Rolling coverage of the second day of the World Economic Forum in Davos
Cameron: Once in a generation chance to change Europe
Schauble: Europe must spend billions on refugee crisis
9.57am GMT
Back to Alexis Tsipras. He says Greece has made great efforts to reform its economy in recent years, through an unprecedented downturn.
We lost 25% of our GDP, and unemployment skyrocketed, says the Greek PM.
Greece needs considerable structural reforms. We must all understand that next to balanced budget, we also have to have growth.
We need a co-ordinated growth strategy, and Europe must help to diminish the inequalities between North and South.
We need more Europe, and show more solidarity as well.
9.45am GMT
Wolfgang Schäuble refuses to say whether Germany can cope with another million refugees this year.
And he says Europe must spend billions on the areas where refugees are fleeing. He agrees with Alexis Tsipras that Europe cannot become a fortress
Schauble on the refugee crisis: Europe should not become a fortress pic.twitter.com/M4U40gHjuS
It is a problem of and for Europe. Everything that goes wrong with these regions won’t end up in Canada, it will end up in Europe.
#WEF2016 German finance minister Schauble says that EU will have to invest billions in affected MENA countries to stem refugee flow.
9.39am GMT
Alexis Tsipras says all European countries must share the burden of the refugee crisis.
Europe must create a two-way system for migration, so people can be returned home.
Tsipras on the #refugees crisis "we have to do something together in Europe, have a legitimate mechanism" #WEF16 #davos @FRANCE24
At @Davos, @atsipras laments #Greece & #Turkey spend on "militaries to check each other" but don't co-op on refugees pic.twitter.com/SlWkLkk0dO
9.37am GMT
Next question, on migration, goes to Dutch PM Mark Rutte.
Can the Schengen Agreement survive the refugee crisis?
When spring comes, and the numbers quadruple, we cannot as a European Union cannot cope with the numbers any longer.
#migration rutte says 35,000 crossed turkey to greece in 1st 3 weeks january. 'we can't cope'
Before we kill Schengen, we have to make Dublin work.... No-one wants to kill Schengen, but if it is only a fair-weather system then it cannot survive.
9.31am GMT
Manuel Valls, France’s prime minister, kicks off the European session by saying security and terrorism are one of the biggest challenges faced by the continent.
We are at war against terrorism. A world war. And we as Europeans need to face up to this.
French PM Valls: We are in global war against terrorism. EU project can die if we don't cooperate on defense. #WEF16
We must move away from this selfishness, and find the means to deal with this historic challenge.
France' PM Valls calls for more Europe to deal with failed states exporting terrorism #Davos2016
9.22am GMT
Hundreds of people are pouring into the Davos Congress Hall for the main set-piece event of the morning - the Future of Europe session.
It will pit Greece’s Alexis Tsipras against Germany’s Wolfgang Schauble, with France’s Manual Valls, the Netherland’s Mark Rutte, and Eni chairman Emma Marcegaglia.
Highlight of the day: #Tsipras, #Schaeuble to lock horns on 'The future of Europe' at 11.15 in #Davos2016. That should be interesting
9.15am GMT
Perhaps we spoke too soon.
The attempted rally in Europe seems to be petering out, with the FTSE down around 8 points and Germany’s Dax off 24 points.
Equities are on the slide again as crude oil continues its relentless decline. Both WTI and Brent are trading below $28 for the usual supply/demand reasons. However, there are also concerns as speculation mounts over the possibility that Saudi Arabia may unpeg the riyal from the US dollar. The strength of the greenback combined with the low oil price is a serious drain on the Kingdom’s reserves and breaking the peg would be one way of easing the pain.
9.08am GMT
A senior Chinese official has defended the country’s economic policies and urged investors to stop fixation on fluctuations in its stock market.
“China’s record of honouring itss commitment is superb”.
Given the massive transitions in China, there is a communication issue - this is something that markets do not like.
Uncertainty, not knowing exactly what the policy is. Not knowing exactly what the renmimni is valued against - the dollar, or a basket of currencies.
