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Eurozone crisis live: Greek talks continue on Groundhog Day

The waiting continues as negotiations between Greece’s government and its creditors drag into another day

9.00am: A spokesman for the Greek government said this morning that negotiations with its lenders are now focused on three issues – wages, pensions and bank recapitalision.

Pantelis Kapsis told Greek MEGA television that there are just a few “sticking points” to be cleared up before the Private Sector Involvement is cleared up.

Kapsis said:

On the one side, there is pressure to restore the economy’s competitiveness fast. We are saying that there is clearly an issue of competitiveness.

On the other hand, there is also the question of recession which is very important for Greece.

The wage question focuses on Greece’s mimum salary of €750 per month, which the IMF argue is too high. Union officials oppose the suggestion, saying a cut would drive more people into poverty and further damage consumer spending (retail sales are already sliding).

8.29am: Angela Merkel’s visit to Beijing isn’t just about diplomacy, it’s also about business.

The German chancellor is expected to meet with Chinese investors during her visit to Beijing, and officials are hoping that she might persuade them to invest in Europe.

German news magazine Spiegel reports:

A senior government representative stressed in Berlin on Tuesday that “Chinese investments are expressly welcome. They will be sought, used and appreciated” — both in Germany and in the rest of the euro zone.

It may not be an easy sell. Three months ago, Klaus Regling of the EFSF toured the Far East looking for support, and came away empty handed.

8.17am: Angela Merkel began her visit to Beijing today by insisted this morning that the single currency had made Europe stronger.

In a speech to the Chinese Academy of Social Sciences, the German chancellor declared:

The euro has made Europe stronger.

She adding that EU members were “deeply” committed to the fiscal compact agreed at Monday’s summit in Brussels, saying budget limits would prevent countries overspending in the future.

It will be interesting to see how Chinese media cover the visit, as Beijing officials have sometimes appeared unsympathetic to Europe.

As Jin Liqun, who chairs China’s 0 billion sovereign wealth fund, stated last November: “[Europe's] labour laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack…”

7.55am: Appropriately enough, today is Groundhog Day in America — the day when (folk wisdom states) the appearance of a small rodent out of its burrow will show whether sunny or cloudy weather is due.

Thanks to Hollywood, GroundHog Day is also associated with living the same events over and over (and over) again. That pretty much sums up the eurozone crisis in recent days, as the Greek debt restructuring talks have dragged on – punctuated by one side or the other claiming that a deal was close.

As Michael Hewson of CMC Markets put it this morning:

Given that it’s Groundhog Day today its particularly apt that Greece continues to be the centre of continued speculation about what’s happening with respect to the debt talks and the latest bailout.

Even so markets are now so bored with it, any comments by EU officials are now being dismissed with a perfunctory shrug and an “I’ll believe it when I see it” attitude.

The latest official comment came from the Institute of International Finance (representing Greek bond holders) last night. It said that “constructive discussions” were continuing, and was hopeful of agreeing a deal “in the days ahead”….

Mike van Dulken, City trader at Accendo Markets, is also running low on patience:

Oh look, Thursday & STILL no Greek deal. “Just round corner”, “hours away”, they said. I guess “before w/e” still valid but, which w/e?

— Mike van Dulken (@Accendo_Mike) February 2, 2012

7.54am: Here’s today’s agenda, including some economic UK and European economic data:

• UK construction PMI data for January – 9.30am GMT
ª Eurozone producer price index for December – 10am GMT / 11am CET
ª US weekly jobless data – 1.30pm GMT / 8.30am EST
• Ben Bernanke testifies before the House Budget panel – 3pm GMT / 10am EST

Bond auctions:
• France to sell €6.5bn-€8bn of long-term debt
• Spain to sell €3.5bn-€4.5bn of various bonds

+ Angela Merkel in China until Friday

7.45am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis.

On the menu today: Angela Merkel is visiting China for top-level meetings with premier Wen Jiabao and president Hu Jintao. Europe’s fiscal plans will be discussed, along with China’s policy on the yuan.

Merkel’s visit will be closely watched for signs that China might be prepared to offer support to help Europe through the debt crisis, and for her own views on the situation.

Elsewhere, the protracted negotiations between Greece and her creditors are continuing. Those involved still claim that an agreement could be close, but City analysts are openly sceptical about these pronouncements.

In the bond markets, Spain and France will auction sovereign debt this morning.

And Federal Reserve chairman Ben Bernanke is due to appear on Capitol Hill to answer questions from the House Budget Committee.

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