Debt crisis: as it happened, July 2, 2012 How it that France can boast so many is large companies, 35 in the top 500 of the world and yet appears to hold its nose when dealing with commerce and free business enterprise? Socialism is only good at spending other people's money... and it does so badly. It is no wonder France has the lowest level of forecast business investment for 2012: 17.25 The new head of the World Bank starts today. Jim Yong Kim acknowledged he was taking the baton "at a pivotal moment for the global economy," and added: We will continue to do our work... with innovation, analytic rigor and with great passion, working in partnership with governments, civil society organizations, the private sector, and most importantly with the people living in poverty we aspire to serve. Jim Yong Kim delivers remarks to members of the news media outside the World Bank in Washington on Monday (Photo: EPA) 17.07 Europe's markets have closed. Following a short sell-off caused by the US manufacturing data, the FTSE 100 closed up 1.25pc, at 5,640.64, while the CAC 40 in Paris finished up 1.4pc at 3,240.20 and Frankfurt's DAX 30 closed up 1.25pc at 6,496.08. The Dow and S&P in America are still in the red, down 0.5pc and 0.3pc respectively. 16.25 The FTSE 100 is set to close up by 1pc. Angus Campbell at Capital Spreads comments on today's market movers: Investors are building up for the prospect of more stimulus from central banks this week as this Thursday should see an extension to the BOE's asset purchasing program and on the continent the ECB is expected to reduce interest rates. This combined with the conclusions of last week's EU summit has given confidence a boost and attracting the buyers back into the market. The FTSE isn't far off breaking through to a new two month high as the second half of 2012 has got off to a decent start. Buyers were also cheered by a manufacturing survey that showed the UK's manufacturers saw a rebound in activity as the PMI data was released better than expected, even if it did still point to a contraction. If we can see the index sustain this strength and take out the near term resistance see around 5640 then we could see the bulls test the next technical level at around 5760. 15.39 The Dow Jones industrial average slipped 60 points following the disappointing data: 15.31 Commenting on the data, Stephen Stanley at Pierpont Securities, said: It's really bad. It's much worse-than-expected. There is no way to put a happy face on this. This is an ugly number. The one component that held up was employment. Still people will probably downgrade their outlook on payrolls after this report. This tells you firms are very much sitting on their hands as they are waiting for the (November) election. We are just going to muddle through between now and the election. 15.11 On the other side of the pond, data shows that the US manufacturing sector unexpectedly contracted in June for the first time since July 2009 as new orders tumbled. The Institute for Supply Management said its index of national factory activity fell to 49.7 from 53.5 the month before. 15.06 Over in Greece, ministers are deep in talks over how to ease the punishing terms of its bailout before a review by the country's lenders. Antonis Samaras, the country's prime minister, wants more time to meet targets and to dilute austerity measures. Reuters reports that ministers from the conservative-led coalition were huddled in talks on Monday to work out the plan before "troika" inspectors from the EU, ECB and IMF begin their review of Greece's faltering progress in fiscal adjustment and reforms. Greek and troika sources said the inspectors would start their work on Wednesday, with mission chiefs also visiting to meet the new government. The process could take weeks. 14.22 A quick scout round the markets shows that equities across Europe are still ahead. The FTSE 100 is up 0.6pc too 5604 while Germany's DAX is up 1.2pc to 6493 and France's CAC is 1.3pc higher at 3236. Spain's 10-year bond yield is down 4.4 basis points to 6.2pc while Italy's is down 11.9 basis points to 5.7pc. The euro is trading at $1.2598. 13.42 Some breathing space for Greece today. It has received the remaining €1bn portion of its latest bailout tranche. The disbursement came from the European Financial Stability Facility. 13.16 There have been some questions about whether Finland could block bond-buying (see 12.04). Bruno Waterfield, our man in Brussels, writes: Regular decisions are by unanimity so Finland can block. But if someone, like the Finns, is being awkward for 'urgent' decisions to preserve 'financial stability' the ESM can take a decision by a vote. The threshold, based on capital contributions, is 85 per cent, meaning that Finnish (1.79pc) or Dutch (5.7pc) would not be able to block. Germany does have a block (27.1pc) and must first ask Germany's parliament, a special budget committee, before agreeing anything. German parliamentary opposition is much more likely to be a block on bond buy-ups or direct bank recapitalisation. 13.11 A little more detail on this German court hearing. Germany's parliament last week approved the ESM, but President Joachim Gauck said he will not sign it into law until the powerful constitutional court has given its go-ahead. Several critics have already filed complaints against the ESM with the court, who will hear these complaints on Tuesday 10 July - one day after the fund is supposed to take effect. 12.59 Back to the ESM bailout fund, the German constitutional court says it will look at complaints over this fund next Tuesday. 12.17 Thinktank Open Europe has published a blog this morning on how there could be an unexpected plus for Greece from last week's summit: Kathimerini has an interesting report today suggesting that Greece could attempt to get the cost of its bank recapitalisation removed from its sovereign debt levels - in the same way that Spain is hoping to do. This could well be seen by eurozone leaders as a way to quickly reduce Greece's debt burden - although we don't think it will change any of the fundamental problems which it faces. A large amount of the second Greek bailout - around €50bn - is actually going to Greek banks to help them absorb the large losses they faced from the Greek debt restructuring. With Greek debt currently standing at around €327bn or 160% of GDP, removing €50bn from this figure could provide a significant boost to Greek debt sustainability - bringing the figure down to 136% of GDP. 12.04 Some doubts about the deal do seem to be setting in with the euro, as well as oil and other commodities, giving up some of Friday's gains. Lutz Karpowitz, FX strategist at Commerzbank, said: It [the deal] is just spending more money from donor countries and receiving more money from debt-ridden countries. This will lead to political friction and is not a long-term solution Finland and the Netherlands added to fears over the fragile nature of the agreement by stating they would block a key element of the deal that would have allowed the eurozone's new permanent bailout fund to buy bonds in the market. However, their objection will not necessarily derail the plan altogether. While bond buying in the open market should require unanimous approval from all 17 countries in the single currency, Charles Forelle of the Wall Street Journal tweets that an emergency procedure does allow for it to go through with an 85pc majority. 11.37 Last week's eurozone summit was portrayed as a defeat for Angela Merkel, with the winners at first glance appearing to be the leaders of Italy, Spain and France. But, Reuters reports that if the eurozone is still intact years from now, the marathon session in Brussels may be remembered as much for what the German leader extracted from her combative partners as for the bitter policies she was forced to swallow. Holger Schmieding of Berenberg Bank said: That Monti, Rajoy and Hollande are now happily selling this as a victory says a lot about the diplomatic skills of Ms. Merkel