Markets relieved after Italy agrees €17bn bank rescue – as it happened

All the day's economic and financial news, including a TUC conference on insecure work and reaction to Italy's a17bn taxpayer-funded bank deal

• TUC discuss discussing insecure work crisis
• Markets jump on bailout relief
• German MEP says taxpayers shouldn't be paying
• Veneto Banca and Banca Popolare di Vicenza are being wound down
• Good assets are being sold to rival bank Intesa
• Almost 4,000 jobs may be lost, and 600 branches closed
• Full story: Italy to wind up two failing banks at potential cost of a17bn

4.25pm BST

And finally, here's our financial editor Nils Pratley on the Italian banking deal, and its worrying implications for the long-term health of the Eurozone banking sector....

One cannot get around the fact that the spirit of the relevant EU banking directive has been ignored. The rules apply, except when they don't, it seems. That has two important consequences. First, as Capital Economics argues, the "doom loop" between Italian banks and the Italian government remains a worry. If taxpayers can be on the hook at two regional banks, they may also be exposed if and when the banks more important and the sums significantly greater.

Second, as the thinktank also points out, the cause of banking and fiscal integration in the eurozone has just suffered a serious jolt. In the next round of collective risk-sharing, eurozone states are supposed to guarantee deposits in each others' banks. It is now hard to imagine Germany rushing to join such a scheme.

Related: Italy's a17bn bank job: self-preservation at a long-term EU price? | Nils Pratley

4.18pm BST

After a strong start to the day, the stock market rally is fizzling out in late trading.

The FTSE 100 is now up only 0.3%, or 25 points, having gained nearly 60 points this morning.

An afternoon wobble has dented what had been a very positive day for stock markets. Another apparently order bank rescue for the eurozone, this time in Italy, plus a robust German IFO reading, had put markets on the front foot in the early part of the session. Even the UK government appeared to get its act together, with a deal between the Conservatives and the DUP putting the Tories across the threshold for a majority. But once again the summer malaise appears to be getting the better of equity markets, with gains being surrendered as London heads towards the close, with a disappointing US durable goods figure not helping matters.

Unsurprisingly, financial names are in high demand in London following the Italian banking news, which is helping to keep the FTSE 100 in positive territory. But it is clear that for now investors are none too keen on pushing global markets higher. It could be a long summer.

3.11pm BST

Silvia Merler, fellow at Bruegel, has published a really good analysis of last night's Italian bank deal.

Here's her conclusion:

Overall, this episode confirms a pattern in the management of Italian banking sector problems over the past years. Authorities try to kick the can down the road and often let political considerations outweigh economic issues.

We have seen this in the delay of MPS' recapitalisation until after the constitutional referendum, in the creation of Atlas [Italy's bank bailout fund], and in the never-ending effort to shield retail junior bondholders to whom the sale of those product should have instead been better prevented.

My two cents on the story of Veneto Banca and Popolare di Vicenza. #Italy #banchevenete https://t.co/AmMf6puF76)

2.22pm BST

The latest US economic data is out....and it's weaker than expected.

Orders for durable goods shrank by 1.1% in May. That's nearly twice as large a drop as expected, and suggests US companies were more cautious about buying new machinery and electrical equipment last month.

Rates slide after mediocre durable goods report. https://t.co/CPRgUDknVI pic.twitter.com/Bt2cKwZhCA

May's durable goods data suggest that, after rising at a 7.2% annualised pace in the first quarter, business equipment investment has expanded at a much more modest pace in the second, which would fit with the slightly weaker tone of some of the surveys.

Nonetheless, with consumer spending growth on course for a big acceleration, overall GDP growth is still likely to have rebounded quite strongly.

2.09pm BST

Back in Greece, efforts to resolve the row between striking municipal rubbish workers and the government have collapsed.

Unionists are now vowing to continue their walkout until Thursday amid warnings of a public health crisis as temperatures surpass edge towards 40 degrees Celsius, and rubbish continued to pile up.

