welcome to "worldwide exchange." these are your headlines from around the globe. all eyes on former barclays ceo bob diamond. spotlight also on the bank of england amid questions over its role in the libor scandal. as the barclays chairman starts to look for a new head for the bank, unrelenting pressure forced bob diamond out. >> i think it was the fact this intensity was going to continue on and he felt he couldn't do what he needed to do. >> worrying signs in the french and german services sectors. the latest pmi figures out of france show business expectations have slumped to their lowest level in three years. and india's reliance on

domestic consuchtion helps its services sector see improved new orders and jobs growth in june. but the latest numbers out of china show weakness in the job market. you're watching "worldwide exchange." bringing you business news from outside the globe. >> so welcome to the show. thanks for joining us on worldwide exchange today. happy holidays if you are in the states as well. we're just looking out for figures from the eu. services pmi numbers for the eurozone as a whole. we've had some of the broken down numbers. this is the eurozone as a whole. june services pmi came in at 47.1. 47.1. so below that sub 50 level which indicates contraction. but a bit better than had been expected. the forecast was for 46.8. came in at 47.1. also an improvement on last

month when we had 46.7 was the reading. so better than expected. and an improvement on last month for the eurozone as a whole. now at 1500 cet or 2:00 p.m. london time, bob diamond will appear in front of the security treasure. the question could be the role played by paul tucker. this after barclays released a memo between tucker and the ex-ceo of barclays. he's expected to mount a defense of his organization and that of his former employer. the outgoing chairman marcus aigis explained why he decided to leave just one day after his resignati resignation. >> he saw the public interest in

this whole area had not reduced. >> what was it that changed his mind? >> i think the fact this intensity was going to continue on. he felt he couldn't do what he needed to do. >> joining us is kelly evans. a great deal of attention on what bob diamond says today. he's rather freer to say whatever he likes because he's not the ceo of barclays anymore. very different perspective which he'll bring to the treasury select committee today. >> barclays in releasing its documents did warn because of legal concerns he may not be able to get into a lot deaf tail. hello from here in front of parliament. shown in quite capable hands in the studio, of course. i'm thrilled to be joined by lauren john mg fall. thank you for your time. would you give us an idea of

what we should expect to happen just after 2:00 p.m.? >> given the flurry of news stories, the first questions will address bob diamond and the exceptions he has made regarding contact with the bank of england and officials. but the questions won't be answered today because they need to bring in officials from the bank of england and maybe from other government and treasury officials to answer this. so from the treasury committee today, this is a start in seeking the truth. >> and will bob diamond be under oath? does he have to answer all the questions or answer them under oath? >> no, he's not under oath, but i think bob diamond has got questions for himself. how does he want to appear today? i've never seen a meek and mild bob diamond. he's always been a receptive character. was he working for the greater good of the bank and society? i think that issue will lie

behind it. so it's no good going out in a fit of anger or rage. he's been the chief exclusive of a global company. and he will have a responsibility and, i'm sure, he'll want to discharge that today by indicating to them exactly how -- >> now you are currently on the economic affairs committee in the house of lords. what are the practical implications of this whole libor fixing? >> this is a huge issue. barclays is one of the first. and in america, the department of justice, commodities futures trading commission and all of those are looking at a number of banks on this issue. it's a global problem. and from the e-mails you have traders in london talking to traders in washington, talking to traders in tokyo and fixing going on. so given the nature of it and given the size of the market,

for example, the derivatives market is -- >> we're talking about $500 trillion. >> exactly. so huge. huge implications. and certainly for the united kingdom. >> do you think the focus on london's role on all of this is being overemphasized? >> i think it's very much a part of it because london is a hugely global, international competitive center. for example, 20% of all international loans are made through london. so it has a focal point in the global economy. so london is up and on that issue. and other areas as well. but libor has a potential to destabilize the whole financial system. and given the eurozone and the sluggish growth and all of the economies, this is the worst of times for it. and so politicians, what i tell my colleagues in parl simt politicians have got to be seen to be working for the common

good. to be working together. >> but how do politicians with regard to this libor rate, how do they fix it without upsetting the apple cart of all of these mortgages and derivatives that are linked to this raid? >> it's not for politicians to fix it. it's for the system itself to be fixed and there's a role for central banks and the g-20 and others. this is going to go global. i have no doubt about it. in the longer term, it's about banking and about the culture of banking. what does culture mean? it means behavior. and bob diamond and his today bbc lecture last year said he defined culture as people behaving themselves when no one was looking. what we're seeing here is people misbehaving, actually men misbehaving badly. that's what was seen here. so they've got to come up today and act like the rest of society. but to change your behavior, you've got to change yourself. that's a difficult part about it.

we've got to look at culture in banking. of that, i have absolutely no doubt. >> and there are lessons beyond banking. lord john mcfall, thanks for your time. becky, that gives you a sense of what we might expect in a couple of hours as bob diamond will appear in that committee behind me. in the meantime, we'll get more from here. >> plenty more, kay. thanks for that. the probe into libor by uk authorities has been part of a wider set of coordinated international investigations into interbank rate rigging during the 1998 financial crisis. it was stressed the problem is by no means limited to britain. >> i think it's not an exclusive problem in the uk. unfortunately, the financial crisis has shown us in many occasions during the last four, five years that financial regulation was too weak and that the enforcement of these regulation was not perfect at

all. but i have to recall that the uk financial markets are under the same kind of regulations that's the continental financial markets because the eu legislation on financial issues on the functioning of the financial markets, on supervision of financial institution derives from the same legal text from the same directives. but it's not a question of uk or continental europe. i think the whole financial activities were badly regulated and badly supervised and now we need to act and because the financial markets and financial activities are global activities, i think coordination is of the essence between the u.s. and the europe. and i think other europeans should adopt decisions together. >> we're joined by chris tinker, the founder at libra investment

services. let's get straight do into this barclays and libor story. let's begin with the more general perspective on this. is the reputation of uk banking tarnished eternally by what we've heard in the past few days? >> i think one of the concerns observers in the square mile would have or do have is that this is reflecting issues that were going back to 2007, 2008. i think what's going to be interesting from bob diamond this morning is when he reflects on the fact that barclays itself was raising concerns that there were problems with the whole libor rate-setting system back in 2005, '06, '07 and they themselves as a bank were raising concerns where both the british bankers association and the bank of england at the time. far from perfect system. this guide price that libor represented. and those people who have been working those markets for many years will be the first to admit that a far from perfect guide price system was in itself

creating a very different way in which people dealt with libor rates on a day-to-day basis than perhaps the headlines are suggesting. >> they may have raised concerns. they still apparently went ahead and submitted false information ultimately. i mean, they settled so they are saying that they made worries. >> in a way, what you've got to recognize here is libor is not a traded concept as far as the banks are concerned. they are giving guidance. where would you price money if you were to be doing that in real situation. but the market has moved on. the market uses its own money exchange rate if you like. the rate at which it's pricing money for real as libor reference point. your spread versus libor is where real transactions are taking place at. the concern raised by this and perhaps people's aware sentence becoming more detailed is that if you are setting particularly futures and derivatives contracts in relation to a guide

price, the temitation to have this cross at the chinese walls of people saying, nudge it my way because it's going to help my contract. that element of distortion and abuse was what barclays and many other banks were raising a concern about prior to the crisis. was libor something that could be manipulated? this isn't a new conversation. this is something that bank -- british banking sector says can't really be manipulated. there's no great collusion here. at the margin, theets derivatives priced against the guide price. and the second thing very such to deal with what was going on in the 2008 period when the libor rate that you were pitching in was being interpreted as a reflection of your degree of financial stress. >> it's no excuse for not being absolutely honest when you were asked to give that daily guesstimate of -- >> this is what the conversations in relation to how the bank of england saw it is

