Hard times in Eurozone uneployment high

The eurozone's unemployment rate hit a new record high in October,while consumer price rises slowed sharply.
The jobless rate in the recessionary euro area rose to 11.7%. Inflation fell from 2.5% to 2.2% in November.
The data came as European Central Bank president Mario Draghi warned the euro would not emerge from its crisis until the second half of next year.
Government spending cuts would continue to hurt growth in the short-term, Mr Draghi said.
The unemployment rate continued its steady rise , reaching 11.7% in October, up from 11.6% the month before and 10.4% a year ago.
A further 173,000 were out of work across the single currency area, bringing the total to 18.7 million.
The respective fortunes of northern and southern Europe diverged further. InSpain, the jobless rate rose to 26.2% from 25.8% the previous month, and in Italyit rose to 11.1% from 10.8%.
In contrast, unemployment in Germany held steady at 5.4% of the labour force, while in Austria it fell from 4.4% to just 4.3%.
Spending hit
Data earlier this month showed that the eurozone had returned to a shallow recession in the three months to September, shrinking 0.1% during the quarter, following a 0.2% contraction the previous quarter.
The less competitive southern European economies, such as Spain and Italy, where governments have had to push through hefty spending cuts to get their borrowing under control, have been in recession for over a year. But growth in Germany and France came in at a disappointing 0.2%.
More recent data suggests that both core eurozone economies have continued to skirt recession during the autumn.
Retail sales in Germany shrank 2.8% in October versus the previous month, down 0.8% from a year earlier, according to data released on Friday. Analystshad expected the country to record unchanged or moderately growing sales.
Meanwhile, separate data showed consumer spendingin France shrank 0.2% in October versus the previousmonth, with spending on cars and other durable goods hardest hit.
Contraction 'inevitable'
The sharp slowdown in the eurozone's consumer price index , to 2.2% in November, is also symptomatic of the weakness of spending.
However, the inflation data may also open the door to further measures by the ECBto boost the economy, as theindex fell much closer to the central bank's 2% targetrate.
"We have not yet emerged from the crisis," said Mr Draghi, speaking on pan-European radio. "The recovery of the eurozone will certainly begin in the second half of 2013.
"It's true that the budgetaryconsolidation entails a short-term contraction of economic activity, but this budgetary consolidation is inevitable."
Despite Mr Draghi's warning, and the generally poor state of the eurozone economy, markets have begun to take a far more sanguine view of the single currency's future.
Italy's implicit cost of borrowing in the financial markets has fallen to its lowest level in two years, dropping to an implied interest rate of about 4.5% for 10-year debt.
Spain is able to borrow frommarkets at a 10-year rate of about 5.5% - far below the 7%-8% rate being demanded over the summer.
Mr Draghi conceded that the announcement of the ECB's willingness to buy up potentially unlimited amounts of government debt had boosted market confidence, even though noeurozone government had actually taken up the ECB's offer yet.

Spanish Banks Agree to Layoffs and Other Cuts to Receive Rescue Funds in Return

Although the Spanish government can tap into more of the money to help other troubled banks stay afloat, the government has said it will not need the fullamount in any case.
Presenting its restructuring plan on Wednesday, Bankiasaid it would lay off 6,000 employees, or 28 percent of its work force, and cut itsbranch network by 39 percent. The bank predicted it would return to profit next year and reach earnings of 1.5 billioneuros ($1.9 billion) by 2015.
Still, the Spanish government has yet to draw a line under its banking crisis. The next step is expected in December with the creationof a so-called bad bank, which the government is trying to create by teaming up with private investors as equity holders. But the valuation of the bad bank's assets has proved to be a thorny issue because of the effect such valuations couldhave on other real estate assets. The most significant cuts will be made by Bankia, thegiant lender whose collapse and request for 19billion euros, or $25 billion,in additional capital last May led the Spanish government to negotiate a banking rescue of up to 100 billion euros ($130 billion) a month later.
The money approved Wednesday is part of that negotiated amount and willcome from the European Stability Mechanism, the rescue fund for the euro zone.
Joaquín Almunia, the European Union's antitrust commissioner, said the approval of the restructuring plans of the four banks - Bankia, Novagalicia Banco, Catalunya Banc and Banco de Valencia - was "a milestone."