After abruptly ending talks with interior minister Panos Skourletis, the head of the municipal worker's union, Nikos Trakas, demanded that prime minister Alexis Tsipras intervene.

Skourletis, he said, had thrown out the union's counter-proposal - following the government's olive branch offer of extending short-term contracts and permanent job status to around 2,500 workers - after five minutes. "We will continue the fight and on Thursday we will demand to see the prime minister of the country because the interior minister is incompetent," he said.

1.59pm BST

Gold has hit a five week low this morning, as investors move money into riskier assets like shares.

The price of an ounce of gold bullion fell 1.2% at $1,240, its lowest level since 17 May.

The one notable piece of news over the weekend came from Italy where an agreement was reached that will avoid winding down two Italian banks, the good assets of which will be transferred to Intesa Sanpaolo. The resolution seems to have appeased both the European Commission and the Italian government, both of which have been at loggerheads as to how to deal with the failing banks, as well as investors with financials across the board being boosted by the announcement.

Reports this morning of an agreement between the Conservatives and Northern Ireland's DUP have seen the pound pop higher, albeit only marginally given that the deal has been widely anticipated and doesn't offer the kind of stability that a majority or even full coalition would. The deal will see Northern Ireland receive an extra 1 billion over the next two years in exchange for the DUPs support for May's minority government. With the deal now agreed, the next question is whether May will remain in charge throughout that period.

1.44pm BST

The pound has nudged a one-week high, after UK prime minister Theresa May finally secured an agreement with Northern Ireland's DUP party.

Sterling gained almost half a cent at one stage to $1.2759, the highest since 19 June, as the City welcomed a rare piece of political certainty.

Related: 1bn Tory-DUP deal will retain pensions lock and winter fuel payments - Politics live

1.14pm BST

Over in Milan, branches of Veneto Banca and Banca Popolare di Vicenza have opened as usual today.

And there are no signs of panic. That will please Italy's finance minister, Pier Carlo Padoan, who pledged last night that it would be business as normal, following the sale of these 'good' assets to Intesa SaoPaolo.

12.27pm BST

Let's get back to Italy...where the Bank of Italy has revealed that the rescue of the world's oldest bank, Monte dei Paschi di Siena, is complete.

Here's the Reuters' newsflash:

BoI Deputy Governor: Monte Paschi's Precautionary Recapitalisation Has Been Finalised - RTRS

12.02pm BST

One last line from the TUC conference on insecure work, from Ioana Cerasella Chis of the University of Birmingham:

Bradford Uni researchers have interviewed 48 workers - among them, many had more than one job; some doing up to 7 jobs at once #insecurework pic.twitter.com/WdllqzBR9s

Retail workers often do overtime with short notice; there's a lack of control over working hours particularly in this sector #insecurework pic.twitter.com/8mCdx4qo8c

Dashing from job to job, trying to fit in domestic responsibility; children are affected; ppl rely on patchwork arrangements #insecurework pic.twitter.com/2bnb4pHQIk

11.54am BST

Miatta Fahnbulleh, research director at the IPPR, argues that Britain's economy would be more productive if workers benefitted from better protections.

Rather than simply worrying about job creation, Fahnbulleh says organisations should consult with staff to redesign and improve the workplace.

M. Fahnbulleh - @IPPR
Productivity has been consistently lagging behind other countries. The productivity problem is linked to #insecurework pic.twitter.com/zKvrpQ6qMo

big set of questions abt data, digitisation&surveillance on what it means for working conditions says @NEF Stefan Baskerville #Insecurework

S. Baskerville, Nef
Each part of Deliveroo workers' work is monitored; workers produce data processed through algorithms #insecurework pic.twitter.com/s5GRPQxDji

11.45am BST

Here's a thought....would company bosses care more about pay and conditions if their tax rate depended on it?