going to be all about. if you were barclays were perceived to be one of the outlaying rates persistently high every day and the market's interpretation in a very difficult period was barclays are in trouble having to pay up for money in that environment, it's not surprising that their concerns that a guide price was being utilized by observers as something that was distorting the nature of the perceptions about risk. and i think it's those concerns and the discussions that we'll have at the bank of england at the time. we may see this coming to a much wider inquiry. the bank of england has a real case to answer in terms of the way it handled that whole process. that's the pandora's box. >> we don't see them covering themselves in glory at the moment in this whole issue. we'll talk plenty more about this during the show as well. and that's the former barclays ceo bob diamond prepares to testify in london, does the libor scandal mark the

start of a new era in banking or will the sector go back to its old ways. if you want to join in on the conversation, contact us by e-mail at worldwide@cnbc.com gore to twitter. follow us @cnbcwex. or contact me, beccymeehan. also coming up later on cnbc, we'll bring you special coverage of bob diamond's hearing before the uk treasury select committee. that's from 1:00 p.m. today. live testimony due to begin at 2:00 p.m. local time. that's 9:00 a.m. eastern time. quick look at what's going on on the asian markets today. we are seeing a bit of mixed trade really. several key markets are declining. but we have gains coming through, too, across australia, for instance, where we're up by over 1%. tracy is checking in, though, on all the details and joins us with more. tracey? >> good morning, beccy.

love your dress, by the way. asian markets turn mix. those hopes for more stimulus from the world's top central banks beginning to wear off. china stocks struggle to stay in the green but ended mostly flat. petrol china was the biggest drag for the second straight day following a brokerage downgrade. hsbc posted its version of china services vmi in june. that sector dropped to a ten-month low. more on that later in the show. and in hong kong, the index slipped about 0.2%. coal stocks rebounds but the market failed to gain traction. and jach pan's nikkei rose to a three-month high. and in south korea, the kospi finished up about 0.4%. samsung electronics shares actually closed up despite a fresh legal setback in the u.s. stay tuned for that story coming up on the show as well. and australia outperformed. rose more than 1% hitting a

seven-week high. better than expected may retail data also helped boost sentiments. and quick check on the indian sensex. >> tracey, thanks very much. i should get myself a white belt and we'd be completing matching. >> let's move on to the european market action then. this is what's going on across the equity markets. the ftse 100. the ftse down by about 10 points or so. the dax losing not quite 4%, but 27 points in those terms. weaker for the french equity markets. similar percentage move to the downside for the ibex. in spain, the equity market is down by nearly 0.7%, too. so that's what's going on on the equity markets. on the forex markets, the euro trading weaker against the dollar 1.2583. weaker going into the ecb meeting this week. also the bank of england as

well. so 12580 is where we are for the euro. dollar/yen, 79.77. the aussie dollar. kept rates unchanged. just letting that feed through. the aussie dropping against the dollar. and sterling is losing 0.3%. 1.5639 right now for sterling and we have, of course, had breaking data as well for the eu as a whole. those services pmi figures coming in better than expected but still below 50. uk data later. let's look what's going on in the bond markets. the bund ten-year, 1.5%. just over 1.5%. the ten year in france. the yield on the italian debt, 5.68%. in spain, 6.25%.

coming a great more under control since we began to get conclusions from the eu summit at the back end of last week. we're talking about ireland later when it comes to the bond markets. they are getting back into the bond markets tomorrow. also india and china have just released their latest services pmi numbers. we'll head out to mumbai to find out if investors should be concerned about slowing growth in the sector. and chancellor merkel and premier monty will come face to face in rome amid reports of a rift between the two leaders. or correspondents in germany and italy on the case. also to paris where the french finance minister is set to release his first budget. stay tuned for what pierre muscovisi told them about finances. [ male announcer ] this is the at&t network. in here, every powerful collaboration is backed by an equally powerful and secure cloud.

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you're you're watching "worldwide exchange." >> welcome back. so hsbc has posted its version of china's services pmi just one day after china released its official data showing signs of slowing growth. tracey chang has been looking over the details and has a bit more. tracey? >> hi there, beccy. according to hsbc, china services sector expanded at its slowest rate in about ten months.

down from 54.7 in may. the private data highlighted worries over china's slowing employment growth. it capped china's job creation at about a three-month low in june because of slowing new businesses. and this is a big stress point for beijing ahead of china's leadership transition later this year and it is likely to bolster expectations for beijing to introduce further policy measures to ease the economy further. meantime, economists largely brushed aside the differences between hsbc results and tuesday's official services data saying they used different methodologies. china's june officials pmi accelerated at the fastest pace in about three months. >> thank you for that, tracey. india's services sector getting support from the domestic economy. rima has more on this story live from mumbai. >> hi. thanks so much for that. first the number. the june hsbc services pmi for india has come in at 54.3.

there has been a very slight contraction we've seen in the month of june when you compare it on a month to month basis. since last november for us, the services pmi for india has been holding about 50 which indicate expansion only. the pace of growth has slowed down a bit. apart from that, the good part is the new orders are sitting at the highest level in the past four months which indicate domestic consumption is strong and even the hiring figure is the fastest space in the last one year. the jobs index has risen to 51.1 in june from a reading of 50.5 in the month of may. so both these parameters indicates -- all in all for the month of june, slight contraction in the month to month. but the new number does look quite optimistic. let's get out to the director and chief economist of global markets research at

deutsche bank for a read on these figures and a broader look at india. what do those numbers look like to you? a bit of contraction month on month but still above 50 and as we just heard there, some bright spots amongst the numbers. how do they look to you? >> right. perhaps we should go into a little more granular detail and look at yesterday's manufacturing and yesterday's services pmi. the headline is holding up. and that is something that has been consistent for several months now. but to me, in addition to what your correspondent flagged which was a positive sight, i am worried about a few other things. on the manufacturing pmi, new orders growth has slowed down quite a bit and the inventory accumulation has picked up. and the other worry is that the price pressure. the purchasing managers are saying input and output costs are substantially higher than they have been. that's going to constrain the rbi's room for policy maneuver going forward. it's an overall mixed bag but

the bottom line is the economy remains on somewhat of a surer footing than it was, say, six months ago. >> what the outlook for inflation? it's, obviously, a headache for the economy of this country. oil prices have been coming down. should we expect to see some of the inflationary pressure easing or is it just continuing to build? >> unfortunately there isn't much respite. you have about a 20% decline in oil price being offset by about 20% decline in the exchange rates value against the dollar. the rupi cost of imsport still substantial and will keep putting pressure on risks. if you are an importer, you just take the margin hit as rupi cost changes or do you pass on some of that to your consumers. that's one rink. on the food side some worries about the process and nonprocessed food prices being fairly firm and no sign of that abating. so all in all, the price outlook is still fairly unfavorable.