EU-IMF agree on cutting Greek debt-to-GDP level

Euro zone finance ministers and the International Monetary Fund clinched agreementon reducing Greece's debt on Monday in a breakthrough to release urgently needed loans to keep the near-bankrupt economy afloat.
After 12 hours of talks at their third meeting in as many weeks, Greece's international lenders agreed on a package of measures to reduce Greekdebt by 40 billion euros, cutting it to 124 percent of gross domestic product by 2020.
In a significant new pledge, ministers committed themselves to take further steps to lowerGreece's debt to"significantly below 110 percent" in 2022 -- the most explicit recognition so far that some write-off of loans may be necessary from 2016, the point when Greece is forecast toreach a primary budget surplus.
"When Greece has achieved, or is about to achieve, a primary surplusand fulfilled all of its conditions, we will, if need be, consider further measures for the reduction of the total debt," German Finance Minister Wolfgang Schaeuble said.
Eurogroup Chairman Jean-Claude Juncker saidministers would formally approve the release of a major aid instalment needed to recapitalise Greece's teetering banks and enable the government to pay wages,pensions and suppliers onDec. 13.
Greece will receive up to 43.7 billion euros in stagesas it fulfills the conditions. The December instalment will comprise 23.8 billion for banks and 10.6 billion in budget assistance.
The IMF's share, less than a third of the total, will only be paid out once a buy-back of Greek debt has occurred in the coming weeks, but IMF Managing Director Christine Lagarde said theFund had no intention of pulling out of the programme.
To reduce Greece's debt pile, ministers agreed to cut the interest rate on official loans, extend their maturity by 15 years to 30 years, and grant Athens a 10-year interest repayment deferral.
They promised to hand back 11 billion euros in profits accruing to their national central banks from European Central Bank purchases of discounted Greek government bonds in the secondary market.
They also agreed to finance Greece to buy back its own bonds from private investors at what officials said was a target cost of around 35 cents in the euro.
European Central Bank President Mario Draghi said on leaving the talks:"I very much welcome the decisions taken by theminsters of finance. They will certainly reduce the uncertainty and strengthen confidence in Europe and in Greece."

Europe bank regulator role must be clear says Commerzbank CEO

FRANKFURT, Nov 23 (Reuters) - Commerzbank Chief Executive Martin Blessing urged policymakers to make up their mind about whether a European bank regulator should stabilise financial markets or serve as a tool for back-door financial transfers to weak euro zone states.
"Do we want European supervision to be an institution that truly stabilizes our financial system or more as a vehicle for re-allocation and transfer?" Blessing asked bankers and regulators gathered at a conference in Frankfurt on Friday.
"Funds should be provided to banks only if the ESM/European supervision has the ability to clamp down and receive ownership of failed banks," he said, referring to the European Stability Mechanism, the EU's rescue fund.
The European Central Bank (ECB) was the right institution to take on the task of reforming supervision of lenders in Europe, the German banker said, adding that acommon regulator shouldoversee all banks in Europe.

More problems in Greece no agreement yet

BERLIN/ATHENS (Reuters) -International lenders failed for the second week to reacha deal to release emergency aid for Greece and will try again next Monday, but Germany signaled that major divisions remain.
Euro zone finance ministers, the International Monetary Fund and the European Central Bank were unable to agree in 12 hours of overnight talks in Brussels onhow to make the country's debt sustainable. They want a solution before paying the next urgently needed loan tranche to keep Greece afloat.
Several European officials played down the delay, saying the disagreements were technical and a deal would be reached when they meet again on November 26.
But German Finance MinisterWolfgang Schaeuble told lawmakers at a closed-door briefing in Berlin that the lenders were split over several key issues including how to define debt sustainability and fill a hole in Greek finances.
"He sees the extension of thedebt sustainability goal as one of the main bones of contention. The other is how to cover the Greek financing gap of 14 billion euros through 2014," said one lawmaker who attended Wednesday's meeting of Chancellor Angela Merkel 's centre-right Christian Democrats in parliament.
Merkel herself told the lawmakers the gap could be plugged by lowering interest rates on loans to Greece and increasing guarantees provided to the euro zone's temporary EFSF bailout fund, in which Germany would take its share, a participant said.
She suggested a deal could be struck as early as next week but rejected the notionthat big, bold actions could solve the debt crisis overnight.
"I believe there are chances,one doesn't know for sure, but there are chances to get a solution on Monday," Merkel told the Bundestag lower house of parliament during a debate.
Greece needs the next 31 billion euro aid tranche to keep servicing its debt and avoid bankruptcy. Its next major repayment is in mid-December.
Athens says it has carried outthe tough reforms required in the bailout program but needs more time to reach fiscal targets agreed with its lenders because its economyhas continued to shrink.
European governments wantto give Greece an extra two years, until 2022, to cut its debt to a sustainable level but the IMF does not agree. The Europeans, led by Germany, are refusing to write off any loans. Both options would make it easier for Greece to meet the targets in the bailout program.
French Finance Minister Pierre Moscovici said agreement was close, echoing overnight commentsfrom Eurogroup chairman Jean-Claude Juncker, who said talks were stuck on technicalities.
"We are a whisker away froma deal. I am very confident we will get there on Monday," Moscovici told Europe 1 radio.
Greece is increasingly frustrated about the repeated delays in releasing the aid and says it has done what is necessary.
"Greece did what it had committed it would do. Our partners, together with the IMF, also have to do what they have taken on to do," Prime Minister Antonis Samaras said in a statement.
"Any technical difficulties in finding a technical solution do not justify any negligenceor delays."
Samaras will meet Juncker inBrussels on Thursday and has cancelled a trip to Qatar next week to monitor the talks, a government spokesman said.
The prime minister is under growing pressure from his own coalition allies and the opposition after pushing through deeply unpopular austerity measures that he said were the only way to get more aid to avert bankruptcy.
"Τhe eurozone cannot use Greece as an alibi to justify itsweakness in dealing effectively and definitively with the crisis," said Evangelos Venizelos, head ofthe co-ruling PASOK party. Opposition leader Alexis Tsipras, whose party is rising in polls, said Samaras had lost all credibility.
Investors were disappointed with the news. Greek banking stocks fell nearly 6 percent in morning trade. Most of Greece's next aid instalment has been earmarked to shore up the country's tottering banks.
The euro, European shares and the prices of higher-yielding euro zone debt lost some ground but later recovered some of the losses.