Interesting idea fr @ippr @Miatsf Workers cd vote on if their employer's a good corporation, result cd influence their corp tax rates

11.45am BST

The Citizens Advice service share the TUC's concerns over the high cost of taking an employer to an unfair dismissals tribunal:

At @CitizensAdvice, we see high fees keeping people from resolving issues at work, fees should be capped at 50 or removed #insecurework pic.twitter.com/PLbc9QiPkv

11.20am BST

Ouch!

Sally Hunt, general secretary of the University and College Union has slapped down Matthew Taylor's argument that workers enjoy the flexibility of today's labour market.

On flexibility, I don't meet many people enjoying two-way flexibility, says @ucu Sally Hunt #insecurework

"Rights not the right to ask is what employees and workers should have", says @ucu Sally Hunt #insecurework

Sally Hunt to @RSAMatthew, I don't see examples of two-way flexibility. I see people exploited & with no option for recourse. #insecurework

11.09am BST

Despite his comments about protecting 'flexible' work, Matthew Taylor does concede that many workers in the Gig economy are unable to save for their pensions or pay for sickness insurance.

Taylor says we shd move to more consistent way to tax employment but budget u-turn by chancellor on self-employed tax shows hard in practice

Taylor: tax changes shd go hand in hand w/ better protection for self-employed. Many not saving for pension, without insurance for sickness

11.06am BST

Next up at the TUC conference is Matthew Taylor, chief executive of the Royal Society, who is conducting a government review into modern employment practices.

After a tweet warning his audience not to expect too much (!), Taylor reveals that his inquiry should be published in a couple of weeks:

Matthew Taylor says probably a "couple of weeks away" from publishing his govt commissioned report into modern employment #insecurework pic.twitter.com/UlUzNc7OM0

"The most important anti poverty strategy we have is to make sure people can get jobs" says Matthew Taylor #insecurework

"Wages are rising fastest at the bottom" thanks in part to living wage and tightness of labour mkt says Matthew Taylor #insecurework

We must recognise that most people who are atypically and flexibly, want to work that way, says Matthew Taylor #insecurework

Matthew Taylor says his report will make recommendations to preserve 2-way flexibility but tackle 1-way flexibility where only employer wins

Top line of my report will be:All work in Britain must be good work, and fair with scope for progression, says Matthew Taylor #insecurework

10.53am BST

Back in London, the TUC's conference on Britain's insecure jobs market is underway.

The session begins with a warning about the growth in contracts that don't provide any fixed hours work:

Zoe Smith,care worker, tells TUC #insecurework conf, "more and more agencies are popping up now" "much more likely to end up on zero hours" pic.twitter.com/xyVnjmam6Q

Insecure work has big human costs & heavy financial penalty. raises benefits bill, hits productivity, dents tax revs says @FrancesOGrady

"Zero hours, zero tolerance", "bring back overtime pay" and sort out better enforcement of rights says @FrancesOGrady #insecurework conf.

TUC's Frances O'Grady to govt: "If you are serious about tackling insecurity, scrap those [employment] tribunal fees and do it now" pic.twitter.com/you39yjXd2

On the rise on #insecurework, @FrancesOGrady: "we have a great opportunity to reverse this tide of casualisation"

10.52am BST

We now have confirmation that the Italian bank rescue deal is jolly good news for investors who own debt issued by the two Veneto-based lenders.

The value of bonds issued by both banks has soared this morning, after it became clear that bondholders would be spared losses (much to the anger of German MEP Markus Ferber).

Veneto Banca and Banca Popolare di Vicenza senior bond prices rocketed up more than 15 points on Monday, after the Italian government shielded the notes from losses in its wind-down of the two lenders.

The senior bonds had been trading at steep discounts to face value, reflecting investors' fears that they could be "bailed-in" - a process whereby losses are imposed on private creditors to lessen the cost to the taxpayer. But over the weekend the EU commission signed off a scheme that will see Intesa Sanpaolo take on the good assets of the two Venetian banks, while also fully protecting senior bondholders.

Venetian banks' senior bonds surge after swerving bail-in https://t.co/xqceix8SZF

10.35am BST

The Italian bank rescue/wind-up has helped to spark a relief rally across Europe's stock markets.

Shares are up in London, Milan, Madrid, Paris and Frankfurt, as investors welcome the news that two of Italy's fragile lenders have been dealt with.

European equity markets are higher on the day as two Italian banks were rescued over the weekend. The deal will result in Vento Banca and Banca Popolare di Vicenza being wound down, and the good assets of both banks will be sold to Italy's largest retail bank, Intesa Sanpaolo, and the Italian government will should the burden of both banks bad assets.

The bailout could cost the Italian tax payer up to a17 billion. There are still questions still hanging over the Italian banking sector, but for now investors are content with the Continent's financial health.

The German economy appears to be in rude health, if today's record Ifo business climate figure is anything to go by. According to Ifo, German businesses are 'jubilant', and it is clear that investors feel the same way, with the record high reading sparking a sharp move higher for the DAX, while gold immediately shed 1.4%.

This is just the latest in a long line of encouraging economic indicators, with the eurozone seemingly emerging from years of decline at the very moment that the UK decided to leave the EU.

9.19am BST

Newsflash: Morale among Germany's business leaders has hit a record high.

The German business confidence index, produced by the IFO economic institute, has jumped to 115.1 this month, beating expectations.

Breaking! #Germany's #Ifo index hits record high in June. pic.twitter.com/Q1T26PHZGk

When even sky is no longer the limit...#German Ifo index reaches another all-time high in June.

#German #Ifo #business climate index up to new record high in June as views of current situation & outlook improve further

8.58am BST

Breaking away from Italy, municipal refuge workers in Greece have upped the ante in their ongoing clash with the Athens govenment that has left the streets covered in uncollected trash.

An air of early summer crisis has symbolically imbued the ever-greater mounds of rubbish piling up around Greece.

In a bid to break the impasse the interior minister Panos Skourletis announced, after a crisis meeting late Friday, that the leftist-led government would rush an amendment through parliament today effectively prolonging short-term contracts on the brink of expiry and opening the way for permanent jobs later this year.

8.52am BST

Last night, Bloomberg reporter Ferdinando Giugliano rattled out some interesting points about the Italian bank deal:

Italy has just announced the liquidation of the two Venetian banks will cost a17bn - including a a5.2bn subsidy to Intesa. I am speechless.

The government and the Bank of Italy have relentlessly opposed 'bail in'. This is the price Italians pay for their preference for bail outs.

I hope it will be abundantly clear this is no Santander/Popular. Santander will raise a7bn in new capital, Italians may pay up to a17bn.

There are questions for the EU too: what's left of the banking union/BRRD? What credibility does the SRB have? How is this State aid lawful?

For the centre-left Italian govt: bondholders are much wealthier than the average citizen - is it worth spending up to a17bn to help them?

I also have doubts about the political calculations.Italians have been against bail in but are we sure they want a a5.2bn subsidy to Intesa?

Worth clarifying cost is *up to* a17bn - immediate payment a5.2bn. The government hopes it will be even less than that if NPLs well managed.

8.31am BST

German conservative MEP Markus Ferber (EPP) is extremely unhappy that Italian taxpayers are paying the cost of winding down the two Veneto lenders.

In a strongly worded statement, Ferber argues that the central principle of European banking regulation - that bondholders shoulder losses if a bank fails - has been undermined.

"With this decision, the European Commission accompanies the Banking Union to its deathbed. The promise that the tax payer will not stand in to rescue failing banks anymore is broken for good.

I am very disappointed that the commission has approved this course of action. By doing so the Commission has massively undermined the credibility of the Banking Union. If the common set of rules governing banking resolution is so blatantly ignored, there is no point in negotiating any further on a common deposit insurance scheme.

