Go to the Globe and Mail homepage

Jump to main navigationJump to main content

In this Friday, Feb. 9, 2011 file photo, German Chancellor Angela Merkel, right, speaks with Greek Prime Minister George Papandreou, left, and French President Nicolas Sarkozy during a round table meeting at an EU summit in Brussels. During a G20 meeting in Cannes, France on Wednesday, Nov. 2, 2011, French President Nicolas Sarkozy will hold emergency talks with European leaders. (Yves Logghe/The Associated Press)
In this Friday, Feb. 9, 2011 file photo, German Chancellor Angela Merkel, right, speaks with Greek Prime Minister George Papandreou, left, and French President Nicolas Sarkozy during a round table meeting at an EU summit in Brussels. During a G20 meeting in Cannes, France on Wednesday, Nov. 2, 2011, French President Nicolas Sarkozy will hold emergency talks with European leaders. (Yves Logghe/The Associated Press)

Top Business Stories

Day of reckoning in Greece, pandemonium in euro zone Add to ...

These are stories Report on Business is following Thursday, Nov. 3. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

Follow Michael Babad and Globe top business news on Twitter

Chaos rules The best word to describe what's happening in the euro zone this morning? Pandemonium.

In Greece, George Papandreou's government is on the brink of collapse, divided over the prime minister's decision to call a referendum on the euro crisis accord, which has now put its bailout money in doubt.

In Italy, Silvio Berlusconi's government is also under intense pressure, trying to deliver on promised reforms and amid another brutal day in the bond market, with yields climbing again.

And in Cannes, where G20 leaders are meeting, their summit has clearly been hijacked by developments in Athens, where the Greek finance minister reportedly is opposing Mr. Papandreou on the issue of a referendum.

To recap, Mr. Papandreou stunned euro zone leaders earlier this week by announcing he would hold a confidence vote and a national referendum on the terms of the crisis accord struck in Brussels, a sweeping plan to shave Greece's debt, recapitalize the banks in the monetary union and enhance the region's bailout fund. The package aims to reduce the country's debt-to-GDP ratio to 120 per cent by 2020, and many observers have questioned whether it's enough.

Whether or not it's enough, Mr. Papandreou put the whole thing in doubt with his decision to hold a vote amid widespread opposition to the austerity measures tied to the accord. Euro leaders reacted with dismay, and yesterday French leader Nicolas Sarkozy said Athens would be denied any bailout money until it was decided.

The referendum, now solidly a vote on whether Greece remains in the union, is supposed to be held in early December, though reports suggest Mr. Papandreou may not last the day after his emergency cabinet meeting.

I understand why G20 leaders are calling for a quick resolution to this but, really, it has been two years now, and Greece is fast running out of money.

"With Greek 2-year bond yields surging over 100 per cent, currently sitting at 107.3 per cent this morning, one could only imagine the outcome should Greece leave the euro," said Derek Holt and Karen Cordes Woods of Scotia Capital. "Several of the periphery countries are also getting hit this morning as spreads continue to widen."

ECB in surprise rate cut The new chief of the European Central Bank made his first move today, a surprise rate cut amid fears that the continent is headed back into recession.

The ECB doesn't say much in its statement - it waits for a news conference - but it cut its policy rate by one-quarter of a percentage point to 1.25 per cent. The move under Mario Draghi's leadership undoes one of the increases made when Jean-Claude Trichet was in charge, widely seen as a huge policy blunder.

Today's cut shows not only that Mr. Draghi has what it takes, but that he, too, senses the recession winds blowing.

Markets watch As some see it, a collapse of Mr. Papandreou's government could be a good thing because, as the thinking goes, that could very well scotch plans for the referendum. I wonder, though, how the Greek people would take that.

So, the possible end to Mr. Papandreou's tenure and Mr. Draghi's surprise move today are both buoying global markets.

"In the end, we expect a new government one way or another and no referendum," said senior currency strategist Elsa Lignos of RBC in London. "That should rule out the most immediately disastrous outcome. Although this whole saga will still leave a negative trace, making it harder to drum up support from potential [bailout fund]investors, today it brings a sigh of relief."

The Japanese market is closed, but Hong Kong's Hang Seng shed 2.5 per cent today. In Europe, London's FTSE 100, Germany's DAX and the Paris CAC 40 were up by between 1.3 per cent and 3.5 per cent by about 8:45 a.m. ET.

Dow Jones industrial average and S&P 500 climbed.

BCE profit climbs BCE Inc. posted a gain in third-quarter profit of more than 40 per cent as it boosted its share of the TV market and won more smart phone subscribers, The Globe and Mail's Iain Marlow reports.

BCE earned $642-million or 83 cents a share, up from $454-million or 60 cents a year earlier. Revenue climbed to $4.9-billion.

BCE added around 127,000 new, high-value wireless customers in the post-paid category, many of which are on smart phones, and also boosted the number of net new TV subscribers by more than 40 per cent.

Manulife posts loss Canada's Manulife Financial Corp. was hit again in the third quarter by falling stock markets and interest rates, posting a loss of $1.28-billion or 73 cents a share.

That's narrower than the loss of $2.25-billion or $1.28 a year earlier, The Globe and Mail's Tara Perkins reports.

Manulife's results are the latest indication of the severe toll that market turmoil continues to take on life insurers, which have not managed to recover from the financial crisis to the same degree as banks.

Yesterday, Sun Life Financial posted its first quarterly loss in two years.

Magna profit slips As The Globe and Mail's Greg Keenan reports today, Magna International Inc. posted a drop in third-quarter profit as it still struggles with lagging operations in Europe.

The Canadian auto parts giant earned $102-million (U.S.) or 42 cents in the quarter, down from $266-million or $1.14 a year earlier. Magna took a charge of $113-million on the disposal of an interior systems business in Europe.

"Our top priority continues to be the improvement of our underperforming operations in Europe," Magna said.

Business ticker

 
  • YM-FT
  • ES-FT
  • BCE-T
  • MFC-T
  • SLF-T
  • MG-T
Live Discussion of YM on StockTwits
More Discussion on YM-FT
Live Discussion of ES on StockTwits
More Discussion on ES-FT
Live Discussion of BCE on StockTwits
More Discussion on BCE-T
Live Discussion of MFC on StockTwits
More Discussion on MFC-T
Live Discussion of SLF on StockTwits
More Discussion on SLF-T
Live Discussion of MG on StockTwits
More Discussion on MG-T

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories