Debt crisis: as it happened, February 3, 2012 Dow Jones Industrial Average closes at highest level since before 2008 financial crisis. Best start to a year for the S&P 500 since 1989. Nasdaq closes at 11-month high. 20.38 Canadian Prime Minister Stephen Harper does not see much evidence his country will have a recession or crisis this year. He adds that he is sticking to a prediction of an overal budget deficit in 2012-13 despite better-than-expected monthly budget data. On Europe, he sees the continent taking small steps "away from the precipice," but accuses Europe and the US of being a "significant drag" on the Canadian economy. 20.20 PwC has released its 2012 survey of what US CEOs expect this year. It makes for an interesting read: 77pc of US CEOs are revising strategies in response to customer demand 95pc are targeting customers in Brazil 58pc are pursuing a strategic alliance or joint venture 30pc rank China as the most important country for business growth 60pc say creating and fostering a skilled workforce should be a Government priority 20.10 Bloomberg is reporting that Greek Finance Minister Evangelos Venizelos will brief his euro area counterparts on the state of talks to complete a second financing package for the country tomorrow, citing state-run NET Radio. 19.48 Still in the US, here's an interesting graph comparing the S&P 500 with President Barack Obama's approval rating: 19.39 James Bullard, president of the Federal Reserve Bank of St Louis, has said the US may need raise rates before 2014. He added that the surprising strength of the country weakens the case for more QE and unemployment may decline to 7pc by the end of 2013. He told Bloomberg: The economic news and economic data, including today's data, has been surprising to the upside. I need to see significant deterioration in the economy and some threat of deflation or inflation moving significantly below our inflation target before I would consider more QE. Inflation is coming down but at least for now it is above our inflation target [of 2pc]. We will see how things develop. But I am also more bullish on the economy as a whole. I do think we have momentum coming out of 2011. 19.35 A senior eurozone diplomat has reportedly told the Financial Times that "we cannot let Greece down," adding that "if we do then we risk contagion." 19.31 Portugal's PM Pedro Passos Coelho has said his country will emerge stronger from the crisis, and that it is making progress on its budget and external deficits. 19.21 In the UK, we tend to criticise chief executives who get paid ridiculous amounts of money. So, I wonder how people in the US are feeling after IBM almost doubled the salary of Virginia Rometty on promoting her to the top job. Rometty, 54, will receive a salary of $1.5m this year, up from $800,000 last year, the company said. Her cash-incentive target for 2012 is $3.5m, compared with $1.47m she received for 2011. Rometty's predecessor, Samuel Palmisano, got a bonus of $6.5m for 2011, IBM said. 19.03 Time for an update on the US markets. Dow +1.1pc Nasdaq +1.6pc S&P 500 +1.3pc Here's a graph showing the Nasdaq since December 2000. As you can see, it hasn't been this high (currently 2904.34) since December 15 of that year. 18.45 The head of Greenpeace has warned that the world faces a "perfect storm" of crises and was heading for a crisis of "epic proportions." Speaking at the Munich Security Conference, Kumi Naidoo accused leaders of "sleepwalking" into disaster. The moment of history we are in can be described as a boiling point or a perfect storm. We are seeing a convergence of multiple crises happening at the same time. A food crisis, climate crisis, poverty crisis ... and then of course the financial crisis and a demographic crisis and a global governance democratic crisis. The bottom line is that too many of our leaders ... are sleepwalking us into a crisis of epic proportion. 18.28 José Manuel Barroso, the EC president, has said there is a crisis of confidence in Europe. He told a conference in Lisbon that the case of Greece is unique and exceptional and that there are no miracles to solve the continent's debt crisis. He added that the EU must consolidate the single market to bolster jobs, and that time is needed to reach the goals the European Union has set; it would be a mistake for the 27-nation region to fall back into protectionism. Barroso says he is convinced Portugal will overcome its difficulties. 18.12 With rumours flying around that the Greek PM will resign tonight if his austerity measures fail to get backing, the Financial Times has reported that all three party leaders have done just that. The FT wrote that "the representatives of all three coalition partners, including centre-left Pasok of former prime minister George Papandreou and the centre-right New Democracy of likely successor Antonis Samaras, said they were unwilling to back government layoffs." 