#Italy (6) | Veneto Wind-Down 'Serious Blow' to Bank Rules - Bloomberg (citing Die Welt) - https://t.co/fkOifWCbZM pic.twitter.com/yAIl22Ucqm

8.27am BST

This chart, from the EC's competition offices, shows how Italy managed to wind down Veneto Banca and Banca Popolare di Vicenza under its national laws, rather than EU rules.

And an information chart for banks with capital shortfall. Veneto & Vicenza banks solution is the middle one (wind down under national law) pic.twitter.com/y6BADuDdup

8.19am BST

Michael Hewson of CMC Markets isn't impressed by this deal.

He points out that Spain recently managed to engineer the rescue of its own failing bank, Banco Popular, without spending a penny of taxpayers' money.

So much for the so called new single European rule book and the much vaunted European Banking Union. It appears that there is one rule for Spanish banks, and the recent rescue of Popular Bank, and another for Italian banks.

Let's hope the Italian government has deep pockets given that this particular bailout is a fraction of the non-performing loans in the Italian banking system, of which it is estimated there are about a300bn.

8.15am BST

Shares in Intesa Sanpaolo have jumped by over 3% at the start of trading in Milan.

Traders clearly think Intesa is getting a good deal, and no wonder. It's just picked up more customers, plus a5bn from the Italian state to ensure that its capital ratios aren't affected by the deal.

INTESA SANPAOLO +3.82%

8.08am BST

The bad news is that thousands of jobs are likely to be lost across Banca Popolare di Vicenza and Veneto Banca, now they are part of larger rival Intesa.

Reuters has the details:

Intesa Sanpaolo said on Monday its planned acquisition of the good assets of Banca Popolare di Vicenza and Veneto Banca could lead to the closure of around 600 branches and the departure, on a voluntary basis, of around 3,900 staff.

Italy began winding up the two failed regional banks on Sunday in a deal that could cost the state up to 17 billion euros ($19 billion) and will leave the lenders' good assets in the hands of Intesa, the nation's biggest retail bank.

8.06am BST

Overnight, the European Commission approved the a17bn Veneto bank rescue - even though it appears to breach the principle that taxpayers shouldn't rescue failing lenders.

Margrethe Vestager, EU competition commissioner, said:

"Italy considers that state aid is necessary to avoid an economic disturbance in the Veneto region."

Legal gymnastics to get #Italy new taxpayer funded a5-17bn bank bailout in line with #EU rules. No private creditor bail in. Needs must...

The drawn-out handling of the Veneto crisis has wider implications for Europe's banking union, which aims to integrate oversight of eurozone lenders partly based on the assumption that private creditors would cover bank failure costs, rather than taxpayers.

The Italian state intervention to protect senior bondholders and big depositors runs counter to that principle but has been allowed because the banks' liquidation means there are no competition issues.

Monday's FT: "Italy sets aside a17bn of taxpayer cash to wind down failed lenders" #bbcpapers #tomorrowspaperstoday pic.twitter.com/yCLPJAweiD

7.53am BST

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

Today we'll be watching Italy, after the Rome government scrambled to wind down two regional lenders in an attempt to prevent a bank run.

"Those who criticise us should say what a better alternative would have been. I can't see it."

Related: Italy to wind up two failing banks at potential cost of a17bn

"There are people across the spectrum who are pretty outraged at what's going on in 21st-century Britain. But nothing's happened. We had the prime minister on the steps of Downing Street, we've had promise after promise, and we've had no action. So I think patience is wearing thin and I think it's important that politicians do listen - but more importantly that they act. And there is no reason for delay. How much more evidence do people need?"

The TUC wants zero-hours contracts banned and for everyone on regular hours to have a right to a written contract guaranteeing their normal working hours. It wants an end to bogus self-employment and believes the law should change to give people a default right to qualify for all employment rights, unless the employer can demonstrate they are genuinely self-employed.

Related: Frances O'Grady on insecure work: 'the heartbreaking bit is they think it's normal'