Greek finance minister claims bailout deal is close

http://www.theguardian.com/business/live/2015/may/07/shares-bond-yields-rise-eurozone-greece-bailout-live

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5.42pm BST17:42

Mixed end for European markets after volatile day

Weakness in the fixed income market, notably a plunge in German 10 year bond prices, as well as Federal Reserve chair Janet Yellen’s comments that equity valuations were “quite high” sent European markets tumbling in early trading. But with oil prices slipping back after European stocks rose, there was a revival in both equities and bonds. A rise in US markets also helped sentiment. German bond yields are currently slightly down on the day at 0.58%, while most markets ended in positive territory. An exception was the UK, which was also affected by election jitters as voters went to the polls in what appears to be the closest contest for decades. The final scores showed:

On Wall Street the Dow Jones Industrial Average is currently up 113 points or 0.63% after better then expected weekly jobless claims.

On that note, it’s time to close up for the evening. Thanks for all your comments, and we’ll be back tomorrow.

Updated at 5.50pm BST

5.39pm BST17:39

Greece’s deputy prime minister has endorsed growing expressions of optimism in talks with the country’s creditors, saying enough “common ground” has been found to enable both sides to reach an agreement. Helena Smith writes:

Giannis Dragasakis said he hoped Monday’s meeting of eurogroup finance ministers would finally break ground by signalling that progress had been made. “I hope on Monday a sign of progress will be given and [they say] an agreement is visible,” the 68-year-old politician told the Guardian. “Talks, so far, have shown that there is common ground in changes and political measures and, therefore, I believe a deal is possible and in the interests of everyone.”

But Dragasakis, a former communist who has oversight of the leftist-led government’s economic policy, cautioned that the debt-stricken country’s desperate liquidity problem would also have to be eased.

The European Central Bank’s decision on Wednesday to loosen the noose by increasing emergency financial assistance to the nation’s banking system was unlikely to provide the breathing space needed for Athens to stay solvent and keep apace with debt repayments and public sector salaries and pensions. “Cooperation is required from all sides so that the cash flow problem is confronted,” he said.

Updated at 5.50pm BST

5.25pm BST17:25

Thursday was one of the busiest days for European stock markets in the last two years, according to data from BATS Global Markets. Almost €72bn of shares changed hands, they reported, twice the average for a typical day in May last year.

The average in April was just over £56bn.

5.15pm BST17:15

French economist Thomas Piketty said a Grexit would be a catastrophe which would be the beginning of the end for the euro.

The author of the best-selling Capital in the 21st Century said in a report in Forbes:

It would be a catastrophe for the eurozone if Greece were pushed out. It would be the beginning of the end of the single currency. People every morning would be asking ‘who will be the next to leave?’ That would be the beginning of the end. And the governments of France and Germany have not prepared public opinion for such an eventuality; they would have to do that very quickly.

Full report here.

4.30pm BST16:30

Markets have been volatile during the day, to say the least, with Germany’s Dax in positive territory after a recovery in German bonds and most other European markets edging higher. But the UK is still in the red amid general election jitters. Jasper Lawler at CMC Markets UK said:

European stock markets were left a little out of breath on Thursday as government bond markets pulled a full 180 degree turn from savage losses to a sizeable move higher. A fall in crude oil prices tempered the inflation fears that have caused a massive jump in bond yields this week.

The German bund was headed for its biggest two week drop since its inception as yields spiked across the UK, Europe and Asia but US jobless claims holding at 15 year lows took some of the sting out of oil prices as the dollar rallied.

The resulting fall in the euro helped European equities edge back towards positive territory led by the export-orientated German DAX index.

UK Election Day uncertainty has created hesitancy in markets rather than outright fear of the unknown. There’s hardly been a tidal wave of selling but seemingly an unwillingness to jump in with two feet to any stocks until the election result is known.

In the US the Dow Jones Industrial Average is up 81 points after better than expected weekly jobless claims, ahead of Friday’s non-farm payroll numbers.

