance with his one time rival, the socialist Pasok leader Evangelos Venizelos, that a government must be announced "as soon as possible." The conservative leader has been locked in his third floor office with close aides since the morning discussing the government's make-up.
Venizelos, who held talks with Fotis Kouvellis, the leader of the moderate Democratic Left party earlier today, emerged saying there was "a great convergence of views," adding it was essential the power-sharing talks were accelerated "so that we can send a message to people of security and perspective and a message of stability and negotiation abroad."
"I am confident after my meeting with Mr Kouvelis, our views are very close," he said. "Greece must and will have a government as soon as possible. We agreed that the necessary processes must be accelerated."
The socialist leader had been hesitant about entering a coalition without the Democratic Left also being on board. Both parties, like New Democracy, want to revise the €130bn EU-IMF loan agreement currently keeping the debt-stricken Greek economy afloat. Kouvelis emerged from the meeting saying Greece had been "pulverized by the pitiless measures" not least the repeated waves of pay and pension cuts and tax increases.
Greeks leaders are acutely aware that after the theatre of the absurd that followed the inconclusive poll in May – with abortive power-sharing talks dragging out for days – the negotiations, this time round, are being closely watched.
Venizelos said it was also crucial that a "national negotiating team" was also created to engage with international creditors. "There would be an open invitation for forces that are not participating in the government to participate in this national team," he said.
Insiders say it is imperative that the radical far-left Syriza party, which came a close second with 26.9% of the vote (compared to 29.7% for New Democracy), should participate in such a team in a bid to increase Greece's chances of changing the onerous conditions of the rescue package it has signed up to with the EU and IMF. Samaras is expected to meet Kouvellis later today.
Out to Los Cabos, Mexico, where the G20 continues. My colleague Patrick Wintour reports:
Leaders of the G20 economies are preparing to endorse a communique pledging further action on growth, increased resources for the International Monetary Fund and fresh commitments by the European Union to do more to integrate to solve its problems.
Plans for an after-dinner meeting between the US president, Barack Obama, and the leading four eurozone countries attending the G20 were scrapped officially because the issue of the eurozone had been discussed enough.
There may also have been fears that tensions were starting to escalate between eurozone leaders, notably the two EU figureheads, José Manuel Barroso and Herman Van Rompuy, and other G20 countries about the slowness with which the EU was addressing its problems.
@zerohedge has the following commentary on the US housing starts figures.
We just got another indication of how US housing has "bottomed"... if only in terms of promises and strong words. While permits, or promises that at some point in the indefinite future, a house will be built, soared from 723,000 to an annualized rate of 780,000, the highest since September 2008... actual holes dug, or Starts plunged from a revised 744,000 to 708,000. Looking at actual completions, the number tumbled by 10.3% from an annual rate of 667,000 to 598,000 in May.
A new home under construction i Georgia, US, last week. Photograph: ERIK S. LESSER/EPA
Mixed data on the housing market in the US. Housing starts fell in May but permits to build new homes rose to their highest level in well over three years. Omer Esiner at Commonwealth Foreign Exchange said:
A disappointing headline number on the housing starts that looks to be partially offset by a much higher than expected permits number for April. In the broader scheme of things, this housing data will get lost ahead of the Fed meeting today and tomorrow. It's not likely to have much impact on trading.
This just in from my colleague Ian Traynor in Brussels:
Bemusement and confusion in Europe's capital over Greece this morning.
On opposite sides of the main street in the EU quarter, top people are briefing completely different things on Greece within a half-hour of each other.
"No one is talking about a new memorandum of understanding," with Athens defining the terms of the Greek bailout, insisted Amadeu Altafaj, spokesman for Olli Rehn, the monetary affairs commissioner. "No one is speculating about a new memorandum."
The message a little earlier across the street in the building that houses the European Council, representing member states governments, was strikingly different.
