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Morning papers: EU stance shifts on Greece default

This morning's headlines brought to you by Investment Adviser: Monday, July 11 2011.

By Bradley Gerrard | Published Jul 11, 2011 | comments

European leaders are for the first time prepared to accept that Athens should default on some of its bonds as part of a new bail-out plan for Greece that would put the country's overall debt levels on a sustainable footing, reports the Financial Times.

The new strategy, to be discussed at a Brussels meeting of eurozone finance ministers on Monday, could also include new concessions by Greece's European lenders to reduce Athens' debt, such as further lowering interest rates on bail-out loans and a broad-based bond buyback programme. It also marks the possible abandonment of a French-backed plan for banks to roll-over their Greek debt.

"The basic goal is to reduce the debt burden of Greece both through actions of the private sector and the public sector," said one senior European official involved in negotiations.

Business confidence at its lowest for two years

The prospects for Britain's economy remain bleak as consumers continue to cut back on their spending and export sales fail to take up the slack, according to a number of gloomy reports, reports The Guardian.

A week after the National Institute of Economic & Social Research said the slump could last until 2013 and Bombardier announced 1,400 jobs would go at Derby after the government failed to award the company a £3bn train contract, a report from accountants BDO shows business confidence in the manufacturing sector has dropped to a two-year low.

So far the manufacturing sector has been a key driver of the economy, but in the past four months BDO's optimism index has tumbled by 26 points to 90.1.

Tough era for 'macro' funds

Today's markets seem like they are tailor-made for money managers investing based on big-picture, "macro" themes such as the European debt crisis and economic woes in the US, reports The Wall Street Journal. Instead, many are struggling, the reports say.

Macro-focused managers have been tripped up by whiplash-inducing swings in stocks, currencies and commodities, often brought about by the latest twists and turns of impossible-to-time political developments.

Stubbornly low U.S. Treasury yields have been a trap for managers worried about inflation and the deteriorating U.S. fiscal outlook. Making matters worse is a tendency of markets around the world to move in lock step.

Hunt opens door to referral of BSkyB bid

Jeremy Hunt moved closer to blocking News Corp’s bid for British Sky Broadcasting on Monday as he opened the door for an unexpected referral of the proposed deal to the Competition Commission, reports the Financial Times.

It emerged that the UK culture secretary is writing to the regulators who have been offering him advice on the proposed bid, Ofcom and the Office of Fair Trading, asking if the dramatic events of the past week would cause them to change the advice on the deal they gave him in June.

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