>> hellhello. just following back on the pmi indicators, there's a very high profile towards these indicators in the last year or so. and as an economist, how do you tend to regard that as useful information to your, perhaps, longer term underlying views and opinions. do you find they add a lot or that you often get too much noise going on with these indicators and explain what's in them rather thanuti using them something that's giving you clear insight on what's going on. private versus public and everyone trying to get in with 52 is this and 51 is that. how useful do you find them on a day-to-day basis to reinforce your longer term macro views? >> right. i mean, whenever you have analysts spending a lot of time talking about the methodology of the pmi and whether the official number is better than the private sector number you know there are problems with the data and you to see it with a mixed

bag of salt. same as the story for china and india. we look at it in a broader trend basis. there is really no point in looking at one month or two-month data point. the problem in india is in the industrial production, numbers are very volatile and have a great deal of standard of error embedded into them from the sampling error side or methodology side. high frequency data is hard to win down as far as telling you one story or the other. see how they -- they coincide with longer term, slightly better quality data or lower frequency data. >> okay. thanks for coming on today. appreciate your time. timo baig at deutsche bank. we're live in milan and frankfurt as german chancellor angela merkel and the italian

prime minister meet in rome to discuss growth and austerity process. but will they butt-heads? details after the break.

you're watching "worldwide exchange." bringing you business news from around the globe. >> all eyes on former barclays

ceo bob diamond as he faces a grilling in the uk parliamentary committee. spotlight also on the bank of england amid questions over its role in the libor scandal. as the barclays chairman starts to look for a new head for the bank, marcus agius said the unrelenting pressure forced bob diamond out. >> i think the fact this intensity was going to continue on and he felt he couldn't do what he needed to do. >> the contraction in the eurozone services sector eases a bit in june, but pmi figures remain in negative territory supporting the case for further rate cuts from the ecb. and india's reliance on domestic consumption helps its services sector see improved new orders and jobs growth in june. for the latest numbers out of china, it shows weakness in the employment picture. welcome back. more breaking news for you. a bit more data out here in the uk in the form of uk june services pmi numbers coming in

at 51.3. now the forecast was for 52.8. so it's worse than expected. it's also worse than last month as well when we had the may services pmi of 53.3. so a decline of 2 points to 51.3 this time around. joining us for some analysis is chris williams, chief econost at market which compiles the pmi data. so why worse than expected this time around? >> well, i think part of it might be because there was additional bank holidays around the queen's jubilee. that suppressed activity in a lot of areas. it did boost some in terms of hotels. a lot of companies were reporting that there is weak demand evident. the outlook for the next 12 months has worsened and coming down to the lows last year when there was a lot of gloom about the eurozone, what else. so things are turning negative still. we've come down very sharply from strong growth at the start

of the year according to the pmis. all sectors when you lump them together, down to 51.1. it's getting close to stalling. perhaps consistent with gdp falling in the second quarter. >> so just in positive territory this month. just over 50, i suppose. but we have the bank of england meeting this week. pretty widespread assumption that we will see a bit more qe this time around. i suppose the figures and the comments you just made about the weakness and the increasingly negative outlook will add to the bank of england's case to pump more money into the economy. >> yeah, i think so. the bank cited the pmis and strength in the first quarter relative to the gdp number. they weren't acting more actively in terms of boosting the economy. now the pmi has also come down into that territory which is

historically consistent with easing. i think that case has weakened and we will see some action tomorrow. >> chris, who is our guest host, doesn't like pmis. seeing as you help put them together, maybe chris you can explain why you are so down on pmis. >> i am just very wary about the use of very short-term data to try and react to short-term issues. i think the point earlier on was as part of an understanding of what's going on on a trend level, the front line information is useful but you have issues associated with seasonal adjustment factors. what i'm wary of is someone says the forecast is 57.2 and the numbers 51.3 or whatever it is because the forecast in short term economic data indicators is always based on, you know, 50% instinct and 50%, i think this is probably what it's going to be. so to create either a market response or a policy response in relation to that can be a very dangerous thing to do. you then see another set of

economic information coming through that either supports or reinforces that. i just think that there is a temptation to take very short-term data points. it's like getting the employment numbers out of the states beginning of every month. these don't necessarily tell us that the change from one month to the next is anything significant at all. and i think that you are absolutely right. to use these sources of up-to-date information is a bit like giving sales figures coming to you from companies on a weekly basis. you can use this as part of the overall picture. my concern about how pmi tend to get used as a headline as 51 and -- that's, to me, where i think there is a risk that you will overinterpret information, particularly if you lead it straight through to policy conclusion. >> the pmis, the methodology we have for them are amongst other economic indicators. very low signal noise ratio. they cut through a lot. when you look at factory orders in the u.s. and nonfarm payrolls. they are jumping around all over the place. these have very good underlying

trends each month. one thing we focus on in developing them. if you were to ignore them you run policy at risk. it was in the height of the crisis in 2008, and it was the pmis that just fell off the cliff that suddenly made everyone's eyes open thinking, this is different this time. this is a big one. so, you know, you -- i agree policymakers shouldn't just use one golf club. they have to look at everything. the bigger picture as well as what's happening. but in terms of the high frequency data and giving policymakers that edge to know exactly what's happening right now, i think the pmis do a wonderful job. obviously, i'm biased. >> as an economist myself, i've worked with short-term and long-term data for many, many years. and i agree with you the noise signal ratio is an important thing to understand. probably not for this type of date to discuss it but the real issue for me is when people compare forecast to actual. there tends to be a noise level that's generated on day-to-day commentary on markets which

confuses that message. and i think if you look at comparing one methodology with another, whether it's the hsbc with the official, whether it's the market data set which is consistent with the ism survey data in the united states, people getting some conflicting short-term signals means you get a lot of unnecessary noise around what actually we need to step back and say what are the underlying trends. >> yesterday, u.s. factory orders were a great point of that. the month to month rise were cheered by the markets. but the three-month trend was minus 2% which is the weakest for three years or something. that's what you need to look at. >> let's leave it there and great debate though. did manage to get to people to disagree about the use of pmis and they are both called chris. chris williamson, chief economist markits. a quick look at where the european markets are headed. we've had several days of gains. the equity markets moving lower. ftse down by 0.25%.

an impact on forex which we'll get to in a second as a result of the services pmi number. the dax, cac and ibex trading lower. the ibex has taken a further dip, down by 0.9%. the forex markets, interesting where sterling is going now. we had the -- i don't have sterling there against the dollar. nonetheless, euro 1.2583. sterling -- euro/sterling, 0.8043. the dollar/yen, 79. the aussie/dollar 1.02. following friday's agreement, angela america cell coming under pressure. she's set to meet with italy's prime minister mario monti this afternoon. we have andre cabrini.

patricia is in germany. we've got both sides of this. andrea, what are we expecting from mario monti today? >> well, everything is set for the meeting that will start early this afternoon. basically, the message coming from rome this morning is this is not the second run of the european council. there will be no winners and losers. and mario monti said that the headlines of the meeting in europe should have been angela plus mario equals a new european policy based on growth but also on budgetary discipline. so clearly the veto, the italian veto on the grove pack edge in brussels clearly disturbed angela merkel. at the same time the sources in rome are expecting the italian government to get more measures to angela merkel and his colleagues in rome of the italian efforts to get more discipline in its public spending. for example, yesterday was discussed a public spending cuts for $7 billion which will be necessary to avoid raising the taxes in aucts.