Anyone who said there would be no new memorandum with Greece was "delusional", said a senior Eurogroup official. Eurozone finance ministers meet in Luxembourg on Thursday to grapple with Greece, worry about Spain, wonder what to do about Cyprus. Christine Lagarde, IMF head, will be there, too.
It's not clear if Greece will be represented, but there's talk in Brussels that Antonis Samaras, prime minister-designate, may show up himself.
The senior official laid out the scenario over the weeks ahead. Once a new Greek government is in office, the troika team of EC, ECB, and IMF experts will descend on Athens to gauge how far the bailout terms have slipped over the past few month of political paralysis.
The privatisation schedule has shifted, tax receipts are not what they should be, etc. Once the scrutiny has been concluded, "a new MOU is to be signed," said the official. "To deny the need for a new MOU is delusional.
Obviously the Greeks will seek to drive a hard bargain to ease the bailout terms. It may be a hard or an easy negotiation, said the official who expects the new bailout pact to be signed during the summer.
Despite the reports this morning on delays to a Spanish banks audit, the eurozone chaps expect Prime Minister Mariano Rajoy to table the "technical request" for up to 100 billion euros for bank recapitalisation by next week. The issue will be discussed but not finalised on Thursday.
Cyprus, which has not yet asked to be bailed out but whose banks suffered hugely from the haircuts for Greece's private creditors earlier this year, is also to be discussed.
On Greece, the senior official appeared to suggest that the draconian terms could be softened provided the two overarching aims of the rescue – debt sustainability by 2020 and structural reforms that give Greece a chance of economic growth – remain sacrosanct.
Finally, the hopes of getting the eurozone's new permanent bailout fund, the European Stability Mechanism, up and running by the target date of July 9 appear to be running into problems.
To become operational it needs to be ratified by countries representing 90% of the fund's paid-in capital. Reports from Rome today indicate that Italy will not ratify in time. Italy represents just under 18% of the fund, so the target would be missed.
The head of the Eurogroup Jean Claude Juncker is sounding a touch more lenient on Greece's bailout package, Bloomberg economics editor reports:
Eurogroup head Juncker: Greek aid can't be changed substantially, can talk about extending time plan, change of time plan
— Linda Yueh (@lindayueh) June 19, 2012
The European Commission says there will be no new agreement with Greece on the terms of its €130bn rescue package.
European Union flags outside the European Commission headquarters in Brussels. Photograph: Yves Herman/REUTERS
The EC said it did want to work with a new Greek government to push through reforms and revive the economy. A Commission spokesman said in a regular briefing:
We just decided on a second programme recently so nobody is talking about a new memorandum of understanding. We are taking about ensuring that Greece gets a government and that this government takes full ownership of the programme and implements it to put the country back on track.
Taking a closer look at the claim by an Italian politician that Italian factory workers take three months holiday a year (see 10.28am), the reader ambrosia2 points out that his methodology is questionable.
Not a sound basis of calculation. This method also gives a low number of hours worked by German workers. The reason? Lots of part-time workers. For example, the number of hours worked by Greek workers is higher than that of German workers. If one excludes part-time workers (or considers a worker who works half-time as only half a worker), the difference is much less (source: More or Less, Radio 4).
Mr Polillo should apply the calculation to only full-time workers, or find another way to compensate. Maybe he will get the same result, maybe not.
Over to Cyprus, where the country's finance minister told reporters they need a rescue, and they're going to need it very soon. Matina Stevis reports on the Wall Street Journal:
Cyprus needs to get funding from a bilateral agreement with another country or through euro-zone rescue funds as soon as possible so it can recapitalize its banks, but hasn't yet formally applied for euro-zone assistance, the country's finance minister told reporters in Nicosia on Tuesday.
Vassos Shiarly said he remained "optimistic that we'll get the money we need for the bank recapitalization either through a bilateral agreement or through Europe," from the transitional European Financial Stability Mechanism or the permanent European Stability Mechanism.
