Today's Headlines

Bloomberg:

• Merkel Hardens Resistance to Euro-Area Debt Sharing. Chancellor Angela Merkel hardened her resistance to euro-area debt sharing to resolve the region’s financial crisis, setting Germany on a collision course with its allies at a summit of European leaders this week. Merkel, speaking to a conference in Berlin today as Spain announced it would formally seek aid for its banks, dismissed “euro bonds, euro bills and European deposit insurance with joint liability and much more” as “economically wrong and counterproductive,” saying that they ran against the German constitution. “It’s not a bold prediction to say that in Brussels most eyes -- all eyes -- will be on Germany yet again,” Merkel said. “I say quite openly: when I think of the summit on Thursday I’m concerned that once again the discussion will be far too much about all kinds of ideas for joint liability and far too little about improved oversight and structural measures.” The German chancellor will face an increasingly united bloc of euro-area nations at the summit as fellow leaders in France, Italy and Spain plus investors such as George Soros press her for more ambitious policies to help bring down borrowing costs across the 17-nation euro region. Soros urged Merkel to agree to a fund to buy Italian and Spanish bonds in return for those governments implementing budget cuts, or risk a “fiasco.”
• France May Cut 2013 Economic Growth Goal, Vidalies Tells I-tele. France may lower its 2013 growth target because of existing economic conditions, Minister ResPonsible for Parliamentary Relations Alain Vidalies told I- tele today. The government may lower its target to below the 1.7 percent previously anticipated, I-tele cited Vidalies as saying in an interview. Vidalies noted that economic analysts have forecast 0.9 percent to 1.3 percent growth for next year, the channel reported. “We will likely to have take into account the reality of economic growth in the 2013 budget law,” Vidalies told the television channel.
• European Stock Fall Before Summit As Soros Warns on Euro. European stocks fell for a third day on concern that a summit of the region’s leaders this week will not lead to decisive measures to contain its debt crisis as Germany’s Angela Merkel hardened her resistance to debt sharing. Unicredit SpA (UCG) and BNP Paribas (BNP) SA led a selloff in banks, both falling at least 5 percent. Nokia Oyj (NOK1V) lost 11 percent amid speculation Samsung Electronics Co.’s earnings may miss some analyst estimates. Shire Plc (SHP) slumped 11 percent after regulators approved a generic version of its second-biggest selling drug. The Stoxx Europe 600 Index (SXXP) retreated 1.5 percent to 242.82 at the close of trade, extending its decline in the last three days to 2.7 percent and erasing the gauge’s advance for the year.
• Greek Finance Minister Quits Days Into The Job On Illness. Greek Prime Minister Antonis Samaras consented to the resignation of his finance minister, Vassilios Rapanos, four days after naming him to the post. Rapanos, a former National Bank of Greece (TELL) SA chairman, sent his letter of resignation while still hospitalized after collapsing on June 22. The resignation was accepted by Samaras, according to a phone-text message from the premier’s office in Athens today.
• Nowotny Says ECB Would Rather Have EFSF Buying Bonds. European Central Bank Governing Council member Ewald Nowotny said the ECB would rather have the European Financial Stability Facility buy government bonds than itself, according to an interview in Austria’s Kurier newspaper. “The EFSF has the option to buy government bonds in the secondary market,” Nowotny was quoted as saying by the Vienna- based newspaper. “The ECB has welcomed this opportunity because it doesn’t want to go on with its own program to buy government bonds.” Nowotny said he expects the European Union’s summit this week to define the general direction of policy measures to fight the euro area’s debt crisis. Those measures need to be worked out in more detail after the summit, he said. “We have to be careful not to create great, unrealistic expectations which mean that disappointment is a foregone conclusion,” he said. “The proposals include a political union, a fiscal union and a banking union. All three proposals are very far-reaching.” Nowotny said that a prolongation of the Greek aid program can only be considered after “taking stock” with the new government in Athens.
