Money markets look to EU informal summit

The markets have fallen ahead of today’s key meeting of European leaders in Brussels indicating that hopes are fading on new measures to help Greece.  Money markets look to EU informal summitThe FTSE, CAC and DAX are all down and the Euro has slumped lower on a lack of optimism.

Today’s summit will be a first for new French President Francoise Hollande and the key issues will be extra measures to support liquidity such as Eurobonds and future plans for growth in context with austerity plans.

We are not expecting anything concrete from today but at the very least the market needs some semblance of a plan.

Spain will also be in the headlines today as it sets outs its plans for ailing Bankia the struggling Spanish lender.

Yesterday the markets seemed to be holding up well before confidence started to wane and the final kicker came when former Greek PM Papademos stated that preparations for a Greek exit are being considered and the risk is real.

The IMF have further ramped up the pressure by noting that Greece has more to do with further structural reforms needed and tax to be collected.

We have just had the Bank of England minutes and the vote was 9-0 to leave rates unchanged and 8-1 to maintain QE at £325 billion.

According to feedback the decision on QE was finely balanced and following yesterdays fall in inflation and euro headwinds the expectation is that the MPC may now shift to move nearer to further QE.

In addition April retail sales for the UK were much weaker than expected at -2.3% months on month against an expected -0.8% month on month.

The retail sales data continues the weak tone for UK data and echoes the call from the IMF yesterday that more needs to be done by the UK to revive growth.

The Pound is relatively unmoved by the news as developments in Europe overshadow UK data.

In other news the Bank Of Japan left rates unchanged but suffered a Fitch downgrade- more negative news for global markets but not much impact on the Yen as Europe eyed.

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