so mario monti is under pressure from the leaders of the union that want action strikes against what has been presented yesterday. 10% slashing, public administration personals. and also there will be more centralized purchase of services, especially in the elf sector. they continue to go on the new road of a budgetary discipline. >> okay. let's leave the italian perspective there and cross out to germany where we can check in with patricia. what is the agenda that merkel is bringing to this meeting, patricia. looks like she's under pressure in her domestic political situation as well as the relationship with her fellow leaders in the eurozone. >> well, i think she's getting at the moment a little bit closer to her fellow leaders in the eurozone than she is to her own coalition partners or even

the opposition parties. however, i think what is happening today is trying to look a little bit at the details how that can really implement this moving together, that convergence that was also decided at the eu summit last weekend. my sources are talking about looking at how german corporations can help the italian unemployment to come down, especially under -- amongst the youth or how young italian people can go from italy to germany and find jobs as well. so i think it's going to be a rather consensus driven meeting today. no crisis meeting. and really nothing that should be looked at as anything that may come out with some bold statements which is not looking at the same direction. so i think it's going to be very constructive indeed. and also if you look at the latest pmi data just coming out for germany, the composite index yet again showing we see the private sector contracting for the second consecutive month. so it is not now up to germany what is happening in europe. but it is really about germany

now. germany needs to continue to find some growth engine and perhaps for that it needs more and more common ground on the european level, beccy. >> patricia, thanks for that and also to andreu. so australian consumers have spent more than expected in may. consumers are less prudent in their consumption habits thanks to australia's low sber rate environment and government tax breaks. retail sales jumped to almost $22 billion in may. the australian dollar hit a two-month high on that data. aeon posted a rise in its first kwart earnings. operating profit came in at $387 million. the company also kept its profit forecast benefit $2.7 billion for the full year. aeon aims to list in japan's reit market next year to diversify its funding. the retailer hopes to expand its

business and open up 2,500 new branches across asia. staying with japan, the country's financial regulator looking at revising rules to curb insider trading. we have that story live from tokyo. >> thank you. the financial services agency said they will start discussions to strengthen insider trading regulations. they'll consider increasing insider trading fines on institutions that invest on behalf of customers. currently fines imposed on these brokerages are based on the management fees they receive from clients. on tuesday the fsa ordered 12 large banks and brokers in japan to review their internal controls for handling sensitive information and to report back on their findings within a month. the regulators' latest moves come amid a crackdown on insider trading. all top three japanese brokers, as well as jpmorgan, have been found leaking nonpublic information to their clients

ahead of large new share issues. the fsa's move is a signal the government is serious about cleaning up japan's capital markets. back to you. >> thanks very much for that. so it's 1500 cet, that's 2:00 p.m. london time, bob diamond will appear in front of the uk treasury select committee to be grilled for his part in the libor scandal. we have a few more details on what's been going on. >> the focus may be on barclays today. i want to give you a little background on this whole libor fixing investigation. it's not just barclays. about two years ago, regulators in the u.s., in the uk, but also in canada and japan started investigating a number of global banks. about 20 of them, about their role in the libor fixing affair and barclays then last week, remember, settled for around half a billion dollars or 290

million pounds to settle those charges. was one of the first banks to work with the regulators. one of the first banks to settle for those charges. the probe involved u.s., european and asian banks and some 20 global banks are reportedly included. let me just show you some of the names here. citigroup in the u.s. but also bank of america, jpmorgan, hsbc, one of the asian banks, barclays, rbs could be implic e implicated and as for the swiss banks, ubs said it's been investigated. and that ubs also was one of the whistleblowers in this case. and has been working with authorities. so in return for that, it is expecting significantly lower fine. now i want to come back to barclays and show you what the share price reaction has been over the last week. what a staggering decline for these shares. the last week, down by 16%. take a look at today's trading session. the shares down 1.5%. now it's interesting. we did see a bit of a roller

coaster ride for these shares. that was, of course, on the back of certain departures from the key management team. on monday, the chairman resigned. on the back of that, shares were actually up. yesterday, bob diamond handing in his resignation. and shares finished lower by 1.1%. we'll leave you with some of the comments from politicians and tell you what they had to say on the matter following diamond's resignation. >> bob diamond's taking the right decision for his bank. also the right decision for the economy. but now let's get on and create that new culture of responsibility in banking. that is what we need to see. because we need strong responsible banks lending to the british economy in order to create the jobs and growth we all want to see. >> public want to see parliament getting stuck into this, getting the questions answered and that we get bank reform. splitting up the banks. we've got legislation for that. deal with proper recompense for the people that want to see

action. they want to see it quickly. >> i think it was necessary and right that bob diamond step down. but this is about much more than one individual. it's about the culture and practices of the banking industry. that's why we need a full judge-led independent inquiry to get to the bottom of those practices and make recommendations for change in the future. >> i think it's entirely predictable. yesterday marcus agius, the chairman, resigned. this company has been in a car crash. yesterday the passenger in the back seat resigned. today, the driver has resigned. but perversely, the passenger in the back seat, agius is now not going and is grabbing the steering wheel. i think this is a bank in a state of chaos.

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you're you're watching "worldwide exchange." >> shares drop to a new five-month low after they suffered two brokerage downgrades. jeffrays and clsa lower ed thei rating. the two brokerages said they will be under threat from the weak pc sector on slowing demand from china and overseas. and samsung electronics has

experienced another legal setback in its patent battle with apple. a u.s. judge has rejected their request to lift an injunction against sales of the galaxy nexus phone. this comes a day after the court turned down a request to lift the ban on samsung's tablet, the galaxy 10.1. well, joining us for more, andrew millroy. thanks for coming along then. so should we be concerned for samsung electronics and these legal battles? >> well, i think we need to put the whole thing into context. to start with, it's really a battle between apple and the broader android eco co-system. obviously, samsong is one of the major organizations there. but apple earlier just failed to actually have an injunction on htc phones more recently. but they've succeeded in holding back some of samsung's products. you should also bear in mind these are only a few of the

samsung products available in the u.s. market. so it's part of an ongoing battle between apple and android. and it won't have as huge an impact on samsung as it might seem at first given they've got multiple products in the market. >> this is clearly a very competitive space. and there's a lot to play for. is it appropriate that this is being fought out in this legal setting through various injunctions. is it not a distraction from these companies from getting on with the job at hand? >> yeah, i think that's a very good point. i think litigation is increasingly being used as a competitive tool because in this very fast-growing market if you can hold a product back from getting into the market, you know, as the market grows so fast, that can enable you to increase your market share significantly. and customers that go android or go apple tend to stick with whichever ecosystem they first get into. so it's in apple's interest, also samsung's, but certainly in

apple's interest to hold back the onslaught of android as much as it can. however, to be fair to the company, you know, apple has galvanized the smartphone and tablet market and there's a view a lot of organizations are effectively imitating what they have. they have some in place they can use to challenge some of samsung's offerings. but i do agree with the overall point that perhaps it's distracting from the overall market and really at the end of the day it should be the consumer that decides, rather than judges. >> andrew, it's chris tinker here. just in terms of the relative importance of this latest decision, is there a sense to which an injunction against the phone environment is more significant than the tablet given the relative demand patterns in both of those markets or do you see them in pernil terms of the tablet and the phone.

is the move to judge against the phone a bigger win for apple in the short term? >> well, actually, the phone, the nexus phone, the galaxy nexus phone hasn't, you know, hasn't got a substantial market share. it's the galaxy 3, its samsung's other phone that's, i guess, the leader. the one that's the king to promote the most at the moment. so i think in a way you can argue it's the other way around because the tablet market, you know, apple's already let's say, given away a lot of share to android in the phone space. in the tablet space, apple is in a very strong position. it's the dominant player there. so i think the holding up, the competitive threat and the tablet space is perhaps more strategically important to apple right now as we speak. >> andrew, thanks for coming along today. andrew milroy.

