In Spain, the countdown has begun for the world’s biggest Christmas lottery – ‘El Gordo‘ (the Fat One). Cash-strapped Spaniards have been queuing up in the streets to buy tickets in the hope of becoming millionaires overnight.
There are 180 first prizes of €4m each – the biggest payout ever – and another 180 second prizes worth €1.25m each, as well as 322,920 prizes of €1,000 each. There are also thousands of small value prizes known as ‘Pedrea’ (shower of stones). In total, the lottery will pay out €2.5bn in today’s draw, in 2.75m individual cash prizes. The results are expected to be announced around 4pm CET (3pm GMT).
The first El Gordo took place way back in 1812 and the El Gordo Navidad hasn’t changed much since then. This lottery boasts the largest prize pot in the world and is held this year for the second time at the Palacio de Congresos de Madrid. It is open to the public, with limited seating, and is televised nationwide, bringing the country to a standstill during the theatrical draw which is expected to last three to four hours.
The average Spaniard is said to have spent more than €60 on lottery tickets. Whole villages club together to buy tickets. The cost of a ticket is €200 but because this is too pricey for many people tickets are divided into 10 fractions called “décimos”. Each décimo is worth €20 and will win a tenth of the prize should the ticket be drawn.
“I am spending more than last year, 100 euros, and I am sharing the tickets with my friends and family,” AFP quoted a 48-year-old office worker, Victoria, as saying. “Some of them are having a very tough time financially and I want us to win.”
The country as a whole stands to benefit: El Gordo is expected to bring a profit of €1bn to the treasury coffers.
so what is happening today? The agenda:
• UK final GDP figures for third quarter: expected to be unrevised at 0.5%
• US final GDP figures for third quarter: forecast to be unrevised at 0.2% annualised rate
• Italian confidence vote for new PM Mario Monti in the Italian Senate on the latest austerity budget
• El Gordo – Spanish lottery result
As expected, stock markets have opened higher. The FTSE is trading more than 40 points higher at 5432, an 0.8% gain. Germany’s Dax and France’s CAC are both up 1.5%.
In Greece, PSI talks are on the verge of collapse as Madrid-based hedge fund Vega threatens to sue Greece for excessive haircut. Vega wrote to fellow investors to say it would consider suing if Greece insisted on writedowns of more than half the net present value of the debt. More in this FT story.
Royal Bank of Scotland’s chairman is stirring things up with comments that he is expecting a “small country” to leave the euro zone, which would put more strain on the world’s banking system.
Philip Hampton told Sky News in a prerecorded programme scheduled to be broadcast today:
I think it is likely that one country, a small country, will drop out.
It could be any of them because I think that some of these things will be driven by political events as much as by economic circumstances and social unrest, and all of those sorts of things. But I think there is a very good chance that one country will fall out.
Hampton said the British banking system had not been fixed yet, although the sector was “very much on the mend”.
Good morning. Welcome back to our rolling coverage of the world economy and the eurozone debt crisis.
Europe’s main stock markets are set to open slightly higher, even though the European Central Bank’s lending to banks yesterday failed to ease worries over the debt crisis.
And ratings agency Fitch warned last night that it may downgrade America‘s triple-A credit rating, pointing to its rising debt burden. Meanwhile, Hungary saw its credit rating slashed to Junk status, by Standard & Poor’s.
Final GDP figures for the third quarter from the UK and the US, due at 9.30am and 1.30pm London time respectively, could shed more light on the health of the British and American economies. Economists don’t expect any revisions to the main numbers (0.5% quarterly growth for the UK and 2% annualised growth in the US) but the detail could be interesting.
Financial spreadbetters expect London’s FTSE 100 index to open around 10 points higher, or up 0.2%, Frankfurt’s DAX to open 10 points higher, or 0.2%, and Paris’ CAC to open 8 points higher, up 0.3%.
Asian stocks slipped, with the Nikkei in Tokyo falling 0.8% and Hong Kong’s Hang Seng down 0.3%.
Japan cut its forecast for economic growth to 2.2% from 2.7% to 2.9% for the fiscal year starting in April. The government expects market turbulence from Europe’s debt crisis to subside next year and exports to recover as overseas economies pick up, a Cabinet Office official explained. For the current year ending in March, Japan’s government slashed its forecast to a 0.1% contraction from the 0.5% growth predicted previously, reflecting the impact of the earthquake and tsunami in March.
European banks snapped up almost €500bn (£417bn) in cheap three-year loans from the ECB yesterday, easing credit crunch worries but fuelling fears over the health of financial institutions and the role of the central bank in fighting the crisis.
Michael Hewson, market analyst at CMC Markets, said:
Yesterday’s version of QE by the back door by the ECB saw the single currency gain initially before the realisation set in that the high take-up of 523 banks suggested that the European Banking system had been on the verge of a financial aneurism as banks struggle to raise funds. While it may buy vulnerable banks some time, it is certainly no solution to the wider problem of slow or no growth. Furthermore the failure to deal with the failing banks also puts the good banks under pressure, as there is no discernible way to distinguish them.
Italian and Spanish bond yields also continued to rise despite the free money, suggesting that the banks were resisting the temptation to implement the bond carry trade that the cheap finance presented it with.
