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Pre-Market Primer: G7 Holds Emergency Conference on Spain


Finance chiefs are fearing a bank run in Spain. The pressure on Germany to ditch the austerity gospel is coming from all sides.

MINYANVILLE ORIGINAL Finance heads for the Group of 7 industrialized nations held an emergency teleconference today to discuss the European debt crisis. Reuters reports that one concern is that capital flight from Spain could turn into a full-fledged 1930s-style bank run, and pressure will be on Germany to let go of its insistence on fiscal austerity and to step up its efforts to boost short-term growth in Europe's struggling economies.

This sign of alarm comes shortly after signs that the US economy is turning sour, and Chinese growth is slowing. Europe's savior will have to hail from within. The wider Group of 20 will meet later this month.

Asian markets rallied while European markets fell today. US stock futures are virtually flat. Dow (^DJI) futures rose just 0.05% to 12,069.00. S&P 500 (SPY) futures dropped 0.06% to 1,272.20 while Nasdaq (^IXIC) futures ticked down 0.02% to 2,468.50.

Spain's Treasury Minister Cristobal Montoro told local media that Spain needs outside funds to bail out its failing banks. Montoro insisted that Spain doesn't need a full bailout, and the amount needed isn't "astronomical," but this note is dissonant with the Rajoy government's stance that Spain is not seeking an outside bailout for its banks. Spain's cost of borrowing money is now so expensive that it is effectively shut out of the debt market.

In April, European retail sales fell 2.5% and German manufacturing orders dropped 3.8% on a yearly basis. The services industry in the eurozone declined in May, but by less than initially thought. The PMI Services Index fell to 46.7 from 46.9. This is a slower contraction than the first reading of the index.

US economic announcements start at 10:00 a.m. EDT with the ISM Non-Manufacturing Index for May. Economists expect the index to stay flat at 53.5, which shows a modest pace of expansion for the service sector.

Goldman Sachs (GS) laid off about 50 employees last week, including some managing directors. This came after Edward Najarian, an ISI analyst, cut his earnings per share estimate for the investment bank's second quarter by half.

Google (GOOG) will buy Meebo, a social networking startup that lets users share pages on various networks including Facebook (FB). The deal is estimated to be worth about $100 million. Google just bought another startup called KikScore, a small competitor that rates the trustworthiness of Web retail sites. By the end of the month, Google will shut down the service.

Twitter: @vincent_trivett
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