chris, let's gallop through a few individual stocks. barclay, you have it as a trading buy. >> the nature of what's going on here is we, like a lot of people, reacted positively to an opportunity to bea very oversold barclays and now before bob diamond resigned, i think the market responded subsequently is still a reminder of the fact there's a lot of issues to come through here. it's oversold. it's a trading buy on that basis. like anything that we look at, these oversold risk outs can close quickly. that's why it's a trading baerks not a buy. it's an opportunity for someone to jump in and be brave but not a core focus. >> sticking with the banks, you've had lloyds as one of your few buys. does that view still persist? >> i think we're looking to be taking money off the table. the nature of how we look at stocks, you get opportunities where risk gaps exist and when those risk gaps close if it's not a long-term investment then

you take money off the table and you can be relatively nimble. lloyds will be something we'll be taking profits on more of a trading opportunity than we would be looking to pick it up as a value opportunity on any longer term. >> just scanning through your note this morning, top picks you have itv and eads. why those two stocks? >> it's interesting. both of these stocks have been on our radar screen for a while from a value perspective. itv remains a long-term value buy for us. it has been for the last month or so. we've had a little bit of noise, private equity noise associated with it. even when it pulls back, we still see the long-term value trends growing strong. eads, we've been buying it. it's been up about 17%. it's still on the radar screen for us. i think you have a very strong growth outlook and good value opportunity still in the eads, despite the relative moves. very much one that we would buy on any retracements and one we'd

buy outright anyway. >> let's leave it there. we'll have lots of coverage on cn b cnbc. thanks for coming in and sharing your thoughts. we'll have another guest host coming in. still to come then, we are live outside parliament with kelly evans ta to talk about what to expect for bob diamond's testimony. what he says about the bank of england now that he's no longer ceo of barclays. we'll find out very soon. do stay with us. we'll be right back after this short break.

welcome to "worldwide exchange." i'm beccy meehan. all eyes on bob diamond. the spotlight also on the bank of england amid questions over its role in the libor scandal. meanwhile, as the barclays chairman starts to look for a new head for the bank, marcus agius says the unreulenting pressure forced bob diamond out. >> this intensity was going to carry on and he felt he couldn't do what he needed to do. >> the contraction in the zuro zone services sector eases a little in june but pmi figures remain in negative territory. supporting the case for euro rate cuts from the ecb. and india's reliance on domestic

consumption helps its services sector see improved new orders and jobs growth in june. but the latest numbers out of china show weakness in the employment picture. >> you're watching "worldwide exchange." bringing you business news from around the globe. so we are just looking at some of the breaking data we have for you. plenty on the show to keep us busy today. eurozone may retail sales in focus now. down 1.7% year on year. that's much worse than had been expected. the reuters poll had anticipated a decline of 0.8%. it's coming at n at 1.7%. these are the figures for may. april retail sales figures have been revised lower. the month on month figure is a decline of 1.4% for april. that's been revised down from

1%. on a year on year, it's been a decline of 3.4% year on year from the previous estimate 26.5%. so that may figure -- the april figure has been revised down. the may figure worse than expected, too. on a month on month basis, the may retail showing an increase of 0.16%. remaining below 50 so in the contraction territory. so at 1500 cet, or 2:00 p.m. london time, bob diamond will appear in front of the uk treasury select committee to be grilled over his nart the libor scandal. the key question could be the role played by paul tucker. this after barclays released a memo detailing a conversation

between them. diamond is expected to mount a vigorous defense of his own reputation and that of his former employer. well, this comes as the bank is dealing with the news of bob diamond's resignation yesterday. the outcoming chairman marcus agius explained why diamond decided to leave just one day after his own resignation. >> he saw that the intensity of the public interest in this whole area which i had hoped might reduce by my resignation had not reduced. >> what was it that changed his mind? >> i think the fact this intensity was going to continue on and he felt he couldn't do what he needed to do. >> kay lee evans is reporting from that location all day as we wait for bob diamond to get up and speak. agius himself resigned. he had resigned when a successor is found so he stays on but his resignation still stands whereas bob diamond quit immediately. so is standing up in front of the treasury select committee as

the ex-ceo. quite a different proposition to standing up there as the leader of that company to speak to politicians, isn't it? >> beccy, i think people are hoping that would free him up to say more about barclays than he could if he were still running the company. the company has warned that due to the complex nature of some of these transactions and legal constraints they may not be able to fully answer the questions. this of course in a nine-page document that they posted online yesterday ahead of bob diamond's appearance today. and it goes to great lengths to lay out the -- it is the extent to which barclays not only told regulate bors some of the libor manipulation practices, it suspected were under way but ark peered to have conversations where they flagged their concerns and came away with an impression, depending on how you parse this. came away with an impression that regulators were -- the regulators knew this behavior was going on if not necessarily condoning it outright. anyway, what bob diamond is

likely to try to do slaert to really shift attention from barclays itself toward this broader practice. you had at least a dozen banks submitting their libor borrowing costs. barclays, as it says, finds it ironic there has been such an intense focus on the company alone caused by our being first to settle in the midst of an industrywide global investigation. that gives you a sense of the tone we're likely to hear later today. as for the committee itself, it's a group of people sitting around a horseshoe shaped table. bob diamond is not under oath. but if there is an inquiry as the finance minister here george osbourne has indicated in that case he would be under oath and it would follow more along the lines of what you saw with the news corp. the culture within the firm, to what extent management knew what was going on at the time and given that bob diamond has already stepped down, perhaps taking the heat off him directly but does raise questions about succession plans at barclays. want to just mention bob

diamond's daughter nelle on twitter. she has a twitter account. she's a princeton graduate. said, in fact, that no one in the world, i admire more than my dad. 16 years building barclays. a shame to see the mistakes of few tarnish the work of so many. interesting to point that one out. and, meanwhile, succession plans at the bank of england are also something to maybe keep an eye on because the current governor mervyn king is poised to step down. who takes his place? a lot of people have been mentioning paul tucker. the extent of his involvement with what's happening with libor and barclays as more of that becomes clear would sort of circle back and raise questions about succession plans at the bank of england as well. >> nelle diamond, i retweeted that tweet from her yesterday. very sweet. go on to daily mail website because there was a rather less polite tweet from bob diamond's daughter yesterday which is only up for a couple of minutes and

then disappeared. as long as you aren't too easily offended. we're certainly not going to talk about it here. she's been vocal, shall we say in the defense of her father, which is very sweet to say. let's introduce our guest host for the next couple of hours. bob mckey. from independent strategy. >> morning. >> good morning. thanks for coming along. libor and barclays. let's talk about libor in general. >> yes. >> clearly barclays is very much embroiled in this at the moment. what's the future for libor? there has to be some kind of process. it looks like the old process for setting libor is not going to last much longer. how much of a problem is this for the financial services sector, the banking sector in general? this process seems to have fallen apart. >> we have rivals to libor. on the whole, this is a key rate for setting short-term rates between the banks and, therefore, flowing from that

right through the futures and options markets and derivatives markets and even to the wider economy on people basing their rates. so i've got a european mortgage. it's based on a short-term rate like libor. so if there's any issue involved, where we suggest that that rate isn't a genuine reflection of what the costs of borrowing are at the short end between the people who are lending us money. if that's no longer to be believed, and that's a serious situation. so i think there's got to be a re-establishment of confidence in the race. i don't think it's going to disappear. the british banking association will look at the question wlf you get independent submissions and taking off the tail ends of lower end and coming up with a rate which is supposedly independent of any bank submission. that issue has to be looked at. and clearly what's gone wrong here is it hasn't been independent. there have been discussions within traders across banks to try and get that rate lower than actually is -- was the case when they were actually taking