"I calculated that there's 278 hours left until June 30," the date by which Popular Bank, one of the island nation's largest banks, has to be recapitalized. "We're counting the hours" until concluding a loan agreement, he added.
Spain will need an outright bailout and not just a rescue package for its banks if it has to pay the kind of interest rates demanded by investors at today's treasury bill auctions, says Marc Otswald of Monument Securities.
While Spain achieved its overall target of €3bn of 12 and 18-month T-Bill sales, the yields at which these were sold can only be described as prohibitively expensive, having spiked sharply higher from early morning indications. Quite clearly, the delay to the second part of the audit of Spanish Banks to September was exactly NOT what the doctor ordered, nor was the German constitutional ruling on the ESM (not that it will delay the start of the ESM, but it is another "ball and chain" in terms of German political decision making processes.)
Still the key point is that if Spain is paying those kind of levels for its debt, it needs not only an ESM package to recapitalize its banks, it also needs an outright bail-out package, and it is becoming very difficult to see how it can manage without that beyond the end of Q3, unless yields fall dramatically!
The issue is in fact about the breadth of estimates (official and market) about how much is needed to recapitalize Spain's banks (€40bn to €279bn) and as my (German) father used to say: "wer soll das bezahlen?" (who is going to pay for that?), and when will Spain be forced into requesting a full bail-out (one estimate just published suggests €300bn would be needed), which should or would be the cue for Germany to say auf wiedersehen to the Euro.
We've also got some reaction to the UK's better-than-expected inflation figures, which economists expect will pave the way to a new round of quantitative easing by the Bank of England. David Tinsley, UK economist at BNP Paribas, says:
Overall this is a soft release. The rise in the core [rate of CPI to 2.2%, from 2.1%] is perhaps a small fly in the ointment, but it seems to reflect timing issues. The price of a litre of petrol is currently some 5 pence lower than that sampled in this May release, suggesting further downside news ahead.
This all makes the MPC's job a little easier. The May Inflation Report had a forecast for CPI inflation of 3.15% in 2012 Q3. On current form it is likely to undershoot that significantly. There is therefore little stopping the MPC unleashing another burst of QE at its next meeting.
Chris Williamson of Markit provides a reliably gloomy commentary:
Unfortunately, the drop in inflationary pressures is principally the result of very weak global demand, and an increasingly bleak looking economic outlook. Slower global growth has caused oil prices to fall by around one quarter since their peak earlier this year, with prices also falling for a wide variety of other commodities. This is not therefore a UK-specific easing in price pressures we are seeing, with inflation rates also coming down in all major economies, notably the US, China and Eurozone.
It also seems likely that any new intervention by the Bank of England will form part of a coordinated approach to reinvigorate the global economy by the major central banks around the world, starting this week with the US Federal Reserve, where expectations are growing that policy-makers will seek to boost the US economy via an expansion of its "Operation Twist".
There's some analysis coming out on Spain's treasury bill auction. Nicholas Spiro of Spiro Sovereign Strategy says:
Spanish auctions are agonising to follow. The market is effectively broken and is starved of liquidity. The Treasury is trying to mitigate the damage by curbing supply but this only exacerbates market illiquidity, pushing yields ever higher. Last month Spain issued 1-year paper at an average yield of just under 3%. Today it paid an even more punishing 5%. This augurs badly for Thursday's bond auction.
Reports that the external audit of Spanish banks will be delayed will undermine confidence further. Yet the crisis is increasingly no longer about Spain. It's about the fear that the eurozone is going to fall apart because of the absence of a fiscal and banking union. The market has become increasingly binary: backstop or break-up. Spain is the focal point for market nervousness. A country whose public debt is still relatively low compared to the eurozone average is now perceived to be flirting with insolvency.
News in from Rome, where my colleague John Hooper reports on a claim that Italian factory workers are taking three months of holiday a year.
Making a point that will no doubt be noted by Angela Merkel and Bild Zeitung, a junior minister in the Italian government, Gianfranco Polillo, has claimed that his country's factory workers are taking three months of holiday a year.
Polillo, a junior minister at the economy ministry, said he had reached this conclusion by dividing the total number of hours worked in Italy by the number of workers. "And I discovered that an [average] worker is in the factory for nine months and for three months, more or less, on holiday."
The three months presumably includes sick leave, but in an interview published by La Repubblica this morning Polillo made it quite clear that he thought that was not the whole story. "We're in the Bel Paese, my dear friend", he said. "That's what they call it, and that's how we plan to be able to continue -- accustomed to leisure".The minister proposed that every worker should put in another week's work. The effect, he says, would be to increase Italy's shrinking GDP by a full percentage point. Italy has the EU's second biggest manufacturing sector after … er … Germany.
The euro slid against the dollar following the much weaker than expected survey results (see 10.18am).
A ZEW economist said this was not just a monthly fluctuation in sentiment; the slide is too pronounced to interpret it as a temporary fluctuation. The survey results came in mainly before the Greek elections, but the results coming in after the elections were not significantly better.
The think-tank said diminishing exports, global growth and eurozone rescue packages were the main reasons for the slide in expectations. It does not, however, expect Germany to go back into recession.
German business confidence fell in June at its fastest rate since October 1998, with uncertainty over the Greek elections likely to blame for the drop. The ZEW survey fell to -16.9 from 10.8 in May, way below forecasts for a drop to 4.
More from the debt markets, where Greece has sold €1.3bn of 3-month treasury bills. The average yield has dropped slightly, coming in at 4.31% compared with 4.34% at a previous auction in May. Reuters says Greek banks traditionally buy the bulk of the treasury bills, meaning funding costs do not fully reflect market strains.
The ruling that the German government did not consult enough about the formation of the ESM permanent bailout scheme should not have any effect on the ratification of the fund, which is due to come into effect in July (see 9.22am). Thanks to reader ballymichael for pointing that out.
Barclays analyst Thomas Harjes wrote ahead of the ruling that the suit should have no bearing on ratification of the ESM Treaty or tougher fiscal rules known as the Fiscal Pact.
General feeling seems to be that Spain did well to sell the full €3bn (see 9.34am), but it had to pay dearly in order to get the bills away. The FT markets editor sums it up...
Spain forced to pay up in auction of treasury bills, but gets away what it wanted. Phew, I think
— Chris Adams (@chrisadamsmkts) June 19, 2012
It was a tale of two debt auctions this morning. Denmark has just sold 1.6bn danish krone (€215m) of debt maturing in 2014 at a negative bond yield of -0.08%. That compares with an average yield of 0.31% at the last auction.
Spain, meanwhile, has sold €640m of 18-month bills with an average yield of 5.1%, compared with 3.3% at the last auction. It also sold €2.4bn of 12-month bills with an average yield of 5.07%, compared with 2.98% at the last auction.
UK inflation fell unexpectedly in May to its lowest in two and a half years due to slower price rises for food and fuel. CPI came in at 2.8% for May compared with 3% in April and expectations of a reading of 3%. RPI was 3.1% compared with 3.5% in April and a forecast of 3.3%.
Germany's constitutional court has upheld the case against the European Stability Mechanism, the permanent rescue fund to replace the EFSF. The court said Angela Merkel's government had not consulted parliament sufficiently about the configuration of the scheme.
The ESM is supposed to come into effect in July but has not yet been ratified by many eurozone member states, including Germany. This ruling does not bar the ESM from taking effect.
Spanish yields have reacted to news of the delay to the banking audit (see 9.10am) accordingly. The yield on Spanish 10-year debt is pushing up towards yesterday's highs, currently at 7.19%.
As Sony Kapoor of think-tank Re-Define notes, it's not exactly the way to build confidence...
Lesson in How not to build confidence: #Spain says it needs more time 2 gather information on exactly what's going on with it's banks!
