The 6am Cut London | FT Alphaville

The 6am Cut London

Merkel floats a ‘bigger firewall’ balloon: officials pointing to support for the EC’s ‘option 2’ of temporarily expanding the bailout funds to €740bn plus the €200bn already committed. (Financial Times) Rehn, Regling, Monti all warn of the dangers of an insufficiently big bazooka. (Telegraph)

– BATS IPO killed off to avoid possible litigation and reputation damage. After the glitch on Friday morning, some mutual and hedge funds who’d committed to buying the stock pressured underwriter Morgan Stanley to withdraw the IPO and cancel their trades, according to people familiar with the matter. (Wall Street Journal) Clients such as Fidelity point out they’re not obligated to keep using BATS and have alternatives. (Reuters) BATS’ chief full of contrition; views differ over IPO d0-over. (Financial Times) Software code = worryingly complex. (Bloomberg)

– Investment banks will shrink their balance sheets by $1tn over the next two years, according to a report by Morgan Stanley and Oliver Wyman. Plus $10bn – $12bn in costs by reducing jobs and pay. (Financial Times)

– Spanish local elections fail to give austerity approval boost for Rajoy. (Reuters)

Hedge funds will be hurt as prime brokerages are planning to hit clients with across-the-board higher trading costs. (Financial Times)

Guarded praise for new World Bank US nominee. (Financial Times)

NBNK set to bid on Lloyds branches, take advantage of regulatory problems faced by Co-op bid (The Telegraph)

Pru chief talks smack about the FSA in internal email, underlying tensions over Solvency II rules. Attempts at humour were ‘misjudged’, say flaks. (Financial Times) FSA gets defensive anyway, blaming Brussels. (The Telegraph)


– Wolfgang Münchau is not impressed with Merkel’s hints of support for a bigger bail-out: ‘…the arithmetic is tedious and most statements you get obfuscate the issue through double-counting’. (Financial Times)

Shell is having problems paying its Iranian bills; it owes $1bn and sanctions are making payment processing tricky… (Reuters)

Equities will be okay as long as companies keep taking the gains from labour, says Gavyn Davies (Financial Times)

The UK is investigating the death of a British businessman linked to Bo Xilai (Wall Street Journal)

Another Corzine email suggests he wasn’t aware the transfer to JP Morgan in London was from customer accounts. (NYT DealBook)

Foreign ownership of Japanese debt climbs. (Wall Street Journal)

When your China fraud is a life-and-death matter. (New York Times)