European Crisis Live: No Deal From Brussels Leaves Investors Guessing on 'Grexit'

1550 BST: Tale of the tape (the one we can't see)

10 year bond yields:

Germany: 1.39 percent

United Kingdom: 1.79 percent

Spain: 6.15 percent

Italy: 5.69 percent

Currencies:

EUR/USD: 1.2593 (+0.05 percent)

EUR/CHF: 1.2027 (+.16 percent)

Cable: 1.5688 (-0.01 percent)

1530 BST: Didn't we talk about this last night?

Beaten but unbowed, Italy's Prime Minister Mario Monti says this afternoon that it will "not be too long" before Euro bonds (please, not Eurobonds) become a reality.

Here's a take on the idea from RBS' Harvinder Sian:

The media has made much of the Francois Hollande push for Euro bonds and the German intransigence. One of the best quotes from the German finance ministry was the response that there is nothing stopping France and Italy in joint issuance.

More seriously, the idea of Euro bonds has not been ruled out by Merkel rather that it is the end of a process. The smart idea from Merkel now would be to lay out the conditions of a Euro bond that would entail handing over sovereignty to Brussels with commensurate strict-binding laws that span not only fiscal policy but also other economic areas such as banks & labour markets to allow a true United States of Europe.

1515 BST: Swiss franc follow-up

Talks between Greece and Switzerland over tax on Greek deposits in Swiss banks.

1435 BST: Can't resist a bargain

Stock shoppers are out in force on both sides of the Atlantic today with a decent US open in equity markets supporting the morning's bullish tone to European shares - this despite a weak durable goods report (up +0.2 percent versus a Street consensus of +0.5 percent) and flat weekly jobless claims numbers (370,000 on the week, 370,000 on a four-week average)

FTSE Eurofirst 300 holding onto 10 point (1.05 percent gain) after 0.15 percent rise at the bell for the S&P 500.

1425 BST: Get your act together

Reading tone in text only messages is difficult at the best of times, but it's hard not to feel a slight tinge of frustration in the latest quotes from European Central Bank President Mario Draghi, who is addressing the Federico Caffè Lecture hosted by Università degli Studi di Roma.

He says it's time for European governments (surely, citizens?) to spell out a common vision of the political and economic foundations of the Euro, although he does concede it will require a "courageous leap of political imagination". He adds that those looking for more from the European Central Bank (including, it seems, the Prime Minister of Great Britain) will be disappointed. Draghi says it's time for banks to recapitalize, but they need to do it themselves. He's going to wait to see the longer-term impact of the €1tn in liquidity operations but isn't worried about inflation in the near term.

1415 BST: Swiss Alps

There's been a big spike in the Euro against the Swiss franc this afternoon amid rumours of Swiss National Bank intervention and talk of a tax on foreign deposits in the Swiss banking system.

Neither talk has been in any way confirmed, but the price jump is real and it's the biggest move of the single currency against the "swissie" since early April. Social media sources say it's not an SNB led play, but that's yet to be supported. EUR/CHF trading at 1.2030, a 0.31 percent pop on the session.

1300 BST: Help is on the way

George Provopoulos, the head of Greece's central bank, says the newly-collected €18bn in recapitalisation funds should be disbursed to the country's top four lenders by the end of the week. Or possibly next week. Reasons for the delay are unclear, but Mr. Provopoulos does add that depositor-flight can be slowed if "a climate of trust returns".

That might take a lot longer than the funds.

1240 BST: Plans C, D and E

It's been a tough week for the stewards of the economy of Her Majesty's Kingdom of Great Britain and Northern Ireland: no one's spending (retail sales fell the most in two years), few have confidence (the IMF gently suggests the government revisit its current strategy) and the recession in deeper than anyone (save a few) first anticipated.

So, maybe, a bit more inflation might not be a bad thing, at least so hints dovish (although lately indecisive) Bank of England policymaker David Miles in a speech to Britain's Society for Business Economists (wild party, that).

"The price of bringing above-target inflation back down quickly is high, while the cost of more expansionary policy... has fallen. As a result, the optimal path of monetary policy is likely to entail a slower return to the inflation target."

It's worth a shot .. but here are two things which never seem to be fully explained by the people calling for a) lower interest rates and b) "infrastructure spending"

1. If bank's aren't lending into a recession after borrowing from the BoE at 0.50 percent, what makes us think they're going to ramp-up credit creation if they borrow at 0.25 percent?

2. If the bulk of the 2.7m job lost since the first recession in 2008 were NOT in the industrial sector, what makes us think that "shovel-ready" programmes like house, road, bridge and wind farm building projects will address that?

Just asking ...

1200 BST: The exits are clearly marked and located at the front and rear of the European Project

Italy's Deputy economy minister Vittorio Grilli tells Reuters that his country must prepare for the possibility of Greece leaving the Eurozone, although he says the aim is to avoid that option (natch).

Andrew Bailey, the Bank of England's executive director for banking supervision, said earlier today that UK banks were preparing for a Grexit and that those plans "were becoming more detailed" even if that was "detail without certainty".

Finland's finance minister, Jutta Urpilanien, said today that she's been "evaluating different paths and plans" but still wants Greece to stay inside the embrace of the single currency.

Last night, Belgium's finance minister, Steven Vanackere, acknowledged that plans were being drawn-up around the region, adding "to say that we don't have a contingency plan would be irresponsbile."

Ireland's finance minister, Michael Noonan, "denied that they had been told to draw up emergency plans to deal with a Greek exit from the single currency", according to the Irish Independent.

