Banks rally on rescue deal hopes

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26 September 2011 Last updated at 20:21 GMT Continue reading the main story Last Updated at 17:44 GMT

Market indexCurrent valueTrendVariation% variationEuropean bank shares have risen as investors react to the latest attempts to stabilise the eurozone debt crisis.

A number of measures are being discussed according to reports from the weekend's international meeting in Washington.

They are expected to involve a 50% write-down of Greece's massive government debt, the BBC's business editor Robert Peston says.

French and German bank shares were up 10% at one stage in Monday trading.

European governments hope to have measures agreed in five to six weeks, in time for a meeting of the leaders of the G20 group in Cannes at the beginning of November.

But EU officials in Brussels stress that they should not be seen as "a single grand plan", the BBC's correspondent Chris Morris says.

The measures being discussed are:

Institutions that have lent money to Athens writing off about 50% of the money they are owedThe size of the eurozone bailout fund, the European Financial Stability Facility (EFSF), increasing dramatically to 2 trillion euros (￡1.7tn; $2.7tn)Strengthening big European banks that could be hit by any defaults on national debt obligations.

However, on Monday evening AFP reported that German Finance Minister Wolfgang Schaeuble had told television news channel NTV that there was no plan to boost the size of the EFSF.

"We are giving it the tools so it can work if necessary," Mr Schaeuble was reported as saying.

"Then we will use it effectively but we do not have the intention of boosting its volume."

Pan-Europe gains

Uncertainty over how to tackle Greece's problems has led to some European bank shares losing half their value in recent months due to concerns about their holdings of Greek debt.

But on Monday, French banks, which are particularly exposed to Greece, rallied, with BNP Paribas and Societe Generale up 4% and 5.4% respectively, and Credit Agricole up 3.7%.

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Unless the banks are fixed, there will remain too big a risk that a financial crisis could turn the current global economic slowdown into something more akin to depression than recession”

End Quote Robert Peston Business editor, BBC News Germany's big banks were also up sharply. Allianz was up 10%, Deutsche Bank 8% and Commerzbank 7.7%. In the UK, Barclays rose 6.8% and RBS 3.3%.

The Frankfurt was up about 3% at close, and in Paris by about 2%. The UK's main index, the FTSE 100, was virtually unchanged.

US shares closed higher, with the Dow ahead by 2.5%, the S&P 500 by 2.3%, and the Nasdaq by 1.4%.

However, commodity prices were lower on remaining concerns that the eurozone crisis could affect the global economy.

Philip Tyson of brokerage MF Global told the BBC that the proposed bailout fund had to be at least 2tn euros.

He said: "Markets need confidence that the fund has the firepower to deal with the likes of Italy and Spain should contagion risks spread.

"It does need to happen, but there are big question marks about the detail, and exactly how it will happen. Time is running out."

Ben Critchley, a sales trader at spread betting group IG Index, said: "For now at least, it looks as if markets are giving some credence to a firm plan on how to tackle the debt crisis beginning to emerge.

"But if recent experience is anything to go by, this patience is unlikely to last too long if details are not forthcoming."

Key elements

The reports about the rescue proposals emerged from the annual meeting of the IMF in the US capital last week, attended by finance ministers from the G20 group of countries.

The package is expected to involve a quadrupling - from the current projected level of 440bn euros - in the firepower of the eurozone's main bailout fund, the EFSF.

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The problem, they said privately, was that ministers couldn't talk openly about a new solution to the crisis when the old one had not even been passed by national parliaments. This was a particular issue, naturally, for Germany.”

End Quote Stephanie Flanders Economics editor, BBC News It is not entirely clear how any expansion of the facility would be managed, but one suggestion is for the EFSF to guarantee the first part of any losses creditors sustain from a government defaulting on its debts, with the European Central Bank (ECB) providing an additional 1.5tn euros of loans.

The EFSF would take on the main risk of lending to governments struggling to borrow from normal commercial sources - governments like Italy.

It is also thought that private investors in Greek debt are likely to have to accept a 50% reduction in what they are owed, our editor says.

Eurozone leaders agreed a plan in July, which has yet to be ratified, that provided for a reduction in Greece's repayments to banks of about 20%.

European officials in Brussels stressed that their current focus was on getting measures, including changes to the EFSF, agreed back in July ratified by 17 national parliaments within the eurozone.

It was proving a difficult task, the BBC's Chris Morris says, to get these less far-reaching changes passed, with Germany one of three assemblies to vote this week.

