The intractable differences between the German and Greek governments will be under the microscope today as the Eurogroup of finance ministers meet to discuss Greek proposals for a “loan extension” which would keep the country funded for the next six months.
Yesterday´s letter from Greek Finance Minister Yanis Varoufakis requesting the extension was seen as a climb-down from the Greeks, yet it quickly emerged that Germany was unimpressed with the proposals, with government sources indicating they would reject the proposals for being too vague. That is not believed to be a position held by the entire Eurogroup at this point, yet Varoufakis is likely to face a tough grilling on the fine print of the Greek proposals.
German manufacturing PMI figures remained unchanged at 50.9, giving an indication of the continued sluggishness in Europe´s largest economy. Indeed, figures for the country´s PPI index will have done little to quell fears on the continent about deflation, with January showing a decrease of 0.6%, but it is the figure of a 2.2% drop year on year that will most concern policy makers. EU figures for the Markit Services PMI, Markit Manufacturing PMI and Markit Comp are also set to be released today, with forecasters predicting slight improvement in each of the indices.
The Ibex index was down (0.40%) in early trading at 10.866,50 while the euro was slightly down against the dollar, trading at $1.1330.