08.53 With investors still fretting over rising yields on peripheral eurozone debt, the euro has been under pressure versus sterling. It fell as low as 78.55p in early trade this morning - its lowest level since 2008. But, it's recovered somewhat and is now trading at 78.649p.
As for yields, Italy's 10-year yields are up 2.5 basis points to 6.056pc while Spain's are up 8.3 basis points to 6.657pc.
08.35 Back in the eurozone, Roger Bootle argues that Finland could be the first to leave the currency area:
I have written about the desirability of Germany leaving the euro – and the likelihood of Greece doing so. But I am now wondering whether Finland might be the first to go. She is just as financially conservative as Germany and in contemplating euro exit, she does not bear the burden of war guilt.
She is close to other Nordic countries which have done pretty well by maintaining their own currencies. And if Finland left, she would not have the problems associated with weak currencies. On the contrary, she has a triple A credit rating and her new currency would rise.
Finland has been critical before. The disintegration of the ERM in 1992 began there. Going back further, it was the Finns' bold resistance against the Red Army's assault in 1939 that persuaded Hitler that the Soviet Union would be a pushover for the Wehrmacht. It would be fitting if it was the country not of Wagner but of Sibelius that prompted the unravelling of the euro.
08.25 If you think things in China are bad, wait until you read what's in store for America. According to Ambrose Evans Pritchard, our international business editor, a fresh US slump is not just a risk any longer. It has already begun:
Output slowed to stall speed over the winter. The US economy tipped into outright contraction in the second quarter, even before facing the "fiscal cliff" later this year – tightening of $600bn or 4pc of GDP unless action is taken to stop it.
Nothing serious is yet being done to head off the downward slide. If ECRI is right, the implications for the global system are ugly.
It is never easy to read the signals at inflexion points. Washington is always caught off guard. As ECRI’s Lakshman Achuthan says, it took the Lehman collapse ten months into recession in September 2008 to "wake people up".
What we know is that retail sales rolled over in February and broader trade sales peaked in December. Industrial output peaked in April. The nationwide ISM index of manufacturing crashed through the break-even line of 50 in June, just as it did at the onset of the Great Recession in late 2007, but this time at a faster pace.
08.05 We all know that China's economy is slowing down, but will the landing be a hard one? According to the country's premier, things could get worse before they get better.
Wen Jiabao warned this weekend that China's economic woes could continue for "some time". He added:
We need to be sober, and see that the economic rebound is not yet stable and economic hardship may continue for some time.
08.00 Good morning and welcome back to our live coverage of the European debt crisis.