France downgraded from AAA to Aa1 by Moody`s

Moody's Investors Service on Mondaydowngraded France, stripping it of its prized AAA credit rating due to concernsover its prospects for economic growth and its exposure to Europe's financial crisis.
Moody's lowered France's rating one notch to Aa1. It kept the rating's outlook at negative, meaning it could face future downgrades.
Greece narrowly avoids bankruptcy
Return of Europe recession isbad news for U.S.
Greece fine tunes its austeritymeasures as it awaits bailout
The ratings agency said that it is becoming increasingly difficult to predict how resilient France will be to future euro-area shocks.
But the agency noted that the country's rating remains high compared with many other European countries. It cited for this France's diversified economy and "a strong commitment to structural reforms and fiscal consolidation."
The downgrade will likely heighten fears that Europe's debt crisis is spreading from the so-called peripheral nations like Greece, Portugal and Ireland to the core of the euro region. Standard & Poor's, a rival rating agency, lowered its rating on France's debt one notch from AAA to AA+ in January, citing the deepening political, financialand monetary problems within the eurozone.
Pierre Moscovici, the French finance minister, blamed the downgrade on the policies of previous governments thathad failed to restore the competitiveness of the nation's economy.
"French debt still remains among the most liquid and safest of the eurozone," said Moscovici, a member of the ruling Socialist government."The French economy is large and diversified and the government has shown proof of its serious plan to implement structural reformsand restore public finances."

Cyprus Central Bank urges bailout deal by December

Cyprus'Central Bank chief says "it's very important" to sign a bailout agreement with potential creditors by next month in order to calm jittery investors.
Panicos Demetriades says investment firm PIMCO and auditors Deloitte will come up with a preliminary figure toward the end of this month, or early December, on how much money the country's ailing banks will need to recover from their huge exposure to Greece.
Demetriades told private TV station Sigma Tuesday that this would help bridge a disagreement between Cypriot authorities and officials from the European Commission, the European Central Bank and the International Monetary Fund over the banks' actual needs.
Cyprus, which would become the fourth euro country to be bailed out, is thought to need between (EURO)11-17 billion ($14-21.6 billion).

Germany's Angela Merkel on Wednesday warned Britain not to turn its back onEurope

Describing plans to increase the EU budget as"ludicrous", Cameron has threatened to veto any deal he thinks is not in Britain's interests and will push for a real-terms freeze.
However, German officials are exasperated by what they see as London's slide towards Europe's margins, a feeling reinforced last week after the British parliament voted to call for a real-terms cut in the EU's budget.
Before meeting Cameron, the German Chancellor told the European Parliament shecould not imagine a Europe without Britain, the world's sixth largest economy, whichrelies on the EU for half its trade.
"I believe you can be very happy on an island, but being alone in this world doesn't make you any happier," Merkel said after British politician Nigel Farage, leader of the anti-European UK Independence Party, urged her to tell Cameron that Britain should quit the EU.

Austerity cuts passed by Greece lawmakers

The austerity package aimed at securing the next round of bailout funds was passed with the support of 153 MPs in the 300-member parliament.
The 13.5bn-euro ($17.3bn; £10.5bn) bill includes tax rises and pension cuts.
Earlier, riot police fired tear gas towards protesters when they were attacked with petrol bombs in Athens.
Prime Minister Antonis Samaras warned before the vote late on Wednesday that without the bailout Greece would run out of money thismonth and face"catastrophe".
Many of these measures are fair and should have been taken years ago, without anyone asking us to”
Antonis Samaras
Greek PM
The austerity package - Greece's fourth in three years - is meant to close the nation's budget deficit, lower its huge debt burden and make its economy more competitive.
MPs must now pass a revisedbudget on Sunday before eurozone finance ministers meet next week to approve 31.5bn euros in fresh loans from the European Union (EU) and the International Monetary Fund (IMF) that Greece needs to avoid imminent bankruptcy.