We have to cooperate more closely to overcome this soft patch Fang tells #davos
8.59am GMT
More on the ECB ahead of today’s meeting:
Ahead of today's #ECB meeting, markets are pricing in another 10bp cut in interest rates. But not for 3 to 6 months. pic.twitter.com/kcetmsYlZ7
8.50am GMT
Germany’s finance minister, Wolfgang Schauble, has weighed in on the Brexit question, arguing Britain should stay in Europe:
Schauble tells BBC the UK "wouldn't look strong" if it wasnt in the EU. #Davos2016
8.47am GMT
Italy’s prime minister, Matteo Renzi, is reported to have pulled out of Davos to deal with the problems in the Italian banking sector:
Italy's PM Renzi said to have cancelled Davos #WEF16 visit on back of bank trouble back home.
8.46am GMT
European markets are holding onto their early gains, while US futures are suggesting a dip of around 45 points on the Dow Jones Industrial Average when Wall Street opens.
David Morrison at trading company Spread Co said:
The reaction to the overnight Asian Pacific slump from European equities and US stock index futures has been surprisingly muted. At the time of writing, all the major indices are in positive territory. On the face of it this is quite encouraging, particularly as crude is still trading near its 2003 lows. But once again, what looks like the beginning of a recovery in equities could easily turn out to be nothing more than a “dead-cat bounce.”
There’s no doubt there have been signs of stress in global equities for a while now. As far as the US is concerned, in the latter half of 2015 the FANG stocks (Facebook, Amazon, Netflix and Google (Alphabet)) were responsible for holding up the major indices as the broader market declined. Technically, the major indices formed a topping pattern as they failed to make fresh highs after the China-inspired summer sell-off. Stress in the high yield bond market was becoming apparent even before the Fed hiked rates. That hike now looks as if it will go down as one of the worst-timed rate rises in history, even crowning the ECB’s classic efforts in 2011. To top it all, China suffered a second melt-down just as we began the New Year.
8.45am GMT
The Dutch finance minister, Jeroen Dijsselbloem, has admitted that Europe blundered by not dealing with its banks faster.
@Davos Dijsselbloem says Europe was "foolish" to leave it so late to deal with its banks #WEF16
#Davos2016 @wef "Future-proofing finance" Dijsselbloem, "we need a capital market where risks are well priced". Speculation does not agree!
8.40am GMT
A group of demonstrators have been spotted in Davos.
They’re protesting against China’s activities in the Pakistani territory of Balochistan, where Beijing is developing a large new economic zone.
Protest fällt in Davos jetzt eher nicht so groß aus... pic.twitter.com/u3gc3bFatR
8.29am GMT
Fang tells #davos to stop worrying chinese stock market might be down 40% but up 30% over 18 months
8.24am GMT
Top Chinese official Fang Xinghai has hit back at Christine Lagarde’s complaint about communications failings (see earlier post)
"I am here to communicate" Fang tells #davos in response to Lagarde
8.23am GMT
With markets in turmoil, oil sliding to new lows, concerns about Chinese growth and worries about whether central bankers have run out of ammunition to support the global economy, the president of the European Central Bank will be on the spot later to spell out where he thinks we go from here.
Mario Draghi will unveil the ECB’s latest measures - more QE? Perhaps not yet - in a statement and press conference in Frankfurt. After last month, when the measures announced proved a disappointment, and the more hawkish elements on the ECB clearly prevented the bank from doing more, Draghi’s comments will be widely watched. Michael Hewson, chief market analyst at CMC Markets UK, said:
Today’s focus is likely to shine on the first ECB rate meeting of 2016, against a continuing backdrop of weak inflation in the euro area.
With last month’s December disappointment still fresh in the memory ECB President Mario Draghi will have to convince the markets that the ECB has a plan, and the ammunition to cope with the further slide in inflationary pressures that are likely to ripple across Europe in the coming weeks.
ECB president Mario Draghi will likely sound dovish today, but we expect him to strike a reasonable balance. Mr. Draghi will be careful to avoid fuelling too much speculation about further action to avoid a repetition of the December experience, when the announcement of QE2 fell short of high expectations.