3.15pm BST15:15

On the situation in the bond markets, Hargreaves Lansdown senior analyst Laith Khalaf said:

The recent fall in gilt prices is a warning shot to bond investors. Even though yields are still exceptionally low, they aren’t as low as they were, and that has taken its toll on capital invested at the wrong time.

The sell-off is a reminder of the risk of investing in bonds at such low yields. This is heightened by the fact government bonds are seen as safe investments, and consequently feature in many pension funds and supposedly low-risk portfolios.

3.00pm BST15:00

The European Council has just published the agenda for Monday’s eurogroup meeting - you remember, the one where everyone is now saying there will be no breakthrough.

The meeting will discuss Ireland as well as holding a thematic discussion on ensuring strong fiscal frameworks in the euro area member states. And, oh yes, Greece:

Ministers will continue the discussion on the situation in Greece. They will be briefed on the state of play in the ongoing discussions between the Greek authorities and the three institutions - the European Commission, the European Central Bank and the International Monetary Fund on the list of reforms that the Greek government is expected to complete under the current agreement. The reform list is a necessary step to complete the ongoing review and thus unlock the payment of the remaining tranche of financial assistance.

Updated at 3.01pm BST

2.55pm BST14:55

And now German 10 year bond yields are unchanged on the day after their earlier surge, back down to 0.60%.

2.53pm BST14:53

Here’s an interview with Danae Stratou’s rival for the lead role in Common People:

Was @danaestratou, wife of @yanisvaroufakis, inspiration for Pulp's Common People? Or was it Katerina Kana? http://t.co/yHCjKmmYGa

Updated at 2.59pm BST

2.46pm BST14:46

More from Schäuble, courtesy of Reuters:

2.42pm BST14:42

Germany’s finance minister has doused any remaining optimism of a Greek breakthrough next Monday.

Encouragingly, though, Wolfgang Schäuble did indicate that relations between the two sides is a little better....

#Germany FinMin Schäuble says does not have high expectations for May 11 #Eurogroup mtng on #Greece; Atmosphere in talks is a bit better.

2.36pm BST14:36

Journalists of a certain age (ahem) have been humming away and tapping their shoes all morning, thanks to a fantastic rumour that Yanis Varoufakis’s wife may be the star of the 1995 Britpop classic, Common People.

That’s according to the Athens Voice.

It probably falls into the “too good to be true” category. But still......

Over to the Independent:

One of pop culture’s enduring mysteries may have just been solved. Greek paper the Athens Voice has revealed that the wife of Yanis Varoufakis, the Greek Finance minister, could be the rich art student Jarvis Cocker wrote about in Pulp’s single ‘Common People’.

Danae Stratou studied at St. Martins College of Art and Design between 1983 and 1988, the same year Cocker enrolled in a film studies course there during a break from the band. He told NME in 2013 that he met the Greek girl in the song during ‘Crossover Fortnight’, when St Martins students switched into another discipline for two weeks.

In a later interview Cocker remembered a conversation with the Greek woman who “wanted to move to Hackney and live like ‘the common people’”. He used this as the basis for the song. But the identity of the woman has never been discovered, despite a search launched by BBC3.

Please be true! Was Greek finance minister's wife the mystery girl in Pulp's Common People? http://t.co/a6r5pI1NS6 pic.twitter.com/w2YAFp2c9T

Stratou’s CV confirms she was at St Martins at the right time.....but those in the know reckon it’s probably an urban myth. Hey ho.

@FMR_Brussels @v_dendrinou @xtophercook @tom_nuttall article calls this an "urban legend." Heard the subject now a recluse on a Greek island

@graemewearden Looks like Jarvis arrived (Sep 1988) after she graduated. And her major (sculpture) seems wrong.

Updated at 2.38pm BST

2.07pm BST14:07

The Greek stock market is continuing to rally. It’s now up over 4%, on optimism that an agreement can be reached before Greece hits the wall.

That’s despite Greek government spokesman Gabriel Sakellaridis insisting that Athens won’t roll over.

He told reporters that:

“There should not be an expectation on the part of institutions ... that the government will back down on everything....When you negotiate, there should be mutual concessions.

Pension cuts remain off limits, he added:

“We won’t go beyond the limits of our red lines. It’s clear that we cannot cut pensions.”

Updated at 2.28pm BST

1.55pm BST13:55

Back in Greece, prime minister Alexis Tsipras has been meeting with government cleaning ladies who have been rehired after a long battle.

Your perseverance gives us strength. #Greece pic.twitter.com/DM0XEKdafh

These cleaners were laid off as part of the previous administration’s austerity measures, but refused to go quietly. Instead, they picketed outside the finance ministry, protesting against the bailout programme -- and famously forcing Troika officials to flee down a fire escape.

PM Tsipras meets fired cleaners outside his office #Greece pic.twitter.com/sy2FmqudXa

Tsipras had vowed to rehire them. And on Tuesday night, the Greek parliament passed legislation to overturn layoffs, and open the way to rehiring thousands of public sector staff.

1.49pm BST13:49

It’s been a wild old day in the European equity markets.

Germany’s DAX has now bounced into positive territory, tracking the stomach-churning swings in the price of its government bonds.

But general election worries are still pushing down shares in London, where the FTSE 100 is down almost 1%:

1.38pm BST13:38

Yanis Varoufakis: A deal is close

Thanks to the Wall Street Journal, we have details of Yanis Varoufakis’s comments in Brussels this lunchtime.

And the top line is that Greece’s finance chief has not given up hope of a deal.

Greece’s Finance Minister Yanis Varoufakis sees an agreement between Greece and its international creditors, which would unlock desperately needed aid for the debt-stricken state, being reached within the next few days, or weeks.

“I trust an agreement will be in the offing in the next few days, or weeks,” Varoufakis said Thursday, speaking at a business conference in Brussels.

His comments come as Greece’s leftist-led government is locked in negotiations with its international creditors — the International Monetary Fund, the European Central Bank and the European Commission — over its next slice of financial aid as part of a €245 billion rescue package.

The country’s next big hurdle is a €750 million loan repayment to the IMF due May 12, having made a smaller payment this week.

As Helena Smith reported from Athens earlier, there is renewed confidence in Greece of a breakthrough in time.

Varoufakis is still taking questions in Brussels. He insists that Greece both wants to repay the IMF, and will do so.

But he is adamant that the country’s previous aid programmes have been a failure -- particularly the first bailout agreed five years ago this month:

.@yanisvaroufakis: Greece shd never have been bailed out in 2010.

As flagged up earlier, he also argued that Greece needs a bad bank to deal with non-performing loans and unclog the banking system.

And a legal “debt brake” could be imposed, to prevent future excessive borrowing, he added.

Varoufakis was also scathing about Greece’s creditors, saying that the sight of motorcades of Troika officials zooming around Athens was a “humiliation”.

Updated at 1.40pm BST

1.08pm BST13:08

Dramatic swings are taking place in the bond market.

After crashing this morning, German bunds are now rebounding -- pushing the yield on 10-year bunds back down to around 0.63%.

Today's intraday chart for 10-yr Bund yield. (Hint: the 10-yr Bund yield shouldn't do this kind of thing intraday.) pic.twitter.com/0h2FGow8BD

1.07pm BST13:07

Greece’s finance minister has also slapped down the suggestion that Greece has been rescued by countries who are even poorer.

The money didn’t go to us, he says, but to eurozone banks who held Greek debt.

asked about smaller, poorer EU countries bailing out Greece, @yanisvaroufakis sez almost all money actually went to banks.

At #Brussels lunch, @yanisvaroufakis says 91% of bailout funding went to banks. #Greece

12.51pm BST12:51

Yanis Varoufakis is also denying that he’s been sidelined from the bailout talks. We’re all pulling together in perfect harmony, the Greek finance minister tells reporters:

It's a leftie collectivist thing about whole government working together not sidelining, @yanisvaroufakis on his role

"We work in perfect harmony," says @yanisvaroufakis of shakeup of #Greece bailout negotiating team

12.47pm BST12:47