The euro has also strengthened against the pound, trading up 1.2% at 70.97p.

Holger Schmieding, chief economist at Berenberg Bank, has just sent his thoughts on the Greece saga and the IMF’s role.

IMF versus Europe? The IMF wants to provide new credits to Greece only if Europe grants much more debt relief to Athens first. Major parts of Europe will only ratify a third support programme for Greece if the IMF is on board from the very beginning and if Athens meets the first reform targets in such a programme. On a good day, this dispute as to who needs to move first, the IMF with a contribution to a new bailout programme or Europe with more debt relief, could be solved by wily diplomats in an hour. On a bad day, it could potentially scupper a deal.

· Scary logic. The scariest aspect of the dispute is that the IMF is starting to sound almost like disgraced Greek finance minister Yanis Varoufakis: “It’s about debt relief.” Nothing could be more wrong than that.

· Remember the big mistake? The worst mistake Europe has made so far in the Greek crisis was the decision in mid-2011 to heed bad advice from the IMF and restructure privately-held Greek bonds. Unfortunately, nobody had put adequate defences against contagion in place beforehand. The resulting turmoil in Italian and Spanish bond markets pushed the entire Eurozone into recession within three months. The escalating crisis in its major trading partner scuppered Greece’s chance to recover early from its malaise. Only when the ECB stepped in decisively in the summer of 2012 could confidence in Greece and the Eurozone turn upwards again (see chart).

· Once again, debt relief is a big fat red herring. Egged on by celebrity economists from the US and elsewhere who do not seem to understand Europe at all, Greece’s radical left finance minister preached to the world from January onwards that Greece needs massive debt relief, while he started to reverse key supply-side reforms at home. The result of Syriza’s policy reversal is obvious: in late 2014, Greece was on track for Spanish-style growth of 3%. After Varoufakis, the economy has fallen back into deep recession, the banks are bust and Greece’s debt-to-GDP ratio looks set to reach 200% in 2016 instead of 165% as it would have without the Syriza follies.

· Policies matter much more than debt. If bad policies can raise the projected debt burden by 35 points and push Greek corporate confidence from above average back towards almost record lows (see chart) within seven months, the conclusion is obvious – it takes good policies rather than debt relief to contain and reverse the damage. That the IMF puts so much emphasis on upfront debt relief is outright dangerous. It gets the priorities wrong. And by causing an unnecessary new dispute, it adds to the pervasive uncertainty that is crippling Greece.

· Europe is right. Greek debt should be re-profiled if and when Greece returns to sensible policies. Prime minister Alexis Tsipras is showing signs that he has finally understood that. Dear IMF, please support it as well.

The euro has hit a session high against the dollar of $1.1068, a 1.2% rise.

Reuters has just flashed that the Athens stock exchange is expected to reopen on Monday [as reported earlier], but a finance ministry decree is still needed that sets out the new trading rules.

The stock market has been shut since 29 June, when the government closed banks and imposed strict limits on cash withdrawals and foreign transfers to prevent a bank run.

The chairman of the Hellenic Capital Market Commission, Konstantinos Botopoulos, told Reuters:

We’re working on the basis of Monday but we’re waiting for the minister’s decision, which is the legal prerequisite for the reopening.”

Under plans approved by the ECB, local investors would be allowed to buy shares with existing cash, but would be banned from withdrawing money from their Greek bank accounts to buy shares.

The reopening has been held back by technical glitches at local banks, which will have to enforce the trading restrictions. Many securities traders have taken an early summer break during the five-week closure.

Some data on bank deposits from the Bank of Greece...

Danae Kyriakopoulou, senior economist at the Centre for Economics and Business Research, has also looked at eurozone unemployment.

As usual, the overall figure masks vast differences among the member-states of the currency union, with the rate ranging from 25.6% in Greece to just 4.7% in Germany. However, signs of convergence are emerging, especially from Iberia: Spain and Portugal saw some of the largest decreases in the unemployment rate this month, from 24.5% to 22.5% and from 14.3% to 12.4% respectively. Still, the gap between core and periphery remains fairly wide and will take a long time to close, if it ever does, under the current institutional set-up of the currency area.