17.57 As Facebook is in the news at the moment, we have a great slideshow/story on David Choe, the graffiti artist who decorated the walls of Facebook's headquarters seven years ago and took a few thousand pounds of shares as payment. His stake is now worth $200m (£126m). Meanwhile, Facebook investors believe its valuation is $19bn too low. Business Insider reported that 100,000 Facebook shares sold for $40 a pop in a secondary market auction on SharesPost. This comes after months of Facebook shares trading at $35 with little fluctuation. The $40 share price implies a $94bn valuation for Facebook. On Wednesday, the company powered up a $5bn (£3.2bn) initial public offering expected to rank as the biggest technology flotation in history. 17.53 More woe for Italy. Bank of Italy boss Fabrizio Saccomanni has said that his country's banks may need government assistance to meet 9pc CT1 capital ratio. 17.44 The ECB is reportedly considering ways to use bond holdings in Greek rescue. The bank holds €219bn in government bonds of which €36bn-€55bn are Greek. 17.41 Goldman Sachs has raised its 2012 European GDP forecast to -0.4pc from -0.8pc. 17.40 IIF's Charles Dallara and Jean Lemierre to go to Athens this weekend for debt talks. So, no resolution tonight? 17.33 Germany could emerge as Europe's leader in 2012 by offering Italy and Spain a way out of the debt crisis - or stumble and draw the continent's anger if other Europeans come to associate it only with an unpopular drive for austerity, the head of the World Bank has warned. Robert Zoellick spoke as the annual Munich Security Conference opened with a discussion of economic heavyweight Germany's role in Europe and beyond. Earlier had said that "if Germany at the end of 2012 is only associated with austerity, and the key countries can't maintain the political support for the economic actions, then Germany could become the target of ire." 17.08 On the great market performance today, Chris Beauchamp, a market analyst at IG Index, said: Markets exploded into life around 1.30pm, when the expectation-smashing non-farm payrolls for January came in. A forecast of 140,000 proved woefully inadequate, with the actual figure coming in at a jaw-dropping 243,000. In addition, and again contrary to expectations, the figure for December 2011, which itself had been very positive, was revised upward slightly to 203,000, while that for November 2011 was boosted from just 100,000 to 157,000. The unemployment rate dropped to 8.3pc, almost a three-year low, which will have the Democrats cheering as the rate progressively improves ahead of the election. The developing story of the past month has been the decoupling of the US away from Europe, with the economic situation of the New World getting progressively better, contrasting sharply with the moribund condition of the Old World economies. The inherent flexibility of the US appears to be coming into play, confounding those who had expected the world's largest economy to flounder in the mire of poor growth and high unemployment. 17.03 Staying in the US, and Bank of America, Wells Fargo and JP Morgan are being sued by New York over the use of Mortgage Electronic Registration Systems. The banks" use of the database, known as MERS, has led to deceptive and fraudulent foreclosure filings in New York state and federal courts, New York Attorney General Eric Schneiderman said in a statement today. 16.35 Barack Obama is speaking on the US economy: He tells Congress to "not slow down" economic recovery - "don't muck it up." Adds that Congress should renew the payroll tax cuts and do it "without drama." 16.30 European markets have closed. FTSE 100 has closed at a seven-month high, up £27bn - 105 points - to 5,901.07. Quick update on the US markets: Dow +1.2pc Nasdaq +1.5pc (at 11-year high above 2,900). 16.23 Looking ahead to next week in the UK. The MPC's February monetary policy decision is announced at midday next Thursday. Philip Shaw at Investec says that this meeting will take on an additional significance in two respects: First, it will reflect the committee's new economic projections, which will be published in the next Quarterly Inflation Report on February 15. Second, members will have to consider what might turn out to be a significant change in the economic environment. In terms of developments towards the end of last year, events were very much in line with the MPC's expectations. Latest estimates suggest that GDP contracted by 0.2pc in Q4, similar to the committee's view that activity would be broadly flat. Second, inflation has come down sharply so far from its peak of 5.2pc, with Q4 estimated at 4.6pc, against the MPC's central projection in November of 4.7pc. But the really interesting point concerns the more recent economic indicators. Amid a significant degree of market bewilderment in both the UK and the Euro area, a number of surveys have just gone gangbusters. 