trades. so that can't be allowed to continue. >> interesting. kelly, let's send this back to you. this suddenly has become a political issue, hasn't it, how this rate set is of interest to investors who haven't spent a lot of time thinking about libor previously. what's your impression about how much the uk's government and the opposition are going to want to be involved in getting into the nitty-gritty of how these figures are put together next time around. >> it's interesting. it sets up a tension. the bank of england's meeting tomorrow to decide what to do about short-term interest rates, whether to launch more stimulus to help the uk and ultimately global economy. at the same time, one of the key financial benchmarks, one of the things that could upset the apple cart is something like libor. this reflects the rate at which european or non-u.s. banks are trading with one another on a short-term basis. three-month basis. when they get nervous about one

another, those rate goes up. when those rate goes up, so in do the rates for a lot of corporate products, municipalities even borrowing in the u.s. that are tied to libor. on the one hand you have regulators trying promote global financial stability. here comes this libor thing blowing up in their face where they are trying to figure out what to do about it without upsitting the financial system. this helps explain why there hasn't been more done about this given the concerns about this were raised four to five years ago. >> kelly evans, thank you. kristine legarde urged the central bank to focus on bond purchases. the imf managing director made the comments with maria bartiromo in washington last night. >> the best thing to actually encourage the rates to go down is to restore confidence so that investors are pleased and happy with the risk they are taking when they buy a ten years bond

on any country. >> so on to what's going on on the markets. we're going to look at the european equity markets to start with. hopefully in any second they'll appear behind me. the ftse down by a quarter of a point. the pmi figure, services pmi figures today were worse than expected. we had chris from markit on talking about the numbers and saying they looked pretty pessimistic for the next couple of quarters as well. so a quarter percent down for equity markets in the uk. the dax down by over 0.5%. and the cac. pmi services figures out this morning below that really 50 indicating contraction and the eu retail sales showing significant declines as well. and the ibex cross in spain trading lower by 0.7%. the bund in germany, the ten-year german debt is yielding 1.5%. 2.54% for the ten-year in

france. and italy and in spain where we've seen yields coming a great deal back under control compared to just before the eu summit at thend of last week. we're looking at a yield of ten-year italian debt of 5.67%. in spain, 6.258%. the eu summit had an impact on the irish markets as well. we'll talk about that later because ireland coming back to the bond markets tomorrow, in fact. so we'll get a bit more information on that very, very shortly. stay tuned for that. on to the asian market action. this is the picture across asia. a bit of a mixed day of trades. declines for some of the key markets. the chinese markets, for instance. just edging slightly lower. gains of over 1% for the australian markets today. let's get out to tracey chang. >> thanks for that. asian markets closed mixed as investors' hopes for more policy easing measures wear off. china stocks struggled to stay in the green but ended mostly

flat. petro china was the biggest drive. following a brokerage downgrade. hsbc posted its version of the services s pmi. coal stocks rebounded, but the market failed to gain traction on the back of weakness in the financial space. and japan's nikkei rose to a two-month high led by gains in energy sector index heavyweight fast retailing soft banks shares also rose lending support. and south korea, the kospi tongue about 0.4%. samsung electronics shares rose despite a fresh legal setback over in the u.s. and australia outperformed hitting a seven-week high. may retail data helped boost sentiment. and a quick check on india. reversed earlier losses gaining about 0.2%. let's take a break now.

"worldwide exchange" will be right back. ♪ ♪ ♪ ♪ [ male announcer ] what's the point of an epa estimated 42 miles per gallon if the miles aren't interesting? the lexus ct hybrid. this is the pursuit of perfection.

you're you're watching "worldwide exchange." >> welcome back. the german chancellor angela merkel and the italian prime minister mario monti are meeting in rome as the italian budget deficit wide tonns to 8%.

patricia is with us and andre cabrini joining us from milan as well. patric patricia, what is merkel coming to this meeting to achieve, patricia? >> well, i think what they are going to do is to digest basically what happened during the euro summit last thursday, last friday and how that was perceived and how to then implement these steps taken that have seemed very positively by the market and also by many commentators. the implementation part of what was agreed last week is something that they will discuss. on the other hand it is a routine meeting and perhaps will be looking at the eu finance ministers summit due next week as well. but i think they will try to really drill down how austerity and also growth measures can be really implemented into the economy going forward. so as far as some of the sources i speak to actually think the meeting is going to also be about youth unemployment in italy and how german companies

can help to sort that out. how it can be a bit easier for perhaps italian unemployed young people to go from italy and find work in germany. settle there and actually feel also happy without the italian families around. so i think this is something that is going to be on the agenda. and one thing for sure. merkel is under pressure, not any more that much in a euro environment, but more on her own home turf. >> patricia, thanks for that. let's go to andrei. what's the monti perspective then on this meeting? >> basically what monti wants to take out of this meeting is first all of the message that the night of the european council wheni italy vetoed the growth package in order to get support to the bond buying scheme is behind us. now monti and angela merkel speak the same language and walk in the same direction. this is what he said, sending a strong message to the german public opinion saying we have to share the same kind of vision

and we are working together with angela merkel in terms of not just growth but also fiscal discipline in italy. and clearly monti is under pressure not just for the general situation and there will be discussion on the esfs and esm. details functioning of the bond-buying scheme. also what's happening in the italian real economy. the deterioration in the numbers came out this morning in q1. the deficit went to 8% versus a 7% in the first quarter -- in the first part of the year. and this is due to the 16% increase in interest rates payment we had to do. monti is preparing a new package of caps in the public administration. $7 billion. he needs mutual support from the meeting today to get support for its internal policies. >> andre, patricia, thanks for that. let's get back to our guest host for quick comment here. bob mcgee. the eu summit sparked a great

deal of optimism in the markets. do you think we'll see the appropriate follow-through in the next set of meetings to make all those big ideas happen? >> it agreed that, first of all, if spain wanted money from the eu funds in order to recap its banks. once we have a banking supervisor and its monitored carefully. it also agreed for italy to have the right to get purchases made of italian and spanish bonds by the eu funds. and also that eu loans would not get senior status over private loans. so in future, if there's a haircut, that will apply to official funds as well and won't be so severely damaging for people that want to buy from the private sector who want to buy sovereign bonds. those are the pluses. working out the details of those and how long it's going to take in order to get an agreement that the funding is available within the new esm and old

funding mechanism, the esf, still has to take place. there's no growth in countries like italy and spain. we've just seen terrible figures for growth for italy. we've just been told budget deficit higher than it should be. because the cost of borrowing is still too high. and growth is too low. we have high unemployment. so there's big growth issues which have to be sorted between mrs. merkel and mario. while we bought short-term breathing space because there's going to be some support for the italian and spanish banks over the next few months if they get that funding. and it's not going to be blocked. that's what merkel conceded. we haven't really sold the question of the fiscal union, a banking union and getting growth back in europe. so the issue is -- big issues are still facing the leaders within the eurozone. >> okay. let's leave it there. we'll come back to these topics throughout the show. we're going to take a quick break. we'll be looking at the commodity market coming up when we speak to a guest who says all

commodities are facing headwinds. find out why after this break. 

so looking at where the commodities are, especially oil and metals. nymex is $87.21.

brent down by 0.6%. gold flat, really, and silver up by 0.3%. copper losing about 0.3%. let's get up to warren gilman who believes all commodities are facing headwinds. still bullish on gold for medium term noerngs warren is chairman and ceo at cef holdings. so where do you see the headwinds and over what kind of period should we expect them to play out? >> well, we're still in a low growth scenario globally. china is in deceleration mode. europe, obviously, is in zero to negative growth and the u.s. still stumbling along. in this environment we're not going to see much in the way of metal price moves. we've had a nice bump off the bottom. courtesy of the developments in brussels on friday. but i think that rally has just

about run out of steam, and the sentiment is now going to turn back to being on the bearish side. and so say show me the growth. >> so oil, let's talk about where oil is going. you expect us to be back for brent 90 to $95. on the fundamentals. but we should expect to see some trading spikes. what causes those spikes and how high do you think the spikes could go? >> well, i do think we're going to see a bit of a retrenchment in brent over the next few days. a good 13% bounce off the lows from last week. that rally is probably petered out and i expect to see a retrenchment back to the 90 to $95 range. there has been a bit of a kick as well from increasing tensions with iran as the sanctions kick in on july 1. but i don't really see that impacting the supply demand fundamentals of oil in the long term.

