Debt crisis: US jobs data disappoints

The markets are not going to like this number in the least. It seemed like going into this number everybody was expecting about 100,000, the last couple of days it looked like most numbers went up to 125,000. Comes in at 80,000 - a poor number and a very political number and it will not sit well with the market. There is no question that the QE3 conversation becomes very alive in the coming days and weeks.

If there is any piece of bad news, Europe is going to get blamed. The fact is this is a positive number, it is a plus 80,000. It does cap one of the worst quarters we have seen in years and so that will obviously get some headlines here too - that the quarterly number was terrible. Where do you go with the blame on this one - there are just so many places to talk about. Frankly, if you are an American employer, with the uncertainty that you have in front of you for the next six months, there is just no reason to go out and do a lot of hiring right now.

13.30 US non-farm payroll data is out, and it isn't good: just 80,000 new staff were hired in June. That's way below expectations of 100,000, and makes the second quarter the worst for two years. The unemployment rate remained unchanged at 8.2pc in June.

12.41 Cyprus is the next eurozone bailout customer - except it's looking outside of Europe for the cash. Russia has received an official €5bn loan request, the country's finance minister says: "We have received the request. We are currently studying it."

12.30 Spanish 10-year bond yields have risen above 7pc - sort of. Bloomberg quotes 6.97pc as an overall figure, but a bid yield of just a shade over 7pc. Reuters is also quoting just over 7pc. That milestone is dangerous as it's widely thought to be an unsustainable level.

12.09 The Chancellor has announced Ian McCafferty - who has been chief economic adviser at the Confederation of British Industry since 2001 - as Adam Posen's successor as external member on the Monetary Policy Committee. The appointment will take effect on 1 September 2012. The Chancellor said in a statement:

I am delighted that Ian has agreed to join the Monetary Policy Committee. His broad professional experience in business and industry, as well as his knowledge of the UK economy, will be extremely valuable to the Committee in dealing with the challenges it faces now and in the future.

11.31 Italian bond yields have now edged above 6pc, and Spain is threatening to pass 7pc before the day is out, currently at 6.9pc. We'll keep you updated.

11.13 German industrial output data is out, and it's smashed expectations. It was thought that we'd see growth of 0.1pc, but it's taken a 1.6pc leap month-on-month.

10.29 The Finnish finance minister, Jutta Urpilainen, said in a newspaper interview this morning that she'd consider crashing her AAA-rated country out of the eurozone rather than face paying the debts of another country:

Finland is committed to being a member of the eurozone, and we think that the euro is useful for Finland. Finland will not hang itself to the euro at any cost and we are prepared for all scenarios.

Collective responsibility for other countries' debt, economics and risks; this is not what we should be prepared for. We are constructive and want to solve the crisis, but not on any terms.

^{Jutta Urpilainen}

10.25 The Bank of England's Financial Policy Committee - which will support Government economic policies as the rate-setting Monetary Policy Committee does - has released the minutes of its June 22 meeting. There had been concerns that members needing to take growth into account would distract them from keeping inflation in check, but apparently not:

It was noted that the primary objective to protect and enhance resilience, and the new secondary objective were compatible. Indeed, the committee's recommendations... over the past year had been specifically designed to build resilience while supporting lending and growth.

Last week the FPC published recommendations from the June 22 meeting, and said British banks should feel free to tap into their hefty cash piles to keep lending flowing into the recession-hit economy as the economic outlook darkens.

10.06 UK factory gate inflation data is out, and it shows that that lower oil prices helped ease the figure down to a near 3-year low. Last month input prices fell by 2.3pc year-on-year and output prices grew by just 2.3pc. Samuel Tombs of Capital Economics said:

June's UK producer prices figures highlight the downward pressure on prices emerging at the start of the inflation pipeline. Output prices fell, causing the annual inflation rate to ease to 2.3pc. Given the relatively long lags involved, this points on past form to the potential for core consumer goods inflation to fall into negative territory in mid-2013. So, following a prolonged overshot of the MPC's 2pc inflation target, it is becoming increasingly likely that we are now heading for an equally elongated period of below target inflation.

10.02 In the same week that it took on the presidency of the EU, Cyprus has complained of falling an "unfair" victim to Europe's debt crisis.

Finance minister Vassos Shiarly said the nation went into the red only after paying "a very heavy price" to enable Greece to write off more than €100bn of debt owed to private banks. Cypriot banks held massive amounts of Greek debt, Cyprus lost €4.2bn.

This was not a fair way to deal with it. It was a European problem. I believe we should have shared that loss fairly on a level playing field.

09.26 More to expect today: the Bank of England will come under scrutiny as details emerge from the June 22 meeting of its new Financial Policy Committee, the regulatory body set up to spot signs of stress in the economy as a whole. We also get the EC's quarterly report on the eurozone.

09.14 Christine Lagarde, head of the IMF, has warned today that the global situation has become "more worrisome". There's been no official change to growth estimates, but it sounds awfully like she's preparing us for a downward revision on July 16 when the next update is due:

Over the past few months, the outlook has, regrettably, become more worrisome. This is a global crisis. In today's interconnected world, we can no longer afford to look only at what goes on within our national borders. This crisis does not recognize borders. The global growth outlook will be somewhat less than we anticipated just three months ago.

09.06 The Greek finance ministry has been unable to collect €12.6bn in tax fines - equivalent to 6.2pc of GDP - partly due to staff cuts imposed as part of an austerity drive, reports Kathimerini. The fines were handed down by courts after tax disputes. So far only €630m has been collected.

08.47 Other things we'll be watching out for today: the Greek parliament gets to work with the new PM Antonis Samaras presenting his crisis plan - thought to involve a raft of privatisations. Elsewhere, Mario Draghi, Mario Monti and Laurent Fabius, France's foreign minister, will meet for a chat about the eurozone economy. We've also got some data: UK producer prices and German total industrial production.

^{Antonis Samaras}

08.35 Spanish bond yields remain elevated this morning, having edged up yesterday during the ECB press conference. The rate on 10-year debt is currently 6.75pc, while Italy is hovering just below a dangerous milestone at 5.96pc (that's using Bloomberg data - Reuters reports a slightly higher figure of 6.03pc).

08.18 The European markets have opened for the day, making losses as investors shrugged off stimulus measures in Europe and China ahead of key US data out later today (non-farms payrolls data is out just after midday). Traders looked to book more profits on five straight weeks of gains, the longest winning streak this year. Markus Huber, head of German high net-worth trading at ETX Capital, said:

I don't think that everybody who went flat or took some profits (on Thursday) has necessarily come back into the market just yet, meaning many are remaining on the sidelines at least till after today's non farms or even till next week when the US earnings season kicks off. Also one good job number wouldn't necessarily mean that a new trend has been established.

The FTSE 100 has lost 0.28pc, the DAX has slipped 0.41pc and the CAC has dipped 0.56pc. The IBEX is off 0.93pc and the FTSE MIB is 0.63pc lower. On the Asian markets overnight, the Nikkei in Tokyo closed 0.65pc lower.

07.58 More countries could soon be lining up in Brussels with their begging bowls, as Slovenia's finance minister admitted yesterday that a bail-out "can't be ruled out".

Janez Sustersic told reporters that while Slovenia's banking system was currently "manageable with our own resources" and there was no "need to ask for EU help," he added:

If the problems of banks turn out to be bigger, if it turns out we were not aware of some of them or if new risks appear, then maybe down the road, asking for help can't be ruled out.

_{^{Slovenian finance minister Janez Sustersic (Photo: AFP)}}

07.51 Associate editor Jeremy Warner argues that while many have focused on the Bank of England's "monetary mumbo jumbo," the real news is China, which is headed for a hard landing:

Chinese policymakers have become seriously rattled by the evident slowdown in their economy. China is a big place – a statement of the bleedin obvious if ever there was one – and economic performance across the country has always been extremely varied. Think how divergent it can be in Europe and America – with some regions growing fast and others in depression – and magnify it a couple of times for China. As a whole, the economy is still growing fast by European and American standards, but for China, which needs to create tens of millions of jobs a year to keep pace with rapid urbanisation, it's not nearly fast enough.

07.48 Three of the world's central banks took drastic action yesterday in an attempt to soothe the pain of the financial crisis. The Bank of England decided to pump an extra £50bn into Britain's ailing economy, while the European Central Bank and People's Bank of China slashed interest rates. Philip Aldrick reports:

China's move, in particular, came as a shock. It was the second time in a month that Beijing had reduced rates, prompting speculation that the world's second largest economy and engine of global growth could be stalling.

The interventions, which were not officially co-ordinated, came as Mario Draghi, the ECB president, confirmed that "some of the previously identified downside risks to euro area growth have materialised", and the Bank warned that the crisis on the continent was eroding confidence in the UK.

Following the ECB action, the euro fell to close to a three-and-a-half year low against the pound.

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

Debt crisis live: archive