Eurozone crisis: Merkel refuses to yield over ECB as general strike hits Portugal - 24 November 2011

 http://www.guardian.co.uk/business/blog/2011/nov/24/eurozone-crisis-sarkozy-merkel-monti?INTCMP=ILCNETTXT3487

Time to stop the blog for the day.

This summary from earlier is the best way to catch up with the events in Strasbourg. Main events since were the general strike in Portugal (with pictures), and the news that the FSA is preparing for the collapse of the eurozone (although it doesn't think this is likely).
My colleagues will be back tomorrow with more action -- which will include an Italian debt action. What can possibly go wrong?....
Thanks for reading and the great comments. Good night!

7.41pm: Some late news, the International Monetary Fund has welcomed the letter sent by Greek conservative leader Antonis Samaras. More importantly, the IMF are treating Samaras's written assurance of support for the country's draconian bailout policies as satisfactory (via my colleague Helena Smith)

In a statement, the IMF said:

We welcome that (main opposition party) New Democracy has expressed its support for the key objectives and policies of the program that is being supported by Euro 110 billion in financial assistance from Greece's European partners and the Fund.

As we explained this morning, without written promises from Samaras Greece risks not getting further aid.
The IMF also noted that the centre-right party has pledged that any changes it would propose would be in line with the philosophy of the loan agreement's basic framework. Samaras has been a stalwart opponent of the fiscal remedies meted out to Greece by very bodies now propping up its near insolvent economy.
As Helena says:

The big question, now, is whether Euro zone leaders will have the same view as the IMF and judge Samaras' two-page letter legally binding enough to assuage fears of the party rolling back on its committment to Greece's fiscal adjustment program. Worries abound that come March, next year, when elections have been held and a new government is in power, Athens may change course again. EU leaders are expected to make their decision on November 29th.

Earlier on Thursday Samaras declared: "Negotiations are like a game of chess. You make moves and then wait for the other side to move. That is when you have to stick to your position and that is exactly what I did."

6.26pm: The general strike has been taking place in Portugal today appears to have been well-supported.

Transport links have been badly hit, while there are reports that few staff were working at government offices. According to Associated Press, some medical appointments, school classes and court hearings were cancelled, while mail deliveries and trash collection were said to be severely disrupted.

There's a familiar quality to the images - following the long-running anti-austerity demonstrations seen in Greece over the last couple of years.
As Jones tweeted: "These scenes in Lisbon could be pretty much anywhere in Europe over the last year. Same chants, same frustration, same resentment of police"

5.42pm: Looking at the bond markets, Belgium has suffered most from the lack of progress in Strasbourg today. The yield on its 10-year bonds has risen to 5.75% this evening, and was even higher at one stage.

At the start of this month, Spain's 10-year yields were lower.....
As Gary Jenkins of Evolution Securities joked (I think):

Belgium better be careful or it may end up with a government…

Update: in the reader comments, Squiggle reminds me that the Belgian yields have been rising steadily since talks over a new Belgian government collapsed over the weekend. They were just 4.8% on Monday.

5.02pm: Today's Strasbourg talks are well covered in the media. Here's a rapid round-up:

The Financial Times reports that: Merkel and Sarkozy back treaty changes

In some of her most forceful comments to date, Ms Merkel, a strong advocate of moves to enforce greater budgetary discipline among the eurozone's members, said: "We must take steps towards a fiscal union."...
...But Mr Sarkozy was forced to soften the French line.

The BBC points out that, beyond the talk about Treaty changes, Mario Monti had laid out his economic programme to his French and German counterparts, including undertaking to balance Italy's budget in 2013.

At 118% of annual economic output, Italy has a high level of overall debt, but the country has managed to service similarly high debt levels for the past 20 years.
The main problem with the Italian economy is weak growth - the country has averaged 0.75% growth a year over the past 15 years.

Reuters looks to the positives....

France and Germany agreed on Thursday to stop arguing in public over whether the European Central Bank should do more to rescue the euro zone from a deepening sovereign debt crisis.

But the Wall Street Journal warned that the signs of unity only went so far...

The leaders acknowledged their push to forge common economic policy across the euro-zone faces major hurdles, even as the currency bloc is on the brink of collapse. On Thursday, the three leaders sought to play down divisions over how ambitious the ECB's mission in fighting the crisis should be. two are no closer to finding common ground....

Their comments after their meeting in this Eastern French city suggest [Merkel and Sarkozy] are no closer to finding common ground.

4.37pm: The FTSE 100 just posted its ninth daily fall in a row. After a lacklustre session, it ended 12 points lower at 5127. That means that its shed 417 points since the start of last week -or £107bn.

David Jones, chief market strategist at IG Index, commented:

It was business as usual this afternoon with the index once more slipping to fresh lows for this downward move...what little news flow there has been offered little in the way of cheer for investors.

4.16pm: Capital Economics has warned this afternoon that Germany is "caught between a rock and a hard place". Analyst John Higgins explained that:

If she rides to the rescue of her neighbours, she will undermine her own credit standing. If she chooses not to, the euro-zone will probably collapse.

Higgins reckons that Bunds will suffer whatever Berlin chooses to do. Either:

Quantitative easing and common euro-zone bond issuance may be the only ways to draw a line under the crisis given the limitations of the existing arrangements. Yet in the unlikely event that Germany gave ground on these issues, Bund yields would probably soar as investors fretted about the inflationary consequences and the pooling of credit risk.

Or:

Intransigence could be just as bad. Granted, investors might take comfort from the fact that Germany was not willing to throw good money after bad. But this attitude would simply reinforce the impression that she was unwilling to prevent a disorderly break-up of EMU. In this scenario investors probably would want to give the euro-zone, including Germany, a very wide berth. The upshot is that capital inflows could become outflows as investors sought sanctuary elsewhere.

3.46pm: Back in the UK, one of the top officials at the Financial Services Authority has admitted that the regulator is asking British banks to prepare for a possible break-up of the eurozone.

Andrew Bailey, the former chief cashier at the Bank of England and now a senior official at the Financial Services Authority, picked his words carefully - stressing that he was not predicting this would happen but was merely requiring contingency plans to be created - but nonetheless, his remarks are interesting.