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These are stories Report on Business is following Wednesday, May 23, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Well, what did you expect? I'm somewhat surprised that investors are somewhat surprised that today's EU summit appears destined to fail.

Hopes had been building for something substantial at the informal dinner of European Union leaders in Brussels, but those hopes have largely been dashed amid continued opposition by Germany to the idea of a euro bond. Added to that are comments by the former prime minister of Greece, who warned in an interview with The Wall Street Journal of the threat of Athens quitting the euro zone.

"Today is the anniversary of the Defenestration of Prague in 1618, the start of the Thirty Years' War," said Chris Beauchamp, a market analyst at IG Index.

"Frankly, it seems as if this crisis has been going on for 30 years. Hopes for today's EU summit have been well and truly chucked out of the window, as the Germans once again state their firm opposition to euro zone bonds as a means of solving the crisis. Berlin has ignored the pleas of the OECD, IMF and its allies in Paris and Rome, believing that such a solution would only worsen the spendthrift ways of their southern neighbours."

As our European correspondent Eric Reguly writes in today's Report on Business, a euro zone bond would be supported by the credit ratings of all the members of the 17-nation monetary union, but really by Germany's triple-A standing.

Chancellor Angela Merkel doesn't want it. Not only would such a move boost borrowing costs, from her point of view it would also kill the incentive for fiscal discipline among the laggards of the group.

That sets the stage for a summit with no clear outcome, and continued turbulence in markets as the two-year-old debt crisis rages anew.

France's new president, François Hollande, is pushing the creation of a bond, and, given he also wants to focus more on economic growth and less on austerity, appears headed for a showdown with Ms. Merkel at some point.

"New French President François Hollande's new growth mandate has seen him look to take the austerity fight to Germany, and while German Chancellor Angela Merkel may have been isolated at the G8, she remains much less so in Europe," warned senior analyst Michael Hewson of CMC Markets.

Markets sink Against that backdrop, investors are in a foul mood today. Adding to the euro angst are weaker trade numbers from Japan.

"Markets are steadily giving back the gains made over the past two days, not helped by weaker trade data from Japan that hints at a slowing global economy," said Mr. Beauchamp of IG Index.

Tokyo's Nikkei sank 2 per cent, and Hong Kong's Hang Seng 1.3 per cent. European markets were also down sharply, followed by the S&P 500 and Toronto's S&P/TSX composite .

In Europe, London's FTSE 100, Germany's DAX and the Paris CAC 40 were down by between 1.3 per cent and 1.7 per cent by about 9 a.m. ET.

"Former Greek PM Papademos told the Wall Street Journal there's a risk the country could leave the currency union … nothing we didn't already know, but the market doesn't need reminders," said Benjamin Reitzes of BMO Nesbitt Burns.

Railway strikebound Freight shipments have been hit today amid a strike by more than 4,000 employees of Canadian Pacific Railway Ltd.

CP and the Teamsters union tried to reach an agreement in their contract dispute, but failed, leading to the walkout just after midnight, The Globe and Mail's Brent Jang reports.

"The union has withdrawn its services and as a result, CP has successfully executed the safe and structured shutdown of its freight train operations in Canada," a company spokesman said.

A lasting walkout would have a major impact on industry across the country.

The question now is how the Canadian government will respond, a move that is likely. Labour Minister Lisa Raitt has been quick to intervene in walkouts before. She's already making noise.

"I am disappointed that the parties have not been able to reach agreements despite federal assistance and that strike action has begun," Ms. Raitt said in a statement. "The government is concerned about the national economic significance this will have and we are prepared to act in the interest of the national economy."

BMO profit climbs Bank of Montreal kicked off the second-quarter reporting season among Canada's major banks today, with a 27-per-cent jump in profit.

BMO profit climbed to $1.03-billion, or $1.51 a share, diluted, The Globe and Mail's Grant Robertson reports. Its provisions for bad loans delinced by $102-million to $195-million.

Chief executive officer Bill Downe cited gains in Canada, the United States and its BMO Nesbitt Burns arm.

"The integration of our U.S. banking platform is on track," he said. "The business has been materially strengthened with expanded access to existing and new regions, increased brand awareness and a better ability to compete in highly attractive markets. The commercial team continues to outperform, and there's visible, strong growth in our commercial and industrial book."

Retail sales rise Are higher pump prices diverting consumer spending in Canada?

Overall retail sales rose 0.4 per cent in March, Statistics Canada said today, boosted by a 1.2-per-cent gain in the auto sector.

When autos are stripped out, though, sales rose by just 0.1 per cent, which was weaker than economists had expected.

"Even with March's advance, real retail sales rose just 0.2 per cent annualized in the first quarter of 2012, the weakest since Q1 of 2011," said senior economist Krishen Rangasamy of National Bank.

"That suggests limited contribution to GDP by consumers in the quarter. High gasoline prices likely hurt overall spending in the quarter. The share of gasoline in total retail sales indeed averaged 12.5 per cent in Q1, not far from the peak reached in the third quarter of 2008 when the energy price spike had consumers cutting back on overall spending."

Fiat, Mazda team up Fiat and Mazda are teaming up to build a new roadster.

Fait Group Automobiles SpA and Mazda Motor Corp. said today they've signed a non-binding deal to develop and manufacture a new vehicle - a two-seat convertible - for the Mazda and Alfa Romeo brands.

They're looking at making two "differentiated, distincty styled, iconic and brand-specific lightweight" roadsters, based on Mazda's next-generation rear-wheel-drive system.

The vehicles would be built in Hiroshima, starting in 2013.

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