The third element of the rescue plan envisages a strengthening of big eurozone banks, which are perceived to have too little capital to absorb losses.

'Critical days'

Commodity prices remained under pressure, pulled between relief that a eurozone deal could be nearer and worries that the global economy faces a downturn.

Continue reading the main story Oil prices fell sharply in early trading, but recovered with Brent crude up 60 cents at $104.57 a barrel and US light, sweet crude up 55 cents to $80.40 a barrel.

The stronger dollar, which rose around 0.2% against a basket of currencies, also weighed on oil prices as it makes dollar-denominated assets more expensive.

Gold fell 3.2% to $1,603.95 an ounce, continuing recent declines from record highs. Copper, which has already fallen, was down another 4%.

Senior commodities analysts Edward Meir, at brokers MF Global, said: "These are very critical days and weeks ahead, reminiscent very much of the touch-and-go situation we were in back in 2008.

"The key difference this time around is that it is countries and not companies that are in danger of going bust."

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Greeks on strike over austerity

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5 October 2011 Last updated at 17:59 GMT A protester explains why she is against the austerity measures in Greece

Dozens of stone-throwing youths have clashed with police in Athens as public sector workers went out on strike in protest at Greece's austerity measures.

The 24-hour strike saw flights and ferry services cancelled, government offices and tourist sites closed, and hospitals working with reduced staff.

Many strikers expressed frustration and anger at the cuts.

The European Commission is discussing ways of propping up banks in Europe to protect them from the Greek crisis.

The general strike is the first since the Greek government announced an emergency property tax and the suspension of 30,000 public sector staff last month.

But despite these measures, the government has failed to cut its deficit to 7.5% of economic output (GDP) - a target it must meet if it is to receive the next instalment of bailout money from the EU.

Meanwhile, in its latest report on the European economy, the International Monetary Fund (IMF) has warned that economic growth is in danger of petering out and a global recession in the coming year cannot be ruled out.

Global financial markets have been in turmoil over fears that Greece could default on its debt, most of which is held by European banks. In other developments:

On Tuesday, Moody's ratings agency slashed Italy's credit rating from Aa2 to A2, blaming an overall loss in confidence in eurozone governments.Despite the Italian downgrade, European markets rose sharply as trading opened on Wednesday.Belgium and France are working on plans to rescue the Franco-Belgian Dexia bank, which is exposed to Greek debt.German Chancellor Angela Merkel said again that Greece must remain a member of the eurozone.'Lives ruined'

The government says the stringent austerity measures cannot be avoided if the country is to reduce its deficit of 8.5%.

Continue reading the main story Mark Lowen BBC News, Syntagma Square, Athens

It is a very noisy demonstration indeed here, certainly the biggest demonstration by Greece's public sector in several weeks. The country has ground to a halt.

All of these people are extremely angry at the austerity measures that the government is desperately trying to push through to qualify for the next instalment of its international bailout, in order to stave off bankruptcy and avoid defaulting on its debts.

The government says it is in a very difficult position, because it must pursue its austerity drive to meet its fiscal targets and reduce the budget deficit to avoid bankruptcy within the next few weeks.

But this wave of social unrest is growing by people who say the measures are deepening the recession, stagnating the economy and stunting Greece's growth.

But the measures are hugely unpopular and have led to a wave of strikes and protests.

Tens of thousands of people stayed away from work across Greece. In central Athens, at least 16,000 marched to Syntagma Square to join a demonstration outside parliament.

Although most of the protests were peaceful, police fired tear gas at small groups of demonstrators who were throwing stones.

About 10,000 people marched in the northern city of Thessaloniki.

Critics of the austerity drive say it is deepening the recession, stunting Greece's growth - the economy will shrink 5.5% this year - and stopping the country from being able to reduce its government debt itself.

Protesters also say they are unfairly bearing the burden of the country's debt.

"This is an opportunity for the Greek people, whether in the public or in the private sector, to fight this, to deny this logic that we must bow our heads all the time to save the country and show patriotism," said 37-year-old protester Dimitris Kizilis.

"We believe, as workers, that patriotism is to respond with actions."

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There are some European regulators and politicians who regard the downgrade of Italy and the woes of the Franco-Belgian bank Dexia as positive events (oh yes) ”

End Quote Robert Peston Business editor, BBC News Stathis Anestis, a spokesman for Greece's main union the GSEE, said the new measures were "just extending the unfair and barbaric policies which suck dry workers' rights and revenues, and push the economy deeper into recession and debt".

"With this strike, the government, the EU and the IMF will be forced to reconsider these disastrous policies," he told Reuters.

Greek civil servant and trade unionist Tiana Andreou told the BBC that people's lives had been ruined.

"We have decided that we're going to stop this."

Some militant civil servants are promising to sabotage the moves. On Tuesday, protesters again blocked the entrance to several government departments, including the finance and transport ministries.

The government says it has enough cash to pay pensions, salaries and bondholders until mid-November, having previously said it needed more money by mid-October to avoid a default.

Inspectors from the IMF, European Central Bank and European Commission - known collectively as the troika - have been in Greece this week to assess its financial situation.

But eurozone finance ministers have delayed a decision on handing over the money, after Greece said it would not meet this year's deficit-cutting plan.

The government admitted that the budget deficit will stand at 8.5% this year, rather than the 7.5% target.

On Wednesday, the IMF's European chief Antonio Borges said there was no rush for the second bailout, and that he was "confident negotiations will come to a positive conclusion".

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Trend in EU economic bucking of Estonia

October 6, 2011, last updated: 57 GMT by Charlotte Ashton, World Tallin Tallinn, Estonia-Skype, as well as other companies in emerging technologies now has the fastest economic growth in the European Union, so what does Estonia just when other countries are so many economic problems?

Ave Maria Ounapuu enjoys boom of Estonia.

Organic cosmetics company established JOIK four years ago to take its business to making candles.

She has received grants from the European Union for machinery and marketing help, but says the business agenda of the Government of Estonia helped too: "it was pretty easy.

"There was no problem with the regulations, even finding products to sell went smoothly enough.

"You can report your taxes online so you don't need to spend valuable time to forms and things. We don't have our growth to the Government, but they will not put any obstacles in our way. "

Currently, JOIK employs four people, was moved to a larger space. It has an annual turnover of 250,000 euros, on export to countries bordering the Baltic.

Ave Maria Ounapuu says the Government of Estonia has set up an independent business with ease

This is a similar story of Estonia as a whole, as the country has a long way since she joined the EU in 2004.

The initial flow of credit to the construction boom that led to high House, but the bubble burst in 2008, when the country found itself the economic doldrums, it had to smarten up their act.

Labour laws were liberalised, increased retirement age and public spending cut. But the tax remained low to encourage business; Entrepreneurs were fashionable.

Estonia GDP grew at 8.5% in the first quarter of this year, the fastest growth of all the EU economy. One of the biggest growth areas in it technology.

Estonia exports mainly to the EU, but exports of its main markets, Finland, Sweden are distorted

Skype Online software used by people 200 m each month to make free or cheap video phone calls over the Internet, has its development, on the outskirts of Tallinn.

The software was invented in Tallinn of Dane, Swede and Estonians.

Stan Tankivi, head of Skype Estonia, says: "you can show the country of Estonia itself as a witness. It regained independence 20 years ago, the company generally or culture here has very little hierarchy.

"It is very small and nimble, that sort of environment is very positive for entrepreneurship".

In January, Estonia joined the euro. Stability of the currency result, along with those low corporate taxes (zero profits reinvested), this tiny nation of 1.3 m investment very attractive. Exports are soaring, up 53% last year. This summer came the euro 1bn for the first time.

But 70 percent of exports go to EU countries, growth is deteriorating steadily and its two main export markets, Finland and Sweden.

How is the economy of Estonia so fragile?

It is still a net recipient of EU money but its contribution to financial stability facility means that European companies is decreasingly profitable. Contribution of Euro 2bn represents one third of the annual budget.

"We were invited to a wedding but turned out to be a funeral," says Anders Arrak, Estonian who has entrepreneurial University apply.

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of course we understand what the meaning of the credit crisis, but in Estonia is not a hot topic for us "

end quote Andrus Ansip Estonian Prime ??????"??? us a lot of money from the EU.

"We have already renovated churches and roads. But now we are being asked to pay money to improve the errors made in the past, Greece and the countries of the eurozone.

"It makes sense. We have to invest in the future of Estonia. "

But the Prime Minister of Estonia Andrus Ansip stay safer will continue its growth: "of course we all need to be concerned but our banking sector is doing well, our commercial banks are well capitalised and correspond to the reserves.

"The State the money are the best of all the European Union because we have still 12% GDP reserves.

"Yes, of course, we understand what the meaning of the credit crisis, but in Estonia is not a hot topic for us."

Mr Ansip thank him an erection activities explaining why Estonia, a poor cousin Mizrahi, fresh out of troubled times himself, bail out its richer southern cousins.