16.18 Global all-industry PMI rises to 54.6 in January versus 52.7 in December. Signifies growth. 16.13 Some breaking corporate news. French Connection has said that trading in its UK and European stores has been "disappointing" and profit before tax for the year to January 31, 2012, is likely to be in the region of £4.7m. Gross margin to be lower than expected. 16.07 Greek PM Lucas Papademos is to meet with finance minister and central bank chief tonight and party leaders tomorrow. Meanwhile, the Dutch finance minister has said his country is not satisified with Greece's progress, and that substantial PSI is needed to make the country's debt sustainable. He also says that eurozone nations may hold a summit in Brussels next week. 16.04 Bruno Waterfield, our man in Brussels, says the ESM deal has been signed: 15.59 John Chambers, managing director of sovereign ratings at Standard & Poor's, has said US politics was behind its downgrade, and that it normally takes nine years to recover a AAA rating. He adds that Greece should be cut to a "D" on debt swap, defualt rating to rise after swap and its debt-to-GDP goal suggests a low rating for a while. He adds that the UK's AAA rating is not a problem if it sticks to its fiscal plan. 15.32 Business Insider believes that when Barack Obama runs for re-election, this is the graph he will use: For a bigger version of this graph, click the right-hand-side of the main picture at the top of this blog But PIMCO's Mohamed El-Erian has poured cold water on today's jobs figures: Today's is a strong report. We should welcome job creation of 243,000. We should welcome an unemployment rate at 8.3pc. The qualifier, and it's an important one, is let's not also forget the numbers outside these headlines. And there are two in particular that I look at. Long-term unemployment, those who have been unemployed for 27 weeks or longer, that is stuck, stubbornly stuck at 5.5m again. And second, youth unemployment - unemployment among the 16-19 year olds, that is stuck again at 23pc. So, we should welcome the headline numbers, they are really good, but we should not lose sight that we have structural issues that are not being dealt with. And that's going to be the question mark. Is this just a cyclical bounce or can this hand off into a secular bounce which the economy needs? 15.28 Staying in Italy, PM Mario Monti is confident the Financial Transaction Tax will be adopted, will be "happy" if banks bought more government bonds, and believes current bond spreads are still not low enough. He disagrees with Merkel over introducing eurobonds now but agrees that fiscal rectitude is the key for joint bonds. 15.18 In an interview with the Financial Times, Silvio Berlusconi has said he is abondoning frontline politics. But says: "I still have strong popular backing, almost twice as much as my colleagues Merkel and Sarkozy... If I walk out in the street I stop the traffic. I am a public danger and cannot go out to do the shopping. 15.13 The finance ministers of Germany, Holland, Luxembourg and Finland have reportedly agreed that Greece must deliver reforms. But according to AP, unions and employers' associations in Greece have rejected private-sector wage cuts, as demanded by the country's international bailout lenders if Athens is to receive a crucial, second rescue package. The impasse appeared to be holding up final negotiations for massive new debt agreements - a eurozone finance ministers' meeting, which had been expected for Monday to back the new proposals, was postponed to later in the week. Meanwhile, World Bank President Robert Zoellick has said that Germany needs to offer euro bloc reform incentives, as it will draw ire if it only pushes for cuts. He says the ECB has bought time but it won't be enough, and that Italy and Spain need to be offered support. 15.10 And here is a great graph comparing US non-manufacturing ISM with EU services PMI: 15.01 More data from the US: Factory orders halved in December to 1.1pc from 2.2pc previously. Analysts expected 1.5pc. ISM orders at 56.8, analysts expected 53.2. So mixed news from America. 14.55 Meanwhile, back in Europe, Spain's Catalonia region has missed its budget deficit target. Deficit now 3.29pc of region's GDP. 14.51 The White House has said that employment gains are "further evidence" the US economy is healing. Alan Krueger, President Barack Obama's top economic advisor, said: Today's employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression. He adds that if Congress extends payroll tax cut and unemployment benefits, the economy could "maintain this momentum." 