ECB

Eurozone banks may have to raise €200bn to boost their capital reserves under a proposal from the European Banking Authority (EBA).

F&C Thames River bond duo Peter Geikie-Cobb and Paul Thursby have warned German bunds are ‘extraordinarily' overvalued and in line for a major correction.

SAVING THE EURO

Managers fear France could be the next European nation in line for a downgrade as it steps in to support beleaguered bank Dexia.

The European Central Bank has held rates at 1.5% despite mounting pressure on policymakers to resolve the sovereign debt crisis.

US markets recovered from initial falls on the opening bell as investors digested an ECB rate freeze and some positive US employment data.

The FTSE has opened 0.8% higher, building on yesterday's 3.2% rise, as markets hope policymakers are moving to combat the eurozone crisis.

Managers have warned investors a further correction in European markets is likely despite shares having already fallen 25% since the start of July.

A strong hint from the European Central Bank it will cut interest rates next month has buoyed markets in early trading, following sharp gains in the US and Asia overnight.

The UK government is to take legal action against the European Central Bank (ECB) over a planned change to European banking rules it warns could harm the City of London.