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Eurozone crisis live: Spanish unemployment tops 5m

• Almost one in four now out of work in eurozone’s fourth largest economy
• Talks resume in Athens over crucial bond swap deal

9.46am: Back to the Greece question and Josef Ackerman, chief executive of Deutsche Bank and also chairman of the IIF, has popped up on TV to say that private sector bondholders have offered to take a 70% haircut on Greek debt to get a deal done.

We have put a very attractive offer on the table. That’s losses of almost 70 percent we are prepared to take.

Ouch. And in a Cameroonian flourish he adds that

Everybody needs to make a contribution.

So, we’re all in it together, even the bankers. (Except Stephen Hester of course).

9.36am: Howard Archer at IHS Global Insight has, as ever, an instant view on the ECB figures.

The sharp moderation in annual growth in loans to the private sector in December, particularly the appreciable monthly fall in loans to businesses, will reinforce concern that credit conditions are now increasingly tightening and posing a mounting risk to already struggling Eurozone economic activity. Of course, the moderation in loans to the private sector also likely reflects corporates becoming more cautious in their behaviour and in their investment plans in the current weakened and uncertain economic environment, and cutting back their demand for credit.

9.31am: More evidence of a fresh credit crunch in Europe comes in the form of money supply figures out this morning.

The European Central Bank (ECB) reported that annual growth in overall loans to the eurozone private sector slowed to 1% in December from 1.7% in November and 2.7% in October. Lending to non-financial corporations fell by €37bn in December, which caused the year-on-year growth rate to retreat sharply to 1.1% from 1.6% in November and 1.8% in October. Lending to households also fell back. The ECB also reported that annual eurozone money-supply growth slowed sharply to 1.6% in December from 2.0% in November, 2.6% in October and a peak of 2.9% in September.

9.05am: They are truly gruesome figures from Spain which already has the highest unemployment in the EU and where youth unemployment is close to 50%.

However, the figures may actually help Spain and other struggling eurozone countries because the there is a growing feeling in Brussels that austerity may not be the way to go. The Economist, no less, has this piece which hints at a change of mood. If the bad news keeps getting worse, the voices calling for less austerity might be given more of a hearing.

8.51am: Bad news from Spain where the number of people out of work has risen above 5 million. The National Statistics Institute said 5.3 million people, or 22.8%, were out of work at the end of December, up from 4.9 million in the third quarter.

8.26am: Here’s a run-down of some of today’s events:

Italy to auction €11bn of short-term bonds – 10am GMT
Mario Draghi speech in Davos on Europe’s economic outlook – 1.15pm GMT /
US Q4 GDP data released – 1.30pm GMT

8.20am: Another analyst who is regularly quoted in these parts, Michael Hewson at CMC Markets, agrees that Portugal is sneaking up on the rails in terms of danger to the eurozone but he also gives a neat summary of where we are with the Greek talks.

Talks are set to continue today with speculation that they had given ground on the coupon to 3.75%, but there has been no confirmation of this so far. The offer is also above the 3.5% demanded by the Greek government and the EU, which is needed to get the debt to GDP ratio down to a more sustainable level by 2020.

8.06am: Portugal is starting to concentrate minds in the market. As Gary Jenkins of Swordfish points out, the Portuguese had the proverbial bad day at the office yesterday with 10-year yields rising to 14.2%. Worse, the three-year rose to 19.2%. Here’s Gary in his morning note:

It appears that they may have crossed the Rubicon in the eyes of the market … After all the longer your bonds trade like they are distressed the less of a surprise it is if you decide to enter into negotiations with your creditors. Portugal may not be being helped by the long drawn out discussions in Greece at the moment as clearly a disorderly default there would have major ramifications across Europe. A negotiated settlement in Greece might take that risk away but it might also become a template for Portugal in how to deal with their debt, which would not be good news for investors.

Should be interesting then though there’s not much action scheduled for the bond market today other than an auction of Italian bills later this morning.

8.03am: The FTSE100 has duly opened down – 35 points in the red at the moment.

7.52am: Only a few minutes to go before the market opens in London and, for what it’s worth, it’s expected to be down. Asian markets weren’t too buoyant overnight due to some disappointing Japanese corporate earnings and US home sales yesterday. Stay tuned for more.

7.39am: Not surprisingly, much of the attention around the euro crisis is focused on Greece this week as the talks over the bond swap go on. But there is a growing belief that Italy is really the key battleground. Our Brussels correspondent Ian Traynor wrote this week that the game-changer since the new year has been Mario Monti’s ability to confront German policy makers with the consequences of their insistence that euro stragglers inplement tough austerity measures. For once here is a eurozone leader they respect and who is telling them that there’s only so far austerity can go.

Phillip Stephens in the FT has caught up with that view today and writes that ‘Italy is back’ because at last it has a leader who peers can take seriously. As he neatly puts it:

Mr Berlusconi made crude jokes about Ms Merkel’s appearance. Mr Monti talks to her about economics.

7.30am: Good morning, and welcome to our live coverage of the eurozone debt crisis.

Talks are due to resume today in Athens between Lucas Papademos’s government and the Institute of International Finance. Yesterday’s negotiations appeared to make progress, and there is optimism that a deal could be agreed in the next few days.

But while Greek officials are upbeat, there is growing concern over Portugal. Its borrowing costs hit a record high yesterday, on speculation that it may need a second bailout. We’ll be watching events there today too.

And with US GDP data due this afternoon, has the eurozone crisis dented growth in the world’s biggest economy?

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