14.40 US markets are open. Dow up 0.6pc, S&P 500 up 0.7pc, Nasdaq up 1pc. 14.36 Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, believes the UK can learn lessons from the positive US jobs data out today: After a prolonged period of 'jobless growth' the US economy is now creating jobs at a far healthier pace. Significantly, the US unemployment rate (8.3pc) has for the first time since the start of the financial crisis fallen below the UK rate (8.4pc), and is now well below the average 10pc plus rate in the euro area. Moreover, while US unemployment is on a clear downward path, joblessness is rising in both the UK and Europe with many forecasters expecting UK unemployment to rise close to 3m (or 9pc) by the end of 2012. Policy makers in both the UK and EU need to learn the lesson of what might be described as today's 'stimulus-based jobs crossover'. The US jobs market is benefiting from a combination of both fiscal and monetary policy stimulus, in stark contrast to the crude austerity being imposed on the UK and euro economies. A dash to deficit reduction in the midst of mounting recessionary forces is the wrong medicine. For the UK this should mean temporary tax cuts to stimulate consumption and job creation plus directed expenditure on infrastructure projects to inject much-needed demand into a stagnating economy. 14.31 We are hearing rumours that Qatar has pulled out of the Greek debt talks. The White House has announced that David Cameron will make an official visit to see President Barack Obama next month on March 13 and 14. 14.08 King Abdullah and visiting International Monetary Fund chief Christine Lagarde met today in the Saudi capital and discussed the "world economy," the official SPA news agency reported. The two reviewed "IMF action and developments in the world economy" in the presence of the Saudi finance minister and central bank governor, it said, without elaborating on what was discussed. 14.00 Dutch prime minister Mark Rutte says he is not in favour of giving more aid to Greece and doesn't want to write down loans either. 13.52 So does this great batch of data mean we won't see QE3 from the US? Bill Gross, founder of world's largest bond fund PIMCO, believes the Fed will likely continue monetary easing. Interesting to note that the US now has a lower unemployment rate than the UK - 8.3pc versus 8.4pc. January unemployment in the US: Men 7.7pc; Women 7.7pc; Teens 23.2pc. Lindsey Piegza, economist at FTN Financial in New York, said It was ... the strongest report that we've seen in quite some time. We're almost at the place where we need to be to reabsorb the 9m people who lost their jobs during the Great Recession. This pushes the bar even higher for payrolls for the rest of this year. 13.49 US dollar surges on better-than-expected non-farm payrolls report. US non-farm payrolls jump to 243,000 in January from 203,000 in December. Analysts expected 140,000. Private payrolls at 257,000 against 220,000 previously and 160,000 expected. Manufacturing payrolls at 50,000 versus 32,000 previously and 12,000 expected. Unemployment rate falls to 8.3pc from 8.5pc previously, beating expectations, and the lowest for three years. Average weekly hours flat at 34.5 Great results for the US. US Treasuries fall. UK gilt futures fall almost a full point on the data. David Sloan, an economist for IFR Economics, said: January's non-farm payroll with a 243k increase was sharply above a consensus increase of 150k with positive if undramatic back month revisions. The breakdown looks positive almost across the board with manufacturing at +50k particularly impressive. Workweek data was improved, sustaining an upwardly revised December level, though hourly earnings with a 0.2pc rise merely met consensus. The unemployment rate saw another significant fall, by 0.2pc to 8.3pc, when the consensus was for no change, with the fall due to increased employment not losses in the labor force. The broader U-6 measure of labor market slack, after three straight 0.4pc plunges, saw only a modest fall of 0.pc to 15.1pc, but there can be no doubts over the positive nature of this report. There is only one obvious significant caveat, an unusually mild winter restricting the number of seasonal layoffs, which are always heavy in January. Unadjusted, January payrolls still fell by 2.689m. 13.21 Plans to hold talks among eurozone finance ministers on Monday should a deal to restructure Greek sovereign debt be reached with banks, have been abandoned, a source close to the Eurogroup told AFP. Meanwhile, a deal to restructure some €200bn of privately-held Greek sovereign debt that would pave the way for a new financial rescue is "within reach," the European Commission has said. 13.16 Time for an update on the markets: CAC flat 13.01 We are hearing rumours that Greek PM Lucas Papademos will resign if he does not reach a deal on further austerity today. 12.59 Ed Conway at Sky is tweeting on the Greek debt talks, which have dragged on... and on... and on... 12.57 Here's a rare look inside the vault (an old canteen) of the Bank of England, which holds £156bn in gold. That seems like a lot - one and half Facebooks - but is less than the country owned before Gordon Brown as Chancellor sold off 400 tons of gold when prices were at a 20-year low. It also look rather insignificant when you consider Britain's national debt is above £1 trillion. Your Money Their Hands today looks at whether gold will rise against "heavily debased" currencies. 12.53 US non-farm payrolls will be released in just over 30 minutes, along with the unemployment rate. Analysts are expecting no change in the rate but a fall in the non-farm payrolls. And here's an interesting fact: The S&P 500 has fallen on each of the past eight days on which there were jobs reports. 12.50 Italy is reportedly in talks with the IMF to find ways to soften an enhanced surveillance agreed last November by former PM Silvio Berlusconi, according to Reuters. The eurozone's third-largest economy had been forced to request a monitoring mission from the IMF to placate worried investors and reassure European governments as its borrowing costs rose to dangerously high levels. Ed Davey, the employment minister, is to become the new Energy Secretary, replacing Chris Huhne, who was charged this morning with perverting the course of justice over speeding points. Chris Huhne and Ed Davey Norman Lamb, parliamentary aide to Nick Clegg, has been promoted to Mr Davey's old post as employment minister and Cardiff Central MP Jenny Willott becomes assistant whip. 12:38 It's a busy week ahead for the UK, with the British Retail Consortium's survey giving indications on how well consumer spending stood up in January (don't hold your breath for good news), and a raft of other economic indicators shining some light on the state of the British economy. These include trade deficit figures in December, manufacturing output in November, producer prices in Janaury and house prices last month. Howard Archer, chief economist at IHS Global Insight, said: If consumers do rein in their spending, it would make it harder for the economy to return to growth in the first quarter of 2012 after GDP contracted by 0.2pc quarter-on-quarter in the fourth quarter of 2011. Suspicion that consumers may be tightening their purse strings at the start of 2012 have been fuelled by the CBI's distributive trades survey for January. 12:30 On the corporate front, Google is surprised that European regulators have raised concerns about its new privacy policy. In a letter to the search engine giant, the group said it needs to investigate whether the proposals sufficiently protect users' personal data. Google announced in January plans to simplify its privacy rules, consolidating 60 guidelines into a single policy across its services including YouTube, Gmail and Google+. 12:25 Chris Huhne is trending on Twitter. 12:20 Gas supplies from Russia have decreased to various EU member states but there is no "state of emergency," according to the European Commission. 12:08 More on the Greek auction... Greece will auction €625m of 26-week Treasury-bills next Tuesday. Monthly T-bills, as they are known, are Greece's sole remaining source of market funding. Last month debt agency PDMA sold €1.625bn of six-month paper, priced to yield 4.9pc. The sale's bid-cover ratio was 2.80. Athens needs funding to refinance €14.5bn of maturing bonds on March 20 and is at risk of a messy default if there is no agreement with its eurozone partners and the IMF on the terms of a new bailout plan. 12:02 Meanwhile the Greek package - if and when it goes ahead - will require up to €145bn, EU sources said - €15bn more than previously expected. The extra funds will go towards recapitalising the Greek banking sector once a deal is struck to write down the value of bonds owned by private-sector creditors, the sources said. 11:58 Greece will auction €625m of six-month Treasury bills on February 7 to fund the rollover of a previous €1bn issue that comes due on February 10, the country's debt agency PDMA said on Friday. It's not the only one. Slovenia plans to sell €250m of Treasury bills as borrowing costs for the euro-region nation decline, it has emerged. The Finance Ministry is inviting bids for three-month, six-month and 12-month notes starting on February 7, with the auction set for February 10. 