Germany's judges hold the euro's fate in their hands

If the eight judges in Karlsruhe rule that Europe's €500bn bail-out machinery breaches of Germany's Basic Law – or Grundgesetz – in any significant way, they risk knocking away the central prop beneath the debt edifice of Southern Europe.

The judges have distilled a plethora challenges to the Greek, Irish, and Portuguese bail-outs into three complaints. These include one by a group of professors who argue that the Greek loans subvert the Bundestag, violate the "no bail-out" clause of the Lisbon Treaty, and amount to the creation of a fiscal transfer union, by stealth, without the requisite changes in the German Grundgesetz, and "strike a blow at the constitutional foundations of our state and our society".

Wolfgang Schäuble, Germany's finance minister, told the court on Tuesday that Greek bankruptcy would have set off epic contagion and triggered an even greater financial cataclysm than the US credit crunch.

The judges know the risks. They will bend a long way to find a formula that does not set off a banking collapse, or threaten Germany's strategic investment in post-war Europe. But will they bend enough to satisfy the bond markets when they issue their verdict, probably in September?

Andreas Vosskuhle, the court's president, noted acidly that the hearings were not about the "future of Europe or the handling of the debt crisis". They are a matter of law.

This is the same court that stunned EU elites with its volcanic ruling on the Lisbon Treaty in June 2009, cautioning Brussels that the EU is a club of sovereign states, not a state itself; that national parliaments are the only legitimate fora of democracy; and that certain fields "must forever remain under German control" – including budgets.

The court has been the backbone of German democracy for 60 years. It is über-vigilant because it knows where pliant judges went wrong in the 1930s. It must be irked by Pierre Lellouche, France's Europe minister, who said with relish after the summit deal on Greece last year that EU leaders had carried out a constitutional coup. "De facto, we have changed the treaty," he said.

Tübingen professor Joachim Starbatty, one of the litigants, expects the court to reach a "Yes, but" ruling that allows agreed rescues to go ahead, but imposes a strict "corset" on future bail-outs.

This could have serious implications. Further doubts over how far Germany will go to backstop the EMU system risks accelerating capital flight from Spain and Italy. Neither country is safely out of the woods yet. The PMI Composite index for Spain and Italy both tumbled below 50 in June, signalling economic contraction in the third quarter. France's index saw the sharpest drop since the series began in the late 1990s. EMU's North-South divide is becoming wider.

At the least, the court is expected to insist that the Bundestag has a veto on rescue packages, a gift to the populists as German bail-out fatigue turns to fury. A recent Allenbach poll found that 71pc of Germans now have "little" or "no trust at all" in the euro.

For Greece, events have already moved beyond the point of no return. The country is being pushed deeper into economic and political ruin by an IMF austerity drive that lacks the usual shock absorbers. The IMF's twin cures of devaluation and orderly default are both blocked, one by euro membership, the other by EU contagion fears.

Greece's public debt will rise to 161pc of GDP by next year, up from 120pc when the crisis erupted. Its economy will contract by a further 3.8pc this year. The deficit remains stuck near 9pc of GDP because the slump is choking tax revenue. The strategy is self-defeating.

"Is there anybody out there who really thinks this crisis is over?" said Jacques Cailloux, Europe economist at RBS. "The policy has failed completely. It must be revamped. There needs to be a Marshall Plan, and the penal interest rate on EU loans must be cut to zero."

None of this is happening because Europe's creditor states have not faced up to the reality that saving monetary union requires years of subsidies – not loans – from North to South. The EU authorities are instead lost in minutiae, arguing over collateral rules, or floating plans for bond rollovers at effective rates of up to 10pc. The sole aim is to buy time for banks to offload liabilities – mostly on to EU taxpayers – and for Spain and Italy to beef up defences.

The Greeks are being sacrificed for the greater cause. Their reward is to learn from Eurogroup chief Jean-Claude Juncker that Greek sovereignty will be "massively limited". A body overseen by EU officials and modelled on East Germany's Treuhand will liquidate Greece's national assets to cover debts.

Suzerainty has begun in earnest.

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ARM Holdings hands ˈfʊtsiː another place

Writing to read-across to this market CSR, analysts from Seymour Pierce said that the eventual transaction could lead from price activity in the short-term - "leading market focus on the rehabilitation of CSR trades some of his peers." The broker has kept its target rating and the price of the "hold" of 325 p on CSR.