Drinkers in the lounge of their obligation to contribute to the Museum say bailouts EU

But support for the European Union young Estonians soothes the unwavering with a glass of wine in one of the new trendy bars, lounge Tallinn Museum.

Memories of Soviet occupation, which ended just 20 years ago, are still fresh among the younger generation.

Ali is a teacher at the school who says it fully supports Estonia's contribution to the bailout.

"I don't even understand what the discussion. We already received money from the EU now is a good thing because ultimately we are in a position to help someone else. I think it's only fair. "

The Museum lounge Manager, ARGO, agrees. "An overview of Estonia in the West now, only the West," he says.

And Estonia are ready to pay the price.

The world tonight is broadcast weekdays on BBC Radio 4: 00 p.m. BST.

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VIDEO: 'Too much euphoria' over Asian economy

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Asian nations face huge unresolved challenges - of poverty, poor governance and environmental degradation.

Stephen Sackur spoke to Rajat Nag, Managing Director General of the Asian Development Bank about inequality and governance in Asia, and asked whether there is too much optimism about Asian economy growth.

You can watch the full interview on Wednesday 5 October on BBC World News at 03:30 GMT, 08:30 GMT, 15:30 GMT and 20:30 GMT.

And on BBC News Channel at 04.30 BST on Wednesday repeated on Thursday 00.30 BST.

Find out who is coming up on the programme by following us on Twitter.

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Where are the Occupy Wall Street protests heading?

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3 October 2011 Last updated at 22:58 GMT By Laura Trevelyan BBC News, New York Commentators are wondering if this movement could become a "Tea Party" for the left As a man known as Mercury puts the finishing touches to his corporate zombie make up, he explains why he's joined the anti-capitalist protests here in the shadow of Wall Street.

"We are inspired by the Arab Spring. Americans have rights but they're too often apathetic."

Welcome to Zuccotti Park, where the leaderless protest is now entering its third week.

Sophie is here to protest about the execution of a Georgia man, Troy Davis.

Will Estrella believes this is his generation's revolution.

And Brian Phillips, a marine turned housing community official, wants to see the Federal Reserve abolished.

The protesters aren't unified in their motivations or their demands, but they're tapping into discontent about inequalities in an America still struggling after one recession and fearful about entering a second.

'We're the 99%'

Brian Phillips, who wears his marine dog tags round his neck, says he has been lied to all his life by officialdom and he's had enough.

The protesters want a change in political and economic culture

That's what made him leave Washington state and his job at a low-income housing unit to come here.

Now Brian is efficiently dealing with media requests.

I tell him that I want to speak to one of the 700 arrested on Brooklyn Bridge on Sunday.

"Arrested Sunday!" calls Brian. Two young men step forward for me to interview.

That's how we communicate, Brian explains, with marine-like efficiency, as to his left a group start the day with yoga.

Police officers stand at the edges of the protesters' encampment, and today at least relations seem cordial enough.

But on Saturday the demonstrators say the police ushered them on to a roadway section of the Brooklyn Bridge rather than the pedestrianised walkway, fenced them in and then arrested them for disorderly conduct.

The NYPD says this isn't correct, and has released a video of the police telling the protesters not to go on the roadway section of the bridge.

Freelance photographer Will Estrella says the police clearly guided him and others on to the bit of the bridge they weren't meant to be on.

The NYPD's tactics for policing this protest have been called into question after a high ranking officer was seen on a YouTube video using pepper spray on demonstrators the weekend before last.

Will Estrella wants this to be a peaceful protest, a theme echoed across Zuccotti Park.

Most of the protesters I saw camping out at Zuccotti Park were young - in their mid-20s. Many have gone from job to job since graduating.

They have known difficult economic times in young adulthood, and they don't like a system which to them seems to reward what they call the "1%" of society.

"We're the 99%", they say.

Their manifesto supports the people of the world against corporate greed, and calls for people to assert their power and create a process to address the problems we face.

In the centre of Zuccotti park, amid the sleeping bags, is the communal food area.

Ange, a 24-year-old redhead who does freelance art work in Manhattan, is helping organise the food for the protesters.

"I like communal decision making, something that comes from the bottom up," she explains. Ange isn't sure how long she'll be here, but she's pleased to be part of a grassroots movement.

Where will this lead? No-one knows. But the protesters say their enthusiasm won't fade with the autumn sunshine.

The question is whether this ad hoc group of protesters - who feel they're getting the short end of the stick while corporate America hoards money - could morph into a political movement, a kind of left wing Tea Party.

The city's unions are now starting to back the protesters, something they didn't at first, suggesting they see the potential here.

Jesse Cooper Levy, a bearded 24-year-old, hopes this movement will influence politics.

His particular concern is what he sees as the corrupting influence of corporate lobbyists on Washington DC.

"What do you want?" I ask the protesters. "Change", comes the answer - a change in political and economic culture.

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US nears South Korea free trade

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6 October 2011 Last updated at 03:19 GMT The trade deal is expected to dominate President Lee Myung-bak's visit to the US later this month The free trade agreement between the US and South Korea has cleared the first hurdle four years after the deal was first agreed.

The House Ways and Means Committee has voted to advance US free-trade agreements with South Korea, Colombia and Panama to the full House.

The push for a swift approval of the deals comes amid a slowdown in the US economy and high rates of unemployment.

Backers of the deals said they will boost US exports and create jobs.

"With zero jobs created last month and the unemployment rate hovering around nine percent, we must look at all opportunities to create American jobs," said David Camp, chairman of the House Ways and Means Committee.

Tariff concerns

The deal with South Korea is the largest US trade pact since it signed the North American Free Trade Agreement in 1994.

According to some estimates, it is expected to increase US exports to the Asian economy by as much as $10bn (￡6.5bn).

Though the deal was agreed in 2007, there had been concerns in the US over tariffs imposed by South Korea on the US carmakers.

The two sides finally managed to reach an agreement on the issue last year. South Korea said it would halve its tariff on US cars to 4% and lift it completely in four years.

At the same time, US said it would also lift its 2.5% tariff on Korean cars during that period.

South Korea had also agreed to allow the US to export up to 25,000 cars a year that do not meet its more stringent safety requirements.

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Crowds swell Wall Street protests

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1 October 2011 Last updated at 01:49 GMT The crowds in Zuccotti Park are frustrated at a lack of employment and opportunity in the US An estimated 2,000 people have gathered in Lower Manhattan, New York, for the largest protest yet under the banner Occupy Wall Street.

Demonstrators marched on New York's police headquarters to protest against arrests and police behaviour.

Several hundred people have camped out near Wall Street since 17 September as part of protests against corporate greed, politics, and inequality.

Earlier, UK band Radiohead were forced to deny rumours they would appear live.

A tweet sent out by a Twitter account linked to the protest movement set off a firestorm of online interest.

But a spokesman for the band later denied they were planning to appear, and the group themselves denied the rumour on Twitter.

"We wish the best of luck to the protesters there, but contrary to earlier rumours, we will not be appearing today at #occupywallstreet," @Radiohead tweeted.

Anger at police

The Occupy Wall Street movement has set up its base camp in Zucotti Park, a privately owned patch of land not far from Wall Street.

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We blame the banks. They were part of this, but so was Freddie Mac and Fanny Mae and Congress and you and me and everybody”

End Quote Michael Bloomberg Mayor of New York City Hundreds of people have camped out in the park since 17 September.

The loosely organised group says it is defending 99% of the US population against the wealthiest 1%, and had called for 20,000 people to "flood into lower Manhattan" on 17 September and remain there for "a few months".

Some 80 people were arrested during a march on 25 September, mostly for disorderly conduct and blocking traffic, but one person was charged with assaulting a police officer.

Friday's protest numbers were swelled by local trade unions and by those attracted to the area by the rumour of Radiohead's attendance.

New York's police have come in for criticism by the movement since video emerged of pepper sprays being used against demonstrators last weekend.

"NYPD protects billionaires and Wall Street," read one placard carried aloft on Friday, the AFP news agency reported, as crowds marched towards the city's police headquarters, where they rallied peacefully before dispersing.

The stand-off at One Police Plaza passed off largely peacefully

New York Mayor Michael Bloomberg used his weekly appearance on a radio show to criticise the protesters, saying they were targeting the wrong people.

"The protesters are protesting against people who make $40,000 or $50,000 a year and are struggling to make ends meet. That's the bottom line," he said.

"We always tend to blame the wrong people. We blame the banks. They were part of this, but so was Freddie Mac and Fanny Mae and Congress and you and me and everybody."

A series of other small-scale protests have also sprung up in other US cities in sympathy with the aims of Occupy Wall Street.

The movement's website on Friday said a Boston movement had begun, with other reports online suggesting a sit-in was due to begin on Saturday in downtown Washington DC.

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