• Greece Seen Blocked From Debt Markets Until 2017: Euro Credit. Greece may have to wait at least another five years before it can sell bonds to investors, according to financial institutions that trade debt with European governments. A new administration in Athens and signs that European Union leaders are willing to loosen Greek austerity measures failed to convince primary dealers that the country will be able to return to the market before its second bailout ends in the next three years.
• Internet Stocks Lead Rout On Citigroup(C) Outlook: China Overnight. Internet companies led declines in Chinese stocks traded in the U.S., sending the benchmark index to the lowest level in three weeks, after Citigroup Inc. (C) reduced its expansion estimate for Asia’s biggest economy this year. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies sank 2.9 percent to 87.67 by 12:46 p.m. in New York. Elong Inc. (LONG), a Chinese online travel company whose largest shareholder is U.S.-based Expedia Inc. (EXPE), fell for the first time in three days while Qihoo 360 Technology Co., a computer security software developer based in Beijing, retreated to a four-month low. Melco Crown Entertainment. Ltd. traded at the widest discount to the Hong Kong stock since June 15. Citigroup cut its forecast for China’s 2012 gross domestic product to 7.8 percent from 8.1 percent, citing a slowdown in domestic activity in the second quarter and further weakening of European demand.
• Credit Swaps in U.S. Rise as European Leaders Head to Summit. A benchmark gauge of U.S. corporate debt risk rose as euro-area policy makers prepare to debate stimulus measures in a two-day summit this week that may decide the future of the currency bloc. The Markit CDX North America Investment Grade Index, a credit-default swaps benchmark used to hedge against losses on corporate debt or to speculate on creditworthiness, increased 2.9 basis points to a mid-price of 118.2 basis points at 8:10 a.m. in New York, according to prices compiled by Bloomberg. European Union leaders are set to consider further integration measures in the currency bloc during a June 28-29 summit in Brussels as they strive to hold down rising bond yields. French President Francois Hollande and Italian Prime Minister Mario Monti have voiced support for joint euro-area debt issuance, while German Chancellor Angela Merkel has signaled rejection of the idea.
• New Home Sales Reach Two-Year High As U.S. Rates Fall: Economy. Purchases climbed to a 369,000 annual rate, the most since April 2010 and up 7.6 percent from the prior month, the Commerce Department reported today in Washington. The median estimate in a Bloomberg News survey of 67 economists was 347,000. The number of houses on the market held near a record low. Falling borrowing costs may keep luring buyers to builders like Toll Brothers Inc. (TOL), even as a cooling job market and limited access to credit restrain the recovery.
• China Faces Summer Steel Output Cut On Prices: Chart of the Day. China’s steelmakers, the biggest in the world, may cut output in the next two months as prices have dropped at a time when the main raw material became costlier. The CHART OF THE DAY shows the benchmark price of hot- rolled steel coil has dropped 1.2 percent in China since May 23, while iron ore has increased 5.8 percent. The profit squeeze means daily steel output may fall as low as 1.8 million metric tons by the end of August, about 12 percent less than the record high in April, according to estimates by Custeel.com, a Beijing- based industry researcher.
• Oil Declines Below $80 For A Third Day On Euro-Zone Debt. Oil fell below $80 a barrel for a third day on concern that a meeting of European Union leaders this week will fail to check the region’s debt crisis, leading to a reduction in fuel demand. Futures dropped as much as 2.2 percent as George Soros warned that a failure by EU leaders to produce drastic measures could spell the demise of the bloc’s shared currency. Crude climbed earlier as oil and gas installations in the Gulf of Mexico were shut because of Tropical Storm Debby. Prices slid as the storm moved toward Florida and away from energy fields. “The market is hanging on every development out of the euro zone,” said John Kilduff, a partner at Again Capital LLC, a New York-based energy hedge fund. “Things don’t look promising for the summit. Nothing appears to be in the cards that will end the crisis and an ultimate breakdown looks likely.” Oil for August delivery declined 62 cents, or 0.8 percent, to $79.14 a barrel at 1:31 p.m. on the New York Mercantile Exchange. Earlier, they touched $78.03. Futures are down 20 percent this year. Prices have fallen 23 percent since the end of March, heading for the biggest quarterly decline since the final three months of 2008. Brent oil for August settlement slid 28 cents, or 0.3 percent, to $90.70 a barrel on the London-based ICE Futures Europe exchange.

