Equity markets are expected to remain fairly range-bound in the run-up to the summit, which takes place on Thursday and Friday. Various issues are on the agenda such as a potential renegotiation of Greece's bailout terms, and proposals to a create fiscal and banking union. Some form of growth stimulus is also expected to be announced. At pre-summit talks in Rome, German, French, Italian and Spanish leaders agreed that the EU should implement a series of growth measures worth around 1% of the euro area's gross domestic product, or 130 billion euros.
Overall, though, expectations for the summit are pretty low. "We suspect investors will walk away disappointed once again," said Standard Chartered. "We do not expect anything which will soothe the renewed sovereign debt tensions--in particular over Spain and Italy."
As far as Greece is concerned, officials from the troika of its creditors--the European Commission, International Monetary Fund and European Central Bank--have postponed a visit that was due to start Monday, after both the prime minister and the finance minister were hit by health problems.
As for Spain, its government is due to make a formal request for financial assistance from the EU later Monday, with the funds to be provided firstly through the European Financial Stability Facility and then through the European Stability Mechanism, once it is up and running.
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