LONDON (Reuters) - The only issue now blocking an agreement on Sunday on future EU-UK ties is Gibraltar, diplomats said after British PM Theresa May met Commission president Jean-Claude Juncker in Brussels.
Spain's insistence that future trading arrangements for Gibraltar be settled through direct talks with Madrid has few if any supporters; many in Brussels believe PM Pedro Sanchez is just trying to score points against rivals at home before a local election in the Andalusia region and have warned him not to put the whole Brexit agreement in jeopardy. May will return for further talks with Juncker on Saturday.
Since winning power in 2015, Poland’s ruling Law and Justice Party (PiS) has enjoyed strong public support despite criticism over its democratic record, as it benefits from strong economic growth, generous welfare spending and nationalist rhetoric.
That all could be changing. An opinion poll this week suggested its popularity was being dented by a corruption scandal involving the PiS-appointed head of the country’s banking watchdog.
At the same time, PiS yesterday rushed an amendment through parliament on Wednesday reversing parts of a legal reform that the European Union had condemned as undemocratic. More than 20 Supreme Court judges who had been forced to quit can now return to work. Some lawmakers suggested the move was an attempt at a smokescreen to divert attention from the corruption scandal.
MARKETS AT 0755 GMT
European markets are likely to focus on what the rising anxiety over world growth next year will mean for the euro zone and European Central Bank policy. Release of the ECB minutes later in the day will be watched closely for clues and also for any discussion of a possible relaunch of TLTRO cheap funding tools. Board member Mersch also speaks in Munich later.
Italy's sovereign bond yields stayed well off the early week highs as markets bet some movement on details of Italy’s controversial budget were still possible, even if the headline deficit figure didn’t change.
Although the EU Commission rejected the budget plan on Wednesday and indicated the start of an excessive-deficit sanctions procedure, that process is expected to take many months and there will be intensive negotiations along the way.
La Repubblica newspaper reported that Italian President Mattarella wants PM Conte to agree a deal with EU President Juncker over the budget. EU Commissioner Moscovici also stressed dialogue between Brussels and Rome was now necessary. Euro/dollar was a touch higher first thing. European stocks opened lower.
Overnight, Wall Street stocks ended slightly higher, even though they lost much of their earlier gains by the close. Asia bourses were flat to mixed, with Shanghai ending slightly lower.
The mood music surrounding next week’s meeting of U.S. President Trump and Chinese President Xi at the G20 in Argentina was not terribly optimistic. On Monday, the U.S. government proposed stepping up scrutiny over technology exports in 14 key high-tech areas including artificial intelligence and microprocessor technology, a move that many analysts view as directly targeting China. Chinese officials said on Thursday they were evaluating the impact and vowed to take steps to uphold Chinese firms’ interests.
Sterling was steady as the Brexit newsflow slowed ahead of Sunday’s EU summit on the draft agreement reached with UK PM May’s government last week. Oil prices were slightly lower, with Brent probing below $63 first thing. South Africa’s central bank decides on interest rates later in the day but is not expected to change policy amid a recent firming of the rand.
— A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own —