Wall Street Journal:

• Four Scenarios for Thursday’s Ruling on Health Care.
• S&P's Methods Under Lens. The Securities and Exchange Commission is examining Standard & Poor's Ratings Services' 11th-hour decision to pull its ratings on a high-profile deal backed by commercial-real-estate loans, say current and former employees questioned recently by the regulator. The scrutiny relates to S&P's decision in July 2011 to pull its ratings on a new $1.5 billion commercial-mortgage-backed security, or CMBS, issued by Goldman Sachs Group Inc. and Citigroup Inc. The unusual step sent the commercial mortgage securities market into turmoil and scuttled the deal for weeks, angering investors and issuers.
• Nasdaq(NDAQ): 'Arrogance' Contributed to Facebook(FB) IPO Flop.
  

CNBC.com:

• Greece, Ireland, Portugal, Spain, Italy — France? With a gaping public deficit and record level of debt, the euro zone's second largest economy wants to be sure it is not sucked into the bloc's game of debt-crisis dominoes, hence Paris's forceful lobbying for ways to shore up Europe's banks. France is one of the strongest advocates of a Europe-wide banking union and, with an eye on its own banks' exposure to vulnerable debt in struggling countries, for immediate recapitalization of banks from euro zone rescue funds. "I think the French are pushing this for a simple reason: They bloody well know they're next in line. They're after Italy," said Nicholas Spiro, head of consultancy Spiro Sovereign Strategy.
• Dell(DELL) Bids $2.32 Billion for Quest Software(QSFT): Source.

Business Insider:

• Scalia Slams Obama In His Arizona Immigration Dissent.
• Small Cities Will Be The Best Housing Markets For The Next 20 Years.
• The Russians Just Tweeted An Epic Diatribe Bashing The State Department.
• Microsoft(MSFT) Acquires Yammer For $1.2 Billion.
• This Is The #1 Most Devastating Chart For The Spanish Banking System.
• Citi's Economic Surprise Index Takes A Dive. (graph)
  

Zero Hedge:

• European Bloodbath As Merkel Won't Go Dutch.
• Markets Tumble As Socialist Kool-Aid Fails To Materialize. (graphs)
• Turkey Claims Syria Fired On Second Turkish Jet, Says "Act Won't Go Unpunished", Has Invoked NATO Articles 4 And 5.
• The Two Scariest Charts In Europe (Got Scarier).

Reuters:

• Weidmann Opposes Allowing ESM to Tap ECB Financing. Bundesbank President Jens Weidmann said on Monday he opposed the idea of allowing the the euro zone's permanent bailout fund to access the European Central Bank's refinancing operations. "I regard that as monetary financing," Weidmann told a forum in Hamburg, with regard to the European Stability Mechanism (ESM). Weidmann added that the contagion effects from a Greek exit from the euro zone would be considerable, though Greece would suffer most. However, these contagion risks were not a reason for other euro zone states to be blackmailed by Athens, he said.

Telegraph:

• Debt crisis: live.
• France must find €10bn of savings. France must find up to €10bn (£8bn) of savings to bring its budget deficit under control this year, finance minister Pierre Moscovici has said. The government has set a target of cutting its deficit to 4.5pc of GDP this year and will unveil a new budget on July 4 to outline the measures required. Mr Moscovici told French television that savings of between €7bn and €10bn would be needed, but insisted they would not be found through painful austerity. “There’ll be tax increases, there’ll be spending cuts,” he said. “But I reject any talk of austerity. We must avoid a budget policy that hurts economic activity.”

Les Echos:

• Lazard's Pigasse Says ECB Should Buy Dollar Assets. Matthieu Pigasse, deputy CEO for Europe, says "massive" purchases of dollar assets should be done to lower euro, renew region's growth.
  

El Periodico:

• Spanish Prime Minister Mariano Rajoy would lose his parliamentary majority if elections were held now, a poll showed today. The ruling People's Party would win 38% of the vote, giving it 168 to 172 of the 350 seats in Parliament, the poll showed, compared with the 185 he won in November. The Socialists would win 109 to 112 seats, similar to the 110 they won in November. United Left would win 19 to 20 seats, UPD would win 11 to 12 and CiU would win 15 to 16.