Debt crisis: live

The auctions come as Spain's economy minister was quoted as saying that Europe's debt markets are not functioning properly due to the slow and complicated decision-making process in the eurozone.

Luis de Guindos told Spanish daily La Vanguardia:

There are no [debt[ operations between nations in the monetary union and practically the only demand for Italian debt comes from Italians. A similar thing is happening in France and Spain.

He added:

There is a problem from the point of view of the fundamentals of the monetary union. The decision-making process in the euro zone is slow and complicated. That is where international investors who highlight the weak points attack, at the moment Italy or Spain, at another moment, it will be others.

08.15 And yet more bad news, this time for Italy: Moody's downgraded 13 of its banks late last night, citing the weakened borrower standing of the government after last week's sovereign cut. The agency said:

Along with the increase in the risk of sovereign bond defaults, the downgrade of Italy's long-term ratings to Baa2 also indicates a similarly increased risk that the government might be unable to provide financial support to its banks in financial distress.

08.10 There was bad news in America too, as retail sales fell for a third straight month, dropping 0.5pc in June from May and confounding analysts' expectations of a small increase. There were declines across a wide swathe of industries from electronics and cars to building supplies.

08.01 Yesterday the IMF cut its global growth forecast and warned that the outlook could dim further if policymakers in Europe do not act with enough force and speed to quell their region's debt crisis. Its 2013 forecast for global economic growth dropped to 3.9pc from the 4.1pc it projected in April.

On the UK, the IMF cut its growth forecasts for 2012 and 2013 by 0.6 percentage points each, to just 0.2pc and 1.4pc respectively - well below what Britain's official forecaster, the Office for Budget Responsibility, predicted in March.

Downside risks to this weaker global outlook continue to loom large. The most immediate risk is still that delayed or insufficient policy action will further escalate the euro area crisis. In case of a major shock to the recovery, fiscal policies may need to be recalibrated in countries with fiscal space, in the context of a reassessment of the overall macroeconomic policy mix...

There is room for monetary policy in the euro area to ease further. In addition, the ECB should ensure that its monetary support is transmitted effectively across the region and should continue to provide ample liquidity support to banks under sufficiently lenient conditions.

08.00 Good morning and welcome back to our live coverage of the European debt crisis.

Debt crisis live: archive