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The UK chancellor will update Parliament on the state of the British economy around 1pm today, as Italy and France fight to avoid being dragged deeper into Europe’s debt crisis 12.45pm: In the City, the FTSE 100 just took a nasty tumble – now down 39 points at 4967. The blue-chip index had been 100 points higher this morning — the eurozone crisis continues to chip away at investors. My colleague Nick Fletcher reports that alarming rumours are rippling across the capital’s trading floors: Traders heard a tale than BNP might need to increase its provisions for Greece, while Reuters was reporting that a bank in Asia had cut credit lines to major French lenders on worries about their exposure to Eurozone sovereign debt. Five other banks in Asia were said to be reviewing their positions. More details here on Market Forces Live : 12.23pm: While we wait for Osborne, here are the latest odds on which country might lose its AAA rating (with Standard & Poor’s) next. Via Paddy Power: • 2/1 France • 7/2 Canada • 7/2 United Kingdom • 7/1 Austria •10/1 Denmark •10/1 Netherlands •10/1 Australia Early betting trends suggest that France could be next in the firing line but the USA downgrade shows that that no country is safe. 12.04pm: George Osborne is expected to start his statement around 1pm — Parliament is currently listening to David Cameron and Ed Miliband on the UK riots, and MPs are beginning to give their own responses. But what might the chancellor say? The timing isn’t perfect – just a day after the Bank of England cut its forecast for UK growth in 2011 to around 1.5%, from 1.8% previously. Ed Conway, Sky’s economics editor, appears to have been given some guidance by the UK Treasury: @edmundo : Chancellor to stress that stock market falls are international issue – but thing to watch are measures of sovereign creditworthiness and @edmundo : Chancellor will cite fact that based on CDS prices, UK is now a better credit risk than Germany for first time in crisis Actually, the very latest data from Markit show that UK and German Credit Default Swaps (insurance on a government bond defaulting) are neck-and-neck this morning. That is certainly a reassuring signal from the markets. 11.57am: Sticking with the crisis in the eurozone, there has been a surge in emergency borrowing from the European Central Bank to commercial banks. Banks took more than €4bn of overnight funds from the ECB on Wednesday, the biggest amount since mid-May. This comes at a price, though: banks have to pay 2.25% for the money, compared with 1.5% for regular ECB funding. Banks are waiting for a fresh injection of six-month funds from the ECB and are likely to have used the overnight funds to tide them over. The recent downturn in money markets prompted the ECB to reintroduce 6-month funding a week ago, as well as extending its crisis measure of lending banks as much money as they ask for. 11.49am: Italy’s economy and finance minister Giulio Tremonti has just told the country’s parliament the latest details of its austerity plans. Tremonti said that Italy is ready to act in response to European requests for labour market reform, privations and other measures to stimulate economic growth and balance its budget by 2013. The European Central Bank has demanded large-scale privatisation of local services, pension reform and greater flexibility in the labour market. Tremonti admitted Italy needed stronger austerity measures to meet its target of balancing the budget by 2013, and pledged to step up efforts to fight tax evasion and abuse of fixed-term employment contracts. Silvio Berlusