Greece: Eurogroup says debt talks on the table, troika to return to Athens –as it happened

Graeme Wearden (until 2.30) and Nick Fletcher

from on 2016-03-07 18:23 (#16838)

All the day's economic news, as finance ministers consider the deadlock between the Greece government and its lenders

6.23pm GMT

The Eurogroup has said debt relief talks for Greece are on the table, but are dependent on the necessary reforms to tax and pensions. More work is needed, and the Eurogroup called on the institutions and the Greek government to put extra effort in to reach agreement.

Representatives of the creditors - the troika - will return to Athens tomorrow, but the process needs to be speeded up, so the debt relief talks will be brought forward.

6.22pm GMT

Klaus Regling, head of the eurozone rescue fund the ESM, said Greek liquidity was getting tighter but:

ESM'S REGLING SAYS GREEK LIQUIDITY SITUATION IS FLUID, 2015 BUDGET BALANCE WAS PROBABLY BETTER THAN EXPECTED

6.06pm GMT

Will the debt issue be part of the first review?

Dijsselbloem: The review is on the implementation of what was agreed so debt relief not part of that. But there is a strong link between the two. We have agreed there should be fiscal targets and pension reform, so fiscal sustainability long term will be part of debt discussions.

6.01pm GMT

The review was said to be completed by Easter but that is not straightforward:

'Here we go again,' laughs Dijsselbloem as Eurogroup debate whether Western or Orthodox Easter for Greek review #hadtobethere

5.58pm GMT

IMF have asked for more to be done, and also made strong debt relief case, are you in that camp now?

Dijsselbloem: Have to be more on table than there is now or it will not work. Not in any camp but there is a link between depth of reforms and any remaining debt issue. More you do on reform, smaller fiscal gaps will be and less of a debt issue there will be in the future.

5.55pm GMT

Questions: Could debt talks start before completion of review?

Dijsselbloem: Need to know the outcome of the reforms, but there is going to be a point where all this comes together.

5.46pm GMT

On other matters, the Eurogroup says Italy's high debt burden remains a concern.

5.43pm GMT

European Economic and Monetary Affairs Commissioner Pierre Moscovici said he was very happy with the agreement.

It would allow the mission chiefs (the creditors' representatives) to go to Athens as soon as tomorrow to lead discussions on a review of the agreement.

5.39pm GMT

The troika will return to Athens, confirms Jeroen Dijsselbloem, head of the Eurogroup at a press conference following today's meeting.

But he said more effort needed to be put in to get a good outcome, and there were still fiscal gaps to be filled and some reforms needed to be deepened.

5.30pm GMT

#Eurogroup over. We look forward to closing the 1st review in a timely manner and have a discussion on debt, says #Greek finmin Tsakalotos

5.29pm GMT

Here's European Commission vice presdient Valdis Dombrovskis on the situation with Greece:

#Greece pr review - mission chiefs to return 2 Athens. More progress needed in meeting #MoU commitments, including fiscal targets#Eurogroup

5.22pm GMT

A rebound in oil - above $40 a barrel for the first time since December - and metal prices - iron ore in particular - has lifted commodity companies and helped leading shares in Europe recover some of their early losses. Markets ended mostly lower, hit by gloomy comments from the Bank of International Settlements and some profit taking ahead of the European Central Bank's interest rate-setting meeting this week. But the strength in commodities and a rally on Wall Street after an early dip helped European markets to recover some ground. The final scores showed:

5.20pm GMT

Cyprus has exited its bailout programme ahead of schedule, and here's a statement from the managing director of the International Monetary Fund Christine Lagarde:

Cyprus exits its IMF bailout. Here's Christine @Lagarde's statement: pic.twitter.com/2KzCRS8sW7

#Cyprus makes miraculous recovery exiting from its bailout programme 2day 3 years after the collapse of its #banking system

5.14pm GMT

#Greece if #debt relief talks r initiated in April it'll b huge triumph for #Syriza-led gov

3.57pm GMT

More on the prospect of talks over debt relief for Greece. Reuters reports:

The head of the Eurogroup Jeroen Dijsselbloem asked euro zone finance ministers meeting on Monday to prepare to start talks on debt relief for Greece in April, a euro zone official said.