11:20 Here is a copy of Chris Huhne's resignation letter and Nick Clegg's reply: This is the full text of the letter sent by Mr Clegg after receiving Mr Huhne's letter of resignation: 11.17 Here we go again ... Germany's finance ministry says Monday's Eurogroup meeting is not certain. They were meant to meet to discuss whether Greece meets the conditions for a €130bn second bailout - a prerequisite of this is that the Greek government agrees a debt deal with private bondholders. Reuters reports that a spokesman for the German finance ministry told a regular new conference: So far there is no invitation, nor has (the extraordinary eurogroup meeting) been announced, nor has there been advance notice that such a meeting will take place. A meeting of this kind only makes sense - if it is to be about Greece - if we have all the elements sorted... All of those elements have not been met, so it's speculative to talk about such a meeting. 11.16 More sabre-rattling by Iran has seen the price of benchmark crude edge up to $112.45 a barrel. Supreme Leader Ayatollah Ali Khamenei said on Friday the country would retaliate over Western-backed oil sanctions and any threat of attack. He made the comments after Leon Panetta, the US Defence Secretary, was reported at saying he feared a possible Israeli strike on Iran as early as April. A higher oil price could throw out the BoE's inflation expectations. 11:10 Back to Europe, and it appears the Greek deal may not be as close as some people thought. It is uncertain whether eurozone finance ministers will meet on Monday in Brussels to agree a financing package for Greece, according to a Germany finance ministry official, because not all conditions have been met - such as a deal on voluntary losses by private creditors. He told a news conference on Friday it was "speculative" to talk about such a meeting. 10:55 The latest UK personal insolvency figures are not good news, experts say, even though there is a 4pc decrease on the number of people going bankrupt over the last quarter. The total number of personal insolvencies was 119,850 in 2011, with 28,973 going "bust" in the final quarter. Deloitte's Louise Brittain says: As the labour market continues to deteriorate we will see more households struggle to pay their debts as unemployment levels increase. We have seen a noticeable increase in professionals filing for bankruptcy and we're can see this trend continuing Elsewhere, Nick O'Reilly, an insolvency practitioner at HW Fisher & Company, said: These figures are a grim reminder that the deep freeze into which Britain has plunged is not merely meteorological. The business environment is as cold and hard as the frozen earth beneath our feet. With the economy seemingly holed below the water, the steadily increasing number of company insolvencies may be just the tip of the iceberg. At first glance the fall in individual insolvencies offers some crumbs of comfort. But the huge leap in the number of debt relief orders - often seen as "bankruptcy light" - hints at more trouble to come. To qualify for a debt relief order, a person must have relatively small debts - of less than £15,000. Chris Huhne, the energy secretary, has resigned after being charged with perverting the course of justice over speeding points. He now faces a criminal trial. 10:46 Philip Aldrick, economics editor at the Telegraph, is incensed that Ed Milliband's rant on bonuses offers nothing more than "platitudes and petty politiciking." He writes in his latest blog: The best he can propose is a parliamentary vote to resurrect Labour's bonus tax and to make the grand, meaningless gesture of "ending a bonus culture based on one-way bets rather than genuine reward for risk." "It will not be legislation and it will not be binding," he admits. If it wasn't so desperate, it would be almost criminal to use such an important issue to try to bolster his weak political standing. His specifics aren't much better, either. He suggests banks reveal how "many employees are earning over £1m, so that consumers can take this into account when choosing where to bank." Patent nonsense. Consumers will go with the best rate. 10:40 Gold rush? Prices for bullion hit their highest since mid-November on Friday as expectations are raised that America's monetary policy will remain "ultra-loose." However, the prices struggled to maintain traction ahead of US jobs data expected later today. Spot gold hit a high of $1,752.90 on Friday morning, against $1,759.39 late on Thursday. 10:30 It looks as though Greece has something up its sleeve to help Athens in its bailout talks with the EU and IMF. The country expects its 2011 budget deficit to be smaller than expected at between 9.1 and 9.4pc of GDP, thanks to an emergency property tax, according to a finance ministry official. Greece had previously estimated the deficit would be above 9.5pc of GDP. 10.20 Looks like there may be progress on the Greek deal: 10.10 Most economists now expect that the services data will mean the Bank of England will not need to do as much QE next week. Capital Economic's Vicky Redwood thinks the data will tip the balance towards £50bn of QE rather than £75bn. Investec's Philip Shaw also expects £50bn as does Peter Dixon of Commerzbank. 