Eurozone crisis live: ‘Battle lines’ drawn over eurobonds

Divisions between EU leaders take centre stage in the absence of major economic data

8.04am: The FTSE 100 index in London has opened some 14 points higher at 5364, a 0.27% gain.

Oil is steady but is on track for a fourth weekly loss – the longest losing steak since early 2010 – as investors worry over the global economic outlook. Brent crude futures inched up 2 cents to $106.57 a barrel this morning.

7.48am: Good morning and welcome back to our rolling coverage of the eurozone debt crisis and world economy. It’s a quiet day for economic data in Europe today, so the divisions between EU leaders over how to restore confidence in the euro take centre stage.

A major rift has opened up between Germany and France for the first time since the crisis began, our Europe editor Ian Traynor reported yesterday from Brussels. The new French president, François Hollande, insists that eurobonds are the only way forward and together with the Italian prime minister, Mario Monti, is piling pressure on German chancellor Angela Merkel.

Michael Hewson, senior market analyst at CMC Markets UK, says the “battle lines” are beginning to get drawn over eurobonds.

It can’t be any surprise to see the countries that would benefit the most from lower borrowing costs are looking to leverage off Germany’s position as the strongest EU economy, and its triple-A rating.

In any case Germany is not isolated on this issue with Austria, Holland and Finland coming out against the proposals, all countries who don’t have large debts.

In Greece, new kids on the political block Syrizas, who oppose austerity measures, are moving ahead in opinion polls at the expense of Samara’s New Democracy party who are in favour of the bailout plan.

The FT is reporting that some of Europe’s biggest fund managers are dumping euro assets amid growing fears over a Greek exit from the eurozone and more euro turmoil. The euro hit a fresh 22-month low at $1.2514 yesterday.

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