Talks on the debt relief can only start once Greece's lenders -- euro zone governments and the International Monetary Fund -- agree that the country has delivered on reforms pledged in August in exchange for cheap loans.

European Economic and Monetary Affairs Commissioner Pierre Moscovici told reporters before the ministerial meeting he expected the ministers to decide on Monday to send the reform review team back to Greece.

German Finance Minister Wolfgang Schaeuble said he would support sending the team already this week. Two euro zone officials, who asked not to be named, said the lenders' representatives may set out already on Tuesday.

3.53pm GMT

Confirmation from Germany that Greece's creditors could return to Athens this week:

German FinMin Schaeuble: Troika could return to Athens this week (yes he used that word) #Greece #Germany pic.twitter.com/n9dsikheVc

3.30pm GMT

Brent crude has hit $40 a barrel for the first time since early December.

The move comes on hopes of continuing economic recovery in China, which set a target of 6.5% to 7% growth this year, which has boosted commodity prices generally.

3.15pm GMT

Back with Greece and reports are coming in that the country's international creditors will return to Athens on Tuesday, according to a Greek government official.

And Reuters is quoting a eurozone official saying that ministers were told to prepare for the start of talks on debt relief for Greece in April.

2.41pm GMT

Meanwhile US markets have continued the downward trend being seen elsewhere.

After last week's rally investors have decided to cash in some of their gains ahead of the European Central Bank meeting on Thursday, when further interest rate cuts or other stimulus measures are expected. There is scope for disappointment here, however, as ECB president Mario Draghi tries to live up to his promises of taking all necessary action.

2.24pm GMT

Greece's finance minister has urged its creditors to return to Athens and finish signing off its bailout review.

Euclid Tsakalotos told the Frankfurter Allgemeine Zeitung newspaper that the two sides can't simply keep arguing over pension reforms forever. He wants the institutions to accept Greece's position, opening the door for talks on debt relief.

"This question of time is important if we want to move from a vicious to a virtuous circle.

We can't continue debating over pension reforms forever, as if to keep a wound open.....Pensions are part of the social safety net."

2.07pm GMT

Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup, has warned Greece that it must stick to its bailout deal.

We need credible and sustainable pension reforms and the budget needs to be on track for the medium-term.

This is not just something that concerns the IMF, it is something that concerns all the institutions and the eurogroup.

On way into #eurogroup, @J_Dijsselbloem appears to side w/#IMF on issue of #Greece pension cuts. "We need credible & sustainable pensions"

"There is a need to return now to Athens," says @pierremoscovici of #Greece troika mission.

According @pierremoscovici there is still gap but mission chiefs could and should return to Athens #Eurogroup

1.57pm GMT

Oil is also rising today, with Brent crude gaining over 1% to $39.50.

Oil rout is 'over' as prices surge towards $40 https://t.co/WxpIMAQcyI pic.twitter.com/93MR9HWR8N

1.46pm GMT

Shares in Brazil mining group Vale have leapt by 8%, following the massive rally in iron ore this morning.

1.42pm GMT

BTW, the Eurogroup meeting is about to start in the Lex building and nobody but the Greeks care about it

1.30pm GMT

Eurozone finance ministers should be arriving at EU headquarters shortly, for a regular eurogroup meeting.

They'll be playing second-fiddle to the big EU Migration Summit, where leaders are wrangling over the refugee crisis.

...reforming the pension system, fiscal strategy, making the privatisation fund operational and addressing the issue of non-performing loans, among other issues.

"I think the situation right now is more dangerous than it was last summer [when Greece agreed its third bailout].

"Then it was a question of the political will of a few people.

1.04pm GMT

It's not been a great few months for Goldman Sachs, and clients who followed its 'top tips for 2016'.

The Wall Street bank just closed all six trades, with five making losses.

Goldman has now closed all 6 of its top recommended trades for 2016.
5 under water, 1 made money (long non-commod exporters/short EM banks)

12.56pm GMT

This chart of daily price moves confirms that today's 20% surge in iron ore is way, way, outside the norm:

This shows just how much of an outlier today's move in iron ore was pic.twitter.com/99Tff5gqo1

Iron price up 20%, record move. just because. Chatter is about China, but positioning the big thing.

12.42pm GMT

Rating agency Fitch has slashed its growth forecasts but predicted the world will avoid another full-blown recession.

It now expects the world economy to expand by just 2.5% this year, not the 2.9% expected three months ago. That would only equal 2015's growth rate.

"With emerging markets at the epicentre of these shocks and now accounting for 40% of world GDP it is legitimate to ask whether the world will see, for more or less the first time in recent history, an emerging market led global recession.

However, we believe several factors mitigate this risk.

12.30pm GMT

The iron ore price is on an absolute tear this morning, surging by almost 20%.

The cause of the mega-rally isn't quite clear, but it follows speculation that the commodity crunch has bottomed out.

*IRON ORE JUMPS 19% TO $63.74, BIGGEST ONE-DAY GAIN ON RECORD

Crazy 19% pop #IronOre pic.twitter.com/Fa7Uiw4LPh

11.49am GMT

Europe's major stock markets continue to lose ground this morning.

After a tentative start the bears took hold this Monday, the European indices all sliding into the red with last week's confidence replaced by pre-ECB nerves.

It's unclear what has inspired this shift in sentiment; general fears over the myriad of macro-maladies currently circling the markets appears to be the driving force this Monday, with this morning's warning from the BIS and the looming ECB meeting on Thursday only exacerbating matters. There is a chance this kind of jittery trading will continue until Mario Draghi puts the market out of its misery and reveals, for better or for worse, what 'whatever it takes' actually means this time around.

10.34am GMT

Eurozone investor confidence has fallen to its lowest level in almost a year.

Sentix, the German research group, reports that fears over the global economy hit morale among eurozone analysts and investors this month.

Investors' perspective on the current situation in the Eurozone should resupply dovish members of the ECB council with enough ammunition to demand significantly more expansive monetary stimulus on Thursday's ECB meeting.

"Investors' expectations are slowly turning against the negative trend."

10.22am GMT

The CEO of France's EDF has pledged to take a 'final decision' soon on the Hinkley Point C nuclear reactor, following the shock resignation of his finance chief:

9.27am GMT

Dirk Schlotboeller, economist at Germany's DIHK Chambers of Commerce. argues that German factories were lucky to only suffer a 0.1% drop in orders in January.

Schlotboeller says:

"This could have been worse in light of the bad news and turbulence on stock markets at the beginning of the year."

9.19am GMT

Germany's finance ministry has warned that storm clouds are gathering over its manufacturing sector.

Following the 1.6% drop in domestic factory orders in January, it says:

"Over the two months, the impulses are from abroad.

"However, expectations in industry have become considerably overcast and signal only a modest economic upswing."

8.43am GMT

Shares in French energy company EDF slumped by almost 10% at the start of trading, following the shock resignation of its finance director.

A new plant at Hinkley, in Somerset, is desperately needed and has been heavily promoted by the chancellor, George Osborne, and other ministers as a key part of keeping the lights on in Britain.

But EDF has been hit by a series of problems that have led many - even in the City of London - to conclude that the new nuclear plant project is on the verge of collapse.

EDF has confirmed exit of its finance director over Hinkley. I only hope their power station building is better than their PR comms..

The UK's power strategy and in particular the nuclear part looks to be in disarray doesn't it?! #EDF #HinkleyPoint https://t.co/mrjm0pP03N

8.37am GMT

Germany's stock market has slipped a little in early trading following the factory orders report.

The DAX fell almost 0.5%, with investors also digesting BIS's warning of global turmoil ahead.

8.18am GMT

Germany has got the new week off to a poor start, by reporting that factory orders dipped last month.

7.58am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The new week begins with a serious warning from the Bank for International Settlements that the global markets could be heading into new turbulence.

"We may not be seeing isolated bolts from the blue, but the signs of a gathering storm that has been building for a long time."

"The viability of banks' business model as financial intermediaries may be brought into question."

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