certainly, though, there will be an era of saber rattling and opportunity for iran to make some noise during this intermediate period which could see some short-term trading spikes in the price of oil. but ultimately, i think longer term, that supply will come to market and we're going to see oil under pressure just like all commodities given the demand situation. >> that's the question i'd like to follow up on. if we were looking one year ahead, where would the price of crude oil be or brent to be given that most of the forecasting associations are still saying there's going to be some more demand growth for oil. even though we have low global growth. and that there are some supply issues both in the refineries and also perhaps where the oil is. it's not in the most stable places in the world. i would suggest that you could get a hike to the oil price even

though the general global situation is very weak. >> i think oil comes down to a question of demand rather than supply. i think that we've got a tremendous amount of supply globally. opec has -- in its last meeting a few weeks ago held to 30 million barrels a day. interestingly with no individual country quotas. so that allows saudi arabia the ability to produce with impunity if you will to make up for any supply disruptions that may or may not occur from countries like iran. so i'm not too worried about supply. i am worried about demand. your relevant question is where will the price of oil be a year from now. that very much depends on what levels of stimulus we will have coming from china, the u.s. and the eurozone in the latter half of the year. i am looking for if you will, a stimulus trifecta to come about near the end of the year where hopefully we'll have coordinated

stimulus from all three regions. if that occurs, i think we could see brent back up over $100. but it will depend on stimulus coming from china in cooperation with the rest of the world. and that i don't anticipate until we have the regime change probably in october, november. >> okay. warren, we'll watch out for that. warren gilman, chairman and ceo. we'll bring you the latest on the libor rate rigging scandal and look ahead to the polish bank decision on interest rates. stay with us. we'll be right back. >

welcome to "worldwide exchange." i'm beccy meehan. all eyes on former barclays ceo bob diamond as he faces a grilling in a uk parliamentary hearing. also questions over its role in the libor scandal. the barclays chairman starts to look for a new head of the bank, marcus agius said the unrelenting pressure forced bob diamond out. >> i think it was the fact this intensity was going to continue on and he felt he couldn't do what he needed to do. >> the contraction in the eurozone services sector eases a little in june. but pmi figures remain in negative territory supporting

the case for further rate cuts from the ecb. india's reliance on domest irk consumption helps its services sector see improved new orders in jobs growth in june. for the latest numbers out of china it shows weakness in the employment picture. >> you're watching "worldwide exchange." bringing you business news from around the globe. >> well, to get a quick look at what's going on in the markets, karen is standing by at the wall with further details. caroline? >> pretty much flat today with a slight negative buys. just some of the last couple of days, global markets have been trading on expectations of more central bank stimulus. that's why bad news in the form of the ism data, for example, was good for the markets. only down 3 points or so. let me show you the european markets. we're seeing a lot of red here.

the ibex 35 down. but off the session lows. the cac 40 off by 0.4%. we're seeing similar percentage declines for the likes of the german marketth in ftse 100 here in the uk. the services pmi data didn't help sentiment today. we did see that falling or, in fact it rose a little to 46.4 points. but still in contraction territory. now let me show you the euro rates and some of the other currency because the euro is also a little under pressure today. against the dollar down 0.2%. and there are actually a number of factors for this. first of all, there's actually the pmi numbers. again, they aren't helping this case. secondly, we've got the expectation of the 25 basis point cut by the ecb on thursday. that's putting pressure on the euro and there's talk about traders in japan with some bond redemption. that's also putting some pressure on the common currency. becky? >> yes, thanks for that. on to a bit more breaking news.

germany has sold 3.294 billion euros of five-year debt. the relevant metrics here, the bid to cover ratio 2.7. that is compared to june 6th auction where they had bid cover of 1.6. 2.7 this time around. the average yield for that five-year debt, 0.52% on that june 6th auction. the average yield was 0.41%. let's just get a quick comment from bob who we're just throwing this upon. hopefully you've been across those numbers as i was reading them out.out. the german debt market very much a safe haven. what do you make of the figures this time around? >> it shows plenty of demand for holding bunds. where else have you got to go if it's not u.s. treasuries. and the liquidity for the bonds is good.

plenty of strength there. doesn't look as though the yield on the whole is -- near rock bottom anyway. so it seems what you would expect. a good result for the borrower and the lender wants to buy it. >> okay. let's get into what's going on around the rest of the world as well. poland is the next place we should be looking at. the rate decision out of poland. the central bank and just coming out with the decision to leave rates on hold as had been expected. the key rates in poland remaining at 4.75%. largely expected. in fact, all of the 18 economists polled on this did expect that to be the case. the central bank of poland will hold a conference call at 1400 gmt. so 1500 cet, that's 2:00

london time. bob diamond will appear in front of the uk treasury select committee. the key question could be the role played by the deputy governor paul tucker. this after barclays released a memo details a conversation between tucker and the now ex-ceo of barclays. diamond expected to mount a vigorous defense of his own reputation and of that his former employer. let's listen in to what the politicians had to say on the matter following diamond's resignation. >> bob diamond's taken the right decision. the right decision for his bank and the right decision for the economy. but now let's get on and create that new culture of responsibility in banking. that is what we need to see because we need strong responsible banks lending to the british economy in order to create the jobs and growth we all want to see. >> the public want to see parliament getting stuck into this, getting the questions answered. and that we get quick action on bank reform. splitting up the banks as we've now got legislation for that. dealing with proper recompense for the people who have been misled. the people want to see action and they want to see it quickly.

>> i think it was necessary and right that bob diamond step down, but this is about much more than one individual. it's about the culture and practices of the banking industry. that's why we need a full judge-led independent inquiry to get to the bottom of those practices and make recommendations for change in the future. >> i think it's entirely predictable. yesterday marcus agius, the chairman resigned. this is a company that's been in a car crash. yesterday the passenger in the back seat resigned. today, the driver has resigned. but perversely, the passenger in the back seat, agius is now not going and is grabbing the steering wheel. i think this is a bank in a state of chaos. >> so, kelly has been reporting for us now outside of parliament today ahead of that statement from -- well, questioning really from bob diamond later on. kelly, what's the latest? >> beccy, hi. i'm in front of parliament. we'll hear from bob diamond himself. we just heard politicians

describing the company as a car crash. and an interesting question i'd like to put to our next guest. the lead portfolio manager at ecm. thank you for joining us out here. the sun is coming out a little bit for us. you manage about $10 billion in assets. is barclays more or less attractive today? >> if the prices fall a bit further after the recent rally in bank bonds, barclays is more attractive, not less. >> so you guys invest in the credit side of this? >> that's right. >> we've seen a big drop in barclays share price but also as you indicate, seen a big drop in prices of its debt as investors become worried about the future of barclays. is that move to overdone? >> a little bit yes. we haven't, in fact, seen as big a drop in the bond prices as we have seen in the shared price because, of course, we do feel that any impact of the fines is more on the profitability of barclays rather than on the capitalization itself. >> what about this reference to the company being a car crash. we've now seen its managers

