90 seconds at 9am: Eyjafjallajoekull shuts European airspace; China grew 11.9%

Bernard Hickey details the key news overnight in 90 seconds at 9am in association with BNZ, A volcanic eruption under the Eyjafjallajoekull glacier in Iceland has thrown an ash cloud up into the atmosphere over most of northern Europe. This has forced more than 21,000 flights to be cancelled and has virtually shut down airspace over Ireland, UK, Norway, Finland, Germany, Poland and France. This has stranded hundreds of thousands and could last for days, potentially hitting economic growth in Europe. Air New Zealand flights to Britain have been cancelled. Meanwhile, China has reported GDP growth of 11.9% in the March quarter. This was more than economists had expected and raised concerns about overheating. Some now expect China to allow its currency to float higher. This week Singapore raised its currency vs the US dollar to cool things down. Its GDP grew 32.1% in the first quarter on an annualised basis. A credit boom in China and heavy government stimulus has boosted growth. Meanwhile, Greece has now formally asked for a resuce package from the IMF and the Eurozone after another spike higher in interest rates in recent days. There are growing fears the package could be blocked in Germany, where opponents could use the court system to enforce a 'no bailout' clause. Also a European Central Bank director has also warned of a new debt crisis.

European Central Bank Executive Board member Juergen Stark said the euro region may face a sovereign debt crisis unless governments reduce budget deficits. There is “a clear risk that we will enter a third wave,” which is “a sovereign debt crisis in most advanced economies,” Stark told lawmakers in the European Parliament in Brussels today.