Arm's surge came as a benchmark from losses at the beginning to the end of the day in positive territory for data on optimistic employment on the other side of the Atlantic. FTSE 250 also reversed his losses early close 19.01 points at 11741.57.

By dragging the index, however, was heavyweight mining stocks, which slipped back as metals prices declined. ELL Antofagasta and African Barrick Gold f p 36 to £ 15.86 and 13½-600 p respectively.

Market watchers are also considering the effect of Australian flooding on minors, while bhp billiton said that he would exit ramp at two production Australia-Western oil fields complete this week as weather conditions have improved. BHP has dropped from 19½p to £ 25.34.

Rated Citigroup analysts the potential impact of the floods in Queensland and concluded that overall, that the impact is probably not significant due to the effect of rising coal prices.

WPP, the advertising agency, was too heavily on the decline. It fell from 17½ to 780½p as RBS cut its rating from "hold" to "buy".

Snippets of retailers, who has fallen by traders starts counting cost of snowy weather were also among the laggards. Burberry fell 22 percent to 11.00 £ 20 and associated british foods - owner of Primark--fell 14% to £ 11.50. Investec cut its rating on the latter to "hold" to "buy", before trading update first quarter.

But the Next 88 p art of £ 21.03. Despite revealing that he had lost 22 million pounds in sales due to snow, expected further profits to meet forecasts of analysts.

However, HMV stunned 6½ to 26 percent as it has seen sales fall in December. Accordingly, he said that the benefit of the exercise was likely to be at the lower end of expectations.

Halfords has also dropped 14.6 to 440 p as concerns the medium could also affected by the cold wave. Nick Bubb, Arden Partners, an analyst said: "the logic seems to be that many stores are out of town and couldn't be reached due to snow and ice, and that consumers were put off buying kids bikes and sat NAVS for Christmas."

A stock that could have benefited from Arctic conditions, however, is Ocado. After seeing her tank of share price last year after his registration controversial 180 p, Ocado completes over its price to float for the first time on Tuesday and made more WINS yesterday, rising 3.3 200 p.

Analysts said short sellers covering their positions, while Ocado Christmas update - due Monday - trade should be strong. But with prices on the ascendant Ocado action, UBS analysts decided finally that it was time to cool their ratings on the retailer.

The broker has cut its position to "neutral" from "buy", saying that the market was now better leverage the opportunity offered by Ocado.

UBS analysts added that they expected Ocado to pursue growth before sales grocery market online through the customer new addition in existing areas, expanding its geographical footprint and adding new lines of food and other products.

Analysts in the capital of the coast kept their rating on Ocado before commercial update "sell." While the broker expects Ocado have delivered 40pc in the growth of sales in December - 45pc, partly due to the snow-it still has reserves of the company.

"In our minds, we remain concerned by the conversion of sales profit, the magnitude of the investment programme in the capital and time which must be delivered to cash flow and earnings", said the analysts.

Another of last year's entries was less floating research yesterday. Traders took their money offshore in the table for Betfair after one of the banks leading game company led market clear to "money to work" in stock at the moment.

Morgan Stanley, who was among a team of advisors who floated Betfair £ 13 October, kept its "equal-weight" rating, but cut its price target to £ 14 £ 14.80 due to a "disappointing" trading update for the second quarter in December.

Betfair sank 34 at 937½p – its more since floating close low.

Slide back too, was Hays. More Great Britain recruitment agency is updated from the market in the second quarter trading Thursday. Before this update, Panmure Gordon cut its rating on "hold" to "buy", in the light of the recent price performance strong share. They added that they expect to update today to display levels of similar growth in the first quarter, with the Asia-Pacific continues to lead the way.

However, prior to reporting season for recruiters, Peel Hunt plus its rating on Hays "buy" from "hold", arguing that "the weakness of the public sector has now fully played." Their main choice was Robert walters, who they also moved to "buy" from "hold", citing its potential for growth backed by a strong balance sheet. Hays fell 5.7 to 127,9 p, while Robert Walters increased 4½-330 p.

On Aim, akers Biosciences rose 1,125 to 6.75 percent on news that an order of the Middle East for its cholesterol tests would boost revenues.

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