— Sony Kapoor (@SonyKapoor) June 19, 2012
The full audit of the Spanish banks has been delayed from July to September, fuelling fears that the banks may need more than originally thought (see 8.25am). Spain's central bank has apparently agreed the delay with the government, the IMF and the ECB. Accendo Markets' head of research wonders what's keeping them.
Spain says wants more time to gather information; what on? Ever deteriorating non-performing loan figures?
— Mike van Dulken (@Accendo_Mike) June 19, 2012
The first phase of the report is still expected this week. It was scheduled for Thursday and there is some speculation it may come today.
And there's more bad news for France after one of its largest companies, food group Danone, said operating profits for 2012 would fall as the economic climate in southern Europe, notably Spain, deteriorated. The shares dropped 6.5%.
French business confidence declined again in June. It decreased from 93 in May to 92, and was at 98 in March this year. Manuel Maleki of ING says:
French business confidence stayed low due to an anaemic domestic market. Moreover, the poor international climate and the uncertainty regarding the future of the eurozone after the Greek election and doubts on the Spanish banking sector have hit French business confidence. The announced taxes on dividends and the political tensions between France and Germany, its first trade partner, are unlikely to improve business sentiment any time soon.
There are rumours that the report on Spanish banks – which will determine how much of the proposed €100bn bailout they will need – could be released today instead of Thursday. Gary Jenkins of Swordfish Research says it is unlikely to be good news:
Spain was not helped yesterday by speculation that the independent audit of the banks could show that the total amount required is over the already agreed €100bn bailout figure. This is just a rumour but I think it is fair to say that the €100bn figure was originally described as allowing for any eventuality with lots of headroom so if the figure does end up being over €75bn then yet again European officials / politicians will have made a bad situation even worse.
In the debt markets, the yield on Spain's 10-year bonds – effectively the interest rate on the bonds – is at 7.16%, slightly lower than yesterday's high of 7.26%.
The yield on Italy's 10-year bond is bouncing around the 6% mark, currently at 6.04% (according to Tradeweb data).
Two banks, ING and BNP, are saying the ECB may resume its bond buying programme if Spain's 10-year yields reach 7.5%.
Quick look at the markets, which have opened slightly higher.
UK FTSE 100: up 0.5%, or 28 points, at 5519
France CAC 40: up 0.5%
Spain IBEX: up 0.3%
Germany DAX: up 0.2%
Italy: FTSE MIB: up 0.3%
The main news will be coming out of Greece and the G20 summit today, but there's also inflation figures in the UK and economic confidence from Germany.
Later in the day, the US Federal Reserve will start its two-day meeting on interest rates. My colleague Dominic Rushe reports that analysts expect the Fed to step in with a new round of Operation Twist to bolster the fragile American recovery.
• UK inflation figures for May: 9.30am
• Germany ZEW economic confidence survey for June: 10am
• Eurozone ZEW economic confidence survey for June: 10am
• US housing starts and building permits for May: 1.30pm
• JP Morgan's Jamie Dimon testifies: 2.30pm
In the debt markets, Spain will be selling €2bn-€3bn of 12-18 month debt, while Greece is looking to raise €1bn in 13-week treasury bills. Later in the day, the US will be selling 4-week bills.
Good morning and welcome to our rolling coverage of the eurozone debt crisis. Greece's conservatives, New Democracy, said late on Monday that they expect to form a new cabinet with the Pasok Socialists and possibly another smaller centre-left party today.
Overnight, the IMF announced that its lending capacity has almost doubled following an increase in contributions to the fund to $456bn (£366bn). In a statement from the G20 meeting in Los Cabos, Mexico, IMF chief Christine Lagarde said:
These resources are being made available for crisis prevention and resolution and to meet the potential financing needs of all IMF members. They will be drawn only if they are needed as a second line of defence.
Over in Los Cabos, EU commission president José Manuel Barroso has been sounding very defensive and insisting the origins of the eurozone crisis lie in the unorthodox policies of American capitalism. My colleague Patrick Wintour is reporting from the summit.