Eurozone

Shares in European financials have dropped in late trading as the latest European Banking Authority stress tests said the industry must raise €115bn in capital by June 2012.

The FTSE 100 is down 1.2% and US markets have also opened lower as investors' hopes for a positive outcome from Friday's EU summit begin to dwindle.

Asian markets rallied overnight as Moody's mulled raising the ratings of some Asian countries, while investors pinned their hopes on an EU summit to solve the debt crisis.

UK Prime Minister David Cameron has threatened to veto plans for an overhaul to the EU treaty on grounds it could damage British interests.

The Bank of England is readying emergency funds designed to protect the UK economy from "unexpected shocks".

Ratings agency Standard and Poor's (S&P) said France and Germany are among 15 nations that have been put on "credit watch" due to fears over the impact of the debt crisis.

The S&P 500 has risen 1.7%, with European equity markets also holding onto gains after German Chancellor Angela Merkel and French President Nicolas Sarkozy reached accord on the debt crisis.

As the eurozone crisis reaches a crescendo, the Bank of England has revealed just how much exposure UK banks have to the region's most troubled economies.

AN OPEN LETTER TO MERKEL

European stock markets opened higher this morning ahead of a crucial eurozone meeting on Friday which could decide the future of the single currency.