1140 BST: This is what happens when a bubble bursts

Ireland's Central Statistics Office today confirmed a 50 percent drop in Irish house prices from the 2007 peak after a 1.1 percent decline last month. Only twice in the last 48 months have prices *not* fallen. And it may get worse. Reuters polled a group of economists who expect a 12 percent cumulative fall this year and a further 5 percent decline next year.

Try convincing Irish votes to support the EU Fiscal Pact (and the permanent austerity it demands) when they're watching the only real asset most of them will ever own collapse.

1120 BST: About those exports ...

Germany's economy is on the ropes, after growing only 0.5 percent in the first three months of the year and seeing manufacturing output plunge to multi-decade lows, according to Markit PMI data published earlier today.

The old saw about Germany's export advantage, gained by the beaten down Euro, looks flimsy, as well.

Firstly, 40 percent of German exports (of the usual €90bn or so each month) are inside the Eurozone and are thus more based on end-demand strength than weak currency advantage. (Recession-bound France eats a full 10 percent of that total). Add the 20 percent that the whole EU buys and you're looking at a smaller 40 percent which gets shifted to "strong currency" destinations, most importantly of course, China.

Which is why news that the Yuan hit a 10-year high of 7.9438 against the Euro is so important for Germany's economic future. As are reports this morning from HSBC that China's manufacturing sector looks to have slowed for the seventh consecutive month in April. I'd be willing to bet the current China government strategy of "infra-stimulus" will be domestically focused as its own exports slow. This further blunts Germany's ability to ship (expensive) goods to the world's fastest growing economy.

1110 BST: Now it's quiet *and* bullish

FTSE Eurofist 300 up 1.1 percent to 982.54

1100 BST: It's quiet ... almost too quiet

It's hard to see how the current "placidity in European equity markets is going to continue once our American cousins are greeted with "Europe prepares for Greek Exit after Failed Summit" headlines. It makes price discovery for non-professional investors incredibly diffcult and amps up market volatility during "handovers" from Asia to Europe and from Europe to North America.

Right now - and this is *always* troubling - the real capital markets activity is going on "behind the public screens": in the bond markets, in the derivatives markets and in the "dark pools" of off-exchange platforms.

I'll grant you it's item 954,654 on the list of policy makers' current concerns, but it's nonetheless important, and worth remembering the ramp up in equities between the closure of BNP Paribas funds in August 2007 (the *real* kick-off in the credit crisis) and the peak of the Dow Jones Industrial Average two months later.

1045 BST: Ghost in the Machine

A tech issue has kept us offline for a while - not that I missed much! (Insert sarcasm here):

Okay, so we're deeper in recession that we thought here in the UK (downward revision of 0.1 percent to Q1 GDP: we shrank 0.3 percent from shrinkage at the end of 2011) and heading to recession in the Eurozone (Germany's tepid 0.5 percent GDP confirmation won't keep the current "flat" GDP print afloat for long, especially after a dismal 45.9 reading of the "composite" Markit Purchasing Managers' Index (the lowest since 2009) and a slump in French business climate index (INSEE reports a 4 point drop to 92, the second lowest reading of the year).

So .. .where do we stand? France's 10-year government bond yields are on a tear, falling 15 basis points to 2.59 percent after the miserable economic data and, perhaps, Francois Hollande's "star" performance at last night's Brussels Dinner/Summit.

Gilt yields also fell through the floor, hitting yet another record low 1.74 percent (10-year) after the European and UK data. You'd have to think the "significant deterioration" the Bank of England says would need to occur before it stretched the current £325bn programme of quantitative easing can't be too far away.

Shares are holding up, though, despite the macro and political carnage. The FTSE Eurofirst 300 is up around 0.5 percent to 976.95 while the FTSE 100 has built a small 0.7 percent gain from its late November lows.

The single currency is flat-lining at around 1.2563

0830 BST: Happy New Year?

The man who first coined the term "Grexit", former Bank of England rate setter and now Citigroup's chief economist Willem Buiter, says Greece will leave the single currency on 1 January 2013.

He's logic is fairly straightfoward: he thinks the ECB will fund Greek banks until the 17 June vote, which he feels won't deliver a mandate strong enough to convince creditors that Greece is willing to implement the necessary spending cuts to keep the life-blood of Trokia funding flowing after 1 July. He blogs:

The government's cash reserves are limited, and probably will be exhausted well before year-end. Under these conditions, Greek EMU exit could be triggered by the government's need to print money to cover its spending, or to fill the gap left by the outflow of deposits

Meanwhile, in news that I'm sure is not related to anything, overnight borrowing by European banks at the ECB jumped to a a two-month high €3.9bn last night.

0750 BST: Good Morning!

It's going to be a very testing session for investors with any chips on the European table - and even those who've studiously avoided betting at all - after last night's low expectations from the informal European Leaders' Summit were found to be perfectly accurate: reiterated statements of the obvious and an escalating row between France and Germany over the issue of common EU borrowing.

But more on that a bit later ...

Overnight markets in Asia were at first supported by a better US close but slipped for a second consecutive day after a weaker-than-expected reading of China's manufacturing sector by the well-watched HSBC/Markit Economics Purchasing Managers' Index survey. The MSCI Asia Pacific Index fell 1.6 percent and accelerated its decline as the session came to a close, suggesting a weak European open.

Aside from the political risk investors will need to navigate this morning, there are several economic benchmarks that will also dictate trading, one of which has already been posted. Germany's economy grew 0.5 percent in the first quarter, according to the final reading of its GDP figures. Surveys of German business confidence and European area manufacturing and services sector activity will also be published later this morning, as well as a critical "second look" at UK GDP, which is officially now in its first double-dip recession since 1975.