leave. i mean, we can expect a certain amount of political rhetoric. but how would you describe the fundamental health of a company like barclays? >> i think barclays is pretty fine. the capitalization levels are relatively adequate, for a business of the size given the current markets. and given the fact that they are operating at a relatively strong institutional framework in the uk with the bank of finland being supportive to each other. based on other jurisdictions for instance in europe, barclays is in a such better place. >> let's talk about financials more broadly. you invest in all sorts of bank debt. any reason why uk banks here, as this investigation continues to go forward, should be -- should investors steer clear or are these concerns really global and are there other banks in other parts of the world more vulnerable? >> we do feel that given the yields that are available in uk banks, uk banks are more attractive than banks across the

world. for instance, we should expect that this whole libor related investigation will expand to many other banks across the world as almost by definition it's a rate of about 20-plus banks working together. and if anything, barclays has probably been an early mover in settling this whole issue. and we should expect impacts on other banks as well. >> so you've mentioned names across europe that again, given some of the fundamental concerns about european growth, about the financial positions of these banks and liquidity positions, that it just kind of highlights or adds to their vulnerability? >> that is true. to the extent you have a large bank which is involved in financial markets in a country where the sovereign is -- the sovereign's own credit is under threat, let us say, those banks are in a more difficult position than barclays is. >> and finally, did bob diamond in your opinion need to go and are you worried about the bank's

long-term health or performance now that he and some of his top executives have left? >> what i'm more worried about is there is a presumption on the part of liquidities that they expected the libor market in 2008 and 2009 to work just fine. just as normal. as if the world was in a -- most security markets were not normal at that time. and the central banks were intervening very heavily across many markets. to then expect the libor market would function as normal is why it's quite a -- >> i'm not sure they expected that because the communication between, for example, the bank of england and barclays seems to be this wink and nod that if you oar if the rate you submit is lower than what you can borrow at, we understand.

>> we were being involved in credit markets, very much involved with bonds. and what was happening in the libor market was important. and i think everybody pretty much knew that banks were not able to borrow on an unsecured basis. >> that cheaply. >> that cheaply, or at all. >> and so for the authorities to say today they are surprised by this is quite hard to believe. >> and what's exactly the type of question we'll see bob diamond probably turning back to regulators when we hear from him in a couple of hours. satish, thanks for join us. we'll keep an eye on whether investors see barclays as a buying opportunity. >> kelly, thanks for that. let's talk about poland. we brought you the breaking news earlier that poland's central bank keeping rates on hold. the central bank's left the rate at 4.75%. neil cherring is here with us in the io.

poland's economy has been quite different to many other economies across this region but going to a year and a half going, going out to poland the report on the interest rate increase there because they seem to be holding up pretty well. what happens, though, now as the eurozone crisis continues across the region which, obviously is the main trading partner for poland. >> you're right. poland's economic performance over the past two years has been remarkable really. in 2009 it was the only eu economy to avoid recession. since then, i think the economy has grown by something like a cumulative 10% or so. remarkable given the backdrop. the outlook is framed by the eurozone. the key point, although poland is much better placed than hungary, romania and so on to weather those problems. its banks aren't quite as exposed. it's not immune. the eurozone slights into recession, if the eurozone

breaks up, then poland will not be able to escape the turmoil that follows. we think it's not going to collapse but it's going to slow. rates have probably peaked. still some very hawkish members. growth starts to slow over the second half of this year. >> 4.3% growth in gdp 2011. 2% in 2012. you think 1.8% in 2013. so still positive growth in this country. on the basis of what assumptions? what's the macro picture that will yield 1.8% growth in 2013? >> again, everything is framed by the eurozone. we have the eurozone contracting by 0.5% this year. contracting by 2.5% next ye now on the face of it, that -- those polish numbers look strong against the backdrop of a deep recession in the euroeurozone.

the key thing is what happens to germany. it's the biggest market for poland. we thing german economy will contract. it will still continue to do much better than the eurozone periphery. >> plenty of option to cut rates. how much do you think that they will bring rates down and how quickly? >> the good news is that the rates are still well above. they are even positive in real terms. but, and there is a but, poland has a reasonably large stock of foreign currency debt. not as high as it is in hungary but they have to keep one eye on the currency in all of this. they can't cut too aggressively. we've penciled in 50 basis points. the consensus is it's going to be on hold for a long time. the market has priced in no change either. we thing market is probably underpricing the risks at this stage. >> okay. i'm afraid we have to leave it there, neil. thanks for coming in. time for another break. we'll be talking to the ceo of carnival uk soon about how the

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you're you're watching "worldwide exchange." >> you're watching "worldwide exchange." all eyes on former barclays ceo bob diamond as he faces grilling in a uk parliamentary committee.

the contraction in the eurozone services sector eases a little in june but pmi figures remain negative territory. and pmi data out of china show weakness in the employment picture. while india sees services expand thanks to domestic demands.

equity markets are lower today for the european trade at least. the ftse down 0.2%. the dax and cac down by 0.4%. the ibex in spain losing 0.7%. the uk services pmi figures were certainly not positive. just above 50. but indicating lots of pessimism about the outlook for the uk.

the eu retail sales data was worse than expected, too. plenty to absorb today. how do you make money in these markets? here's what some experts have been telling us so far this morning. >> the sectors we like at this stage is pharmaceuticals, consumer staples, telecom and utilities. those are our main sectors. we do not hold any financials nor emerging markets. >> we like corporate credit. you know in the uk, it's a bit tricky because the markets aren't that liquid. in the uk and the united states, you can have your maturity and double your yield with companies that have oodles of cash flow and the capability of paying back over the five to ten-year paper we may be purchasing. >> itv remains a long-term value buy for us. it has been for the last month or so. we've had a little bit of noise.

private equity noise associated with it. but even when it pulls back, we see it very, very strong. we still have bob mckey with us, chief economist at independent strategy listening in to some of those picks. itv was the one from chris. george entwhistle has been named the new director general. >> you can't buy the bbc. >> you can't buy the bbc, but you can buy itv. any thought on those top picks? >> i thought all three demonstrate from looking from a macro economic point of view, that people are still looking for the safety areas, namely the utilities, the staples, the consumer durables or more exact, the consumer staples. and also looking at credit in the corporate sector amongst not only investment growth but also high yield corporates, particularly in the u.s. that's an area people have concentrated a lot for their

strategy because as that speaker said, your return on that, the likelihood of default is very low. corporates in the u.s. have huge cash and in the uk as well. they can easily pay this debt. and looking at certain areas within the uk sector, like media and elsewhere where there's a good cash base and you can -- and prices still relatively low. so all those are sort of safe bets. nobody is looking for risk by the implication of at least those three comments. >> that was nancy curtain who was a guest host on squawk this morning. and oodles of cash flow is what she was talking about there. they may well have oodles of cash flow now but there's still room for caution about any company operating in the uk or the u.s. things get really bad. certainly here in the u.s., think about the possible breakup of the eurozone. that continues to -- >> obviously, all bets are off for everybody. we look at the whole index. if we're saying, why are there

strong corporate cash? the reason is we've had a recovery in the economies from the depths of the recession in the middle of 2009. there's been some relative growth through 2010 and 2011. that's given corp rats orates af income earners and they've been able to keep costs down. >> we have another hour of programming for european viewers. we have to say good-bye to our u.s. viewers for now. happy holidays to you. do make sure you tune in later today. we'll bring you special coverage of bob diamond's hearing before the uk treasury select committee. [ male announcer ] this is the at&t network. in here, every powerful collaboration is backed by an equally powerful and secure cloud. that cloud is in the network, so it can deliver all the power of the network itself. bringing people together to develop the best ideas -- and providing the apps and computing power

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