At the time, the market’s disappointed reaction resulted in a 3% rally in euro-dollar exchange rate. Today, we do not expect the meeting to cause any major move in exchange rates, as the market seems prepared for a relatively balanced debate. The euro has held up well since the 3 December meeting, and it would take a strong (unexpected) dovish signal of imminent action to change this pattern.
All eyes today will be on the ECB with the interest rate decision at 12:45 [GMT] followed by Draghi giving the post meeting press conference at 13:30, which after last month will need to persuade the markets that there is more in the cupboard, as there seems to be no respite in sight when it comes to deflationary pressure.
For an extended period falling commodity prices have left the Eurozone engaged in an ongoing one-sided battle against stubbornly low inflation levels, while stalling domestic economic growth continues to test the European Central Bank’s credibility. It is widely expected that the ECB will remain on standby today and keep rates unchanged, but Mario Draghi may reiterate his dovish mantra and threaten further QE in an attempt to talk down the value of the Euro.
8.11am GMT
At an HSBC breakfast on climate change, the bank’s chief executive Stuart Gulliver has said the current state of the financial markets is not exactly conducive to raising private funds to tackle global warming.
8.08am GMT
Despite the falls in Asia, European markets have made a positive start, if not a totally convincing one.
The FTSE 100 is up 31 points or 0.5%, while France’s Cac has climbed 0.1%, Italy’s FTSE MIB is 0.5% better and Spain’s Ibex has added 0.5%.
8.06am GMT
IMF chief Christine Lagarde has warned that Beijing needs to improve the way it communicates with the markets.
Currently, investors are being spooked as they watch China embark on a huge economic rebalancing.
Given the massive transitions in China, there is a communication issue - this is something that markets do not like.
Uncertainty, not knowing exactly what the policy is. Not knowing exactly what the renmimni is valued against - the dollar, or a basket of currencies.
IMF's Christine Lagarde tells #davos there a "communication issue" with Chinese policies
8.01am GMT
China has four challenges: debt and #economic restructuring, and #capital markets & balance of payments reform: Ray Dalio #wef #globaltrade
7.59am GMT
Jiāng Jiànqīng, the Chairman of the Industrial and Commercial Bank of China, has argued that China can’t be blamed for the stock market turmoil.
Speaking on a panel in China’s economy, Jiànqīng said a range of factors are being it.
So the world all over is facing volatility. Some reasons are normal, some are abnormal.
There is a certain degree of panic in the market.
7.52am GMT
European markets are expected to make an uncertain start after Wednesday’s rout, which saw the FTSE 100 head into bear market territory.
A recovery on the Dow Jones Industrial Average from its worst levels – albeit still showing a 249 point fall – may give some support, although Asian markets lost their early gains to head into the red again.
Our European opening calls: $FTSE 5683 up 10 $DAX 9379 down 13 $CAC 4122 down 3 $IBEX 8290 up 9 $MIB 17987 up 19
Now that equity markets, both here in Europe and in the US have slipped into bear market territory the big question now is where do we go to next. That looks highly likely to depend on oil prices and a late rebound off the lows yesterday did see US markets recoup a large portion of their losses, the Dow was 566 points down at one stage, but they still finished the day below their previous lows in August.
This late rebound should be enough to see European markets open higher this morning, a welcome respite after yesterday’s sell-off, but it is going to need a significant turnaround in sentiment to recoup the losses seen so far this week, and prevent markets from posting their third successive weekly decline.
7.49am GMT
David Cameron is to call on the UK’s business chiefs to support him in the upcoming EU referendum to secure Britain’s place in a reformed EU.
The prime minister is using his trip to Davos to drum up support, ahead of a potentially decisive EU summit in February where he could secure concessions from fellow European leaders.
“This is a once-in-a-generation moment and the stakes are high.”
If you want a more competitive Europe, where the single market is completed, where there are more trade deals and fewer regulations: join me in making that case.
“If you believe, like I do, that Britain is better off in a reformed European Union, then, when the time comes, help me make that case for Britain to stay.”
7.36am GMT
Good morning from Davos, where the second day of the World Economic Forum is getting underway.
Yesterday’s stock market plunges have sent a shiver through this little ski resort, as the “global elite” gather to debate the major issues of the moment.
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