10.00 Eurozone retail sales fell for a second month in December - month on month is was down 0.4 percentage points. So not a very happy Christmas for the 17 nation bloc. For the EU as a whole it was up 0.3pc month on month. 09.50 The FTSE 100 has edged into positive territory after the sevices data. It is up 14 points - or 0.2pc. Less upbeat than economists. Here's how some of them reacted: Vicky Redwood, of Capital Economics: It is looking more hopeful that the economy will expand in Q1 and therefore temporarily avoid a technical recession - although how long this pick-up lasts is another matter. Philip Shaw at Investec: At face value what this reading and the other surveys are telling us is that the upturn has arrived much quicker than expected. One feasible explanation is that the recovery in the US has started to filter through to Europe, including the UK. IMF chief Christine Lagarde has been trying to get eurozone nations to contribute more to deal with the crisis 09.30 The IMF wants talks on increasing it warchest to be done in tandem with EU discussion on a firewall to contain the debt crisis. IMF Deputy Managing Director Naoyuki Shinohara told Reuters in an interview: Talks to boost the regional firewall and the global firewall in terms of the IMF's financial base need to proceed in parallel. Officials from the G20 rich and emerging countries meet later on Friday in Mexico City to set the agenda for financial diplomacy needed to keep the global economic recovery on track. Mr Shinohara said there was "broad agreement among countries about the overall framework and discussions have begun about how much each country will contribute and the modality." 09.28 Britain's dominant services sector expanded at the fastest pace in 10 months in January, confounding economists who had thought the pace of growth would slow. The Markit/CIPS Purchasing Managers' Index for services rose to 56 from 54 in December, against expectations of a dip to 53.5. 09.10 Despite a stagnant stock market, Garry White, the Telegraph Questor Editor, has spotted what he believes is an opportunity: Chinese Premier Wen Jiabao with German Chancellor Angela Merkel on Thursday 09.00 Chinese Premier Wen Jiabao's comment that China was considering more help for the eurozone's rescue funds lifted hopes on Thursday, but Reuters' Lucy Hornby reports that the world's second largest economy is likely to play it safe by going through the IMF. She quotes Zhao Xijin, deputy director of the Finance and Securities Institute at Renmin University, who said: There is no domestic consensus on how to address the European problem. Going through the IMF is playing it safe. From the foreign policy point of view, from other points of view, no further discussion is needed. China is already a member of the IMF and it is prepared to take on the responsibilities of membership. China has always said it wants a return on its money. 08.50 Game Group shares have jumped 40pc after backing from its lenders. Last month the company warn it may breach the terms of its loans to become yet another High Street casualty. Game today forecast a loss of £18m for the year to January 31. 08.45 Italy's services sector improved but continued to shrink in January. It has now contracted for eight months in a row, with Markit/ADACI Business Activity Index, coming in at 44.8, against 44.5 in December. This is still well below the 50 mark that is the line between contraction and expansion. Here's a scene from Berlin today - looks about as icy as Germany's reaction to suggestions that it should stump up more money for Greece. 08.35 Markets on the Continent are as frozen as the FTSE 100 (-0.01pc). Germany's DAX is down 0.1pc and France's CAC slipped 0.2pc. Spain's Ibex and Italy's MIB are also down slightly. 08.25 Spain's services sector contracted for the seventh month running in January, the latest PMI services sector survey shows. The sector makes up around 70pc of the economy. The PMI index rose to 46.1 in January, its highest level since July, from 42.1 the previous month. While the rate of decline eased more markedly than expected, the questions remains whether it marks a turning point. For Andrew Harker, economist at data provider Markit, it does. He said the "PMI data suggest that the worst of the current downturn in activity may have been seen at the end of 2011." 08.15 Sir Philip Hampton, the chairman of RBS, has been strong in his defence of Stephen Hester's pay and why the labourer is worthy of his pay. Robert Peston, the BBC Business Editor, tweets one of Sir Philip's responses: