Europe

As speculative pressure intensified against Greece in European financial markets on Thursday, senior figures in the Greek government sought to bolster confidence that it will repay its debts on time, The Wall Street Journal reported. The message: Their government, which took office in October, has embarked on an austerity plan that will rebuild the country's shattered credibility and start bringing its debt burden down by 2012.
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The Icelandic government said top officials from Iceland, Britain and the Netherlands would be joined by Icelandic opposition leaders at talks later on Friday on the so-called Icesave issue, Reuters reported. An Icelandic government official said Icelandic Finance Minister Steingrimur Sigfusson, Dutch Finance Minister Wouter Bos and British Financial Services Minister Paul Myners would attend the talks, along with the leaders of Iceland's main opposition parties. "The purpose of the meeting is to exchange information and discuss the situation," the Icelandic official said by telephone.
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Greece’s debt crisis returned to financial markets with a vengeance as agitated investors demanded the highest premiums to buy its government bonds since the launch of European monetary union over a decade ago. The yield spread between 10-year Greek bonds and benchmark German Bunds widened dramatically on Wednesday, by almost 0.7 percentage points at one point, in what one trader called a “capitulation” to sellers worried about Greece’s ability to refinance its debt.
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Allen & Overy (A&O) has taken a lead role as General Motors (GM) and Spyker reached an agreement for the purchase of Saab Automobile yesterday (26 January) after months of discussions, LegalWeek reported. The magic circle firm advised Spyker on the deal, which has been agreed at a cut-price value of $400 million (£247 million), but will see the small Dutch auto maker save the Saab brand from disappearing after GM announced plans to wind down operations late last year.
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The president of Iceland, which became one of the biggest victims of the financial crisis when its banking system collapsed, predicted an economic recovery earlier than expected, The Wall Street Journal reported. "In the second half of this year and 2011, the recovery will be gaining strength," Ólafur Ragnar Grímsson said in an interview at the World Economic Forum's annual meeting here. Mr. Grímsson said a decline in the country's currency, the krona, is helping to revive its export industries such as fishing, manufacturing and aluminum.
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Greece is wooing China to buy up to €25 billion of government bonds, a move that underlines Beijing’s growing financial power, as Athens struggles to fund soaring public debt, The Irish Times reported. Goldman Sachs, the US investment bank, has been promoting a Greek bond sale to Beijing and the State Administration of Foreign Exchange (Safe), which manages China’s $2,400 billion foreign exchange reserves, said people familiar with the issue.
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European companies face increased risk of failure as the economy creeps out of recession, because they will need more working capital, credit insurance specialists and distressed debt investors warn, Reuters reported. Distressed debt investors and advisers predicted a second wave of restructurings throughout Europe in 2010, responding to a survey by Debtwire released on Tuesday. Companies that have limped along by stripping costs to the bone may struggle to build inventories in an economic recovery if they cannot meet their working capital requirements, investors said.
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The Swiss government will on Wednesday reveal how it will rescue a decisive deal with Washington about bank secrecy after the country’s highest administrative court derailed the agreement last week, the Financial Times reported. Bern agreed in August that UBS should divulge the names of 4,450 Americans with offshore accounts. Bern had been obliged to intervene after escalating US legal pressure threatened to trigger a crisis of confidence in the bank.
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Greece's debt problems have boosted interest in Portugal's 2010 budget plan coming Tuesday, which international investors will study for signs of similar fiscal frailty, The Wall Street Journal reported. Portuguese stocks and bonds have sold off sharply recently because of Portugal's high long-term deficits and low growth prospects.
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When it comes to rescuing banks, the Swedes are earning a reputation as trendsetters. First they set a standard for recovering from disaster; now they want to export their idea for how to pay for it, The New York Times reported. The country went through its own crippling banking crisis during the early 1990s, after the bursting of a domestic credit bubble. It rebounded relatively smoothly through an aggressive bailout policy built around nationalization and carving the troubled assets of banks off into a so-called bad bank.
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