Part of the reason behind this becomes clear when looking at unit labour costs across the bloc: Between the introduction of the euro in 2000 and the onset of the financial crisis in 2008, labour costs in the Eurozone periphery increased markedly. Ireland for example saw unit labour costs rise by almost 30%, while Greece and Italy recorded rises of around 15%. Germany, meanwhile, saw unit labour costs decline consistently over time. In the absence of exchange rate flexibility, the path of fiscal austerity and internal devaluation (cutting wages) was followed to bring down unit labour costs in the periphery. While this has led to some degree of adjustment in recent years, labour costs in Greece, Spain, and Ireland remain fairly close to or above their 2000 levels. The picture in Italy is even worse, where no real adjustment in unit labour costs has been seen. Italian unemployment increased from 12.4% to 12.7% in June.”

ING economist Bert Colijn says the 31,000 rise in eurozone unemployment in June, which left the rate at 11.1% for the third month in a row, is a “disappointing result as it was the first increase in the number of unemployed this year”.

The increase was mostly due to Italy, which saw a jump in unemployment of 55k people, while most other European economies experienced declines. France saw a marginal increase, while unemployment in Germany, Spain and Netherlands continued to decline, indicating that the labour market is strengthening. The jump in the Italian unemployment rate to 12.7 percent is concerning, but business surveys indicate that a turnaround in employment growth in Italy could be around the corner as many businesses are planning on hiring. Economic conditions are also not in line with continued increases in unemployment for the rest of the year.

Overall, the trend in the European labour market remains one of continued slow recovery, which is normal for post-recession recoveries in the euro area. Even though the pace of job recovery is too slow to put a significant dent in high unemployment rates across the monetary union at the moment, there are positives to note. The economy is profiting from slowly improving employment and faster wage growth, which is boosting domestic demand. Especially in the current slow inflation environment, real wages are growing at pre-2008 pace, which is strengthening the recovery. This in turn will help further improvements in unemployment. Job vacancy rates in Europe are also slowly improving, pointing towards a moderate tightening of the market. Expectations are that the current trend of unemployment declines will be continued throughout the year, as the European economy continues to recover. This will not be enough to bring the unemployment rate into single digits before the end of the year, but will help to support the economy moderately.

Here’s a question about the rise in Italian youth unemployment to a record high of 44%:

In Greece, retail sales rose 4.2% in May from the same month a year earlier, according to the country’s statistics service Elstat. Sales volumes increased for five months in a row as consumer spending picked up – but this was before the latest debt crisis that engulfed the country and brought the economy to a standstill.

Greece’s economy staged a recovery last year after six years of sharp contraction, but has dipped back into recession since then. Retail sales slumped by 40% between 2009 and 2014 amid record unemployment and austerity policies.

Here are some general thoughts on the eurozone. Can the eurozone put the genie back in the bottle? ask researchers at Oxford Economics.

The recent leg of the Greek crisis has once again exposed the problems of monetary union without closer fiscal and political ties. But although the troubles have prompted a wave of visions, demands and pledges of closer integration, major divisions remain on the size, form and ordering of such measures. Unless significant concessions are made, the risk of Eurozone fragmentation will build.

While recent negotiations between Greece and the eurozone have undoubtedly left lasting wounds, one source of encouragement is that pretty much every policymaker agrees that the region needs to respond by undertaking further integration. However, the problem is that integration means all things to all people.

Germany and a band of other core economies are only prepared to sign up to fiscal transfers and significant burden sharing once the Eurozone has become a disciplined group of structurally sound economies. By contrast, France and Italy are pushing for greater ‘economic union’ to be accompanied by moves towards fiscal and political union.

The key problem with this stand off is that the peripheral economies could still be a decade or more from casting themselves in Germany’s mould. If the core’s vision of integration is followed, the peripheral economies may suffer from a sustained period of stagnation which would increase the chances of deflation. This would undermine efforts to reduce debt to sustainable levels, exacerbate financial instabilities and create nasty spill-overs for the core economies. Immediate fiscal union would not cure all the periphery’s ills. Additional reforms and austerity would still be needed. But it would provide a stronger platform from which the peripheral economies could grow.

Admittedly, in the initial years, transfers would be likely to flow in only one direction and thus impose a cost on the region’s strongest economies. But the counterfactual is that if some form of fiscal union is not in operation, the economic and financial backdrop in which the core economies operate will be weaker. With economies such as Italy and Portugal arguably only one shock away from unsustainable public finances, resisting fiscal union will also prove costly for the core economies, albeit in a rather different way.

The more hawkish core policymakers seem either unable to comprehend this latter point or believe that it will be cheaper to build a firewall to protect their domestic economies from instability elsewhere. But this view does not stack up. The idea that economies can leave the eurozone without triggering contagion seems deeply flawed. Indeed, if policymakers’ actions were to cast doubt on the future of economies such as Italy and Spain within the eurozone, this would have serious ramifications for the Eurozone and global economies and financial systems.

In all, then, although the optimal policy for both the core and the peripheral economies would probably be accelerated moves towards fiscal union accompanied by further reform, political factors suggest that the region will take a more cautious path. Accordingly, the threat of fragmentation will continue to hang over the eurozone and may build, resulting in markets demanding a larger currency risk premium to hold some eurozone assets.

Here’s a chart that shows how Italian youth unemployment has rocketed in recent years:

We’ve just spotted pics of former Greek finance minister Yanis Varoufakis in an extremely snazzy shirt...

Youth unemployment: Some 4.7m young people (under 25) were unemployed in the EU last month, of whom 3.2m were in the euro area.

Eurostat estimates that 23.3m people were out of work across the EU last month, including 17.8m in the euro area.

The lowest unemployment rates were recorded in Germany (4.7%) and the Czech Republic (4.9%), and the highest in Greece (25.6% in April 2015) and Spain (22.5%).

This compares with a jobless rate of 5.3% in the US in June.

Unemployment in the 28-nation EU was 9.6% in June, also unchanged from May.

The Robin Hood Tax campaign, a group of of 120 UK organisations including Barnardo’s, Comic Relief, Oxfam, Friends of the Earth, Stamp Out Poverty and the TUC, has also responded to Lloyds’ latest PPI provision. Read the full story here.

David Hillman, spokesperson for the Robin Hood Tax campaign, said:

This latest provision from Lloyds for scamming its customers is a shocker. But the real scandal is the frequency and scale of such announcements from the banking sector. Seven years after the financial crisis they have still not got a grip.

Banks forking out for huge fines whilst still reporting bumper profits is a clear sign they should pay more tax and help avoid some of the worst cuts to public services.”

Nearly all the main European stock markets have opened higher, with the exception of Spain. The Athens stock exchange remains closed.

• FTSE 100 index up 0.1% at 667.84
  
• Dax in Frankfurt up 0.3% at 11288.27
  
• CAC in Paris up 0.6% at 5076.58
  
• FTSE MiB in Milan up 0.1% at 23423.44
• Ibex in Madrid down 0.1% at 11157.40

Back to the UK, where consumer group Which? has responded to the news that Lloyds is setting aside an extra £1.4bn for PPI mis-selling.

Which? executive director, Richard Lloyd, said:

The staggering extra provisions set aside for PPI mis-selling this week, including the whopping £1.4bn from Lloyds, clearly show there’s still huge numbers of consumers yet to be compensated. This scandal will rumble on for years unless the banks pull their socks up and start making it much quicker and easier for people to get back the money they’re rightfully owed. If any bank fails to do this, the regulator must step in.”

Tsipas is due to appear in parliament on Friday to answer questions from the opposition about contingency plans to adopt a parallel payment system in the event of Greece’s exit from the euro.

Former finance minister Yanis Varoufakis may face criminal charges, following revelations of his secret plan to establish an alternative currency in the event of Grexit.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Attention shifts back to Greece on Friday, as lead negotiators from the European Union and International Monetary Fund sit down with their Greek counterparts in Athens for a new round of talks to thrash out the details of a third bailout worth €86bn.

The talks are overshadowed by the news on Thursday that the IMF board won’t participate in a new bailout until there as an agreement on debt relief from Greece’s eurozone creditors.

European markets continued their rebound on Thursday, rising for the third day in a row, lifted by higher corporate profits. Friday is quieter on the corporate front, after Thursday’s avalanche of news.

In the UK, Lloyds Banking Group set aside a further £1.4bn to compensate customers who were mis-sold loan insurance, taking its total bill for the scandal to £13.4bn. The bank reported a first-half statutory profit of £1.2bn, up 38% from a year ago, and pledged to return more cash to shareholders in future.

But Lloyds’ profits missed City forecasts because of the additional charge for payment protection insurance – the costliest consumer scandal in British banking history.

New data this morning showed German retail sales fell 2.3% in June from the previous month. We will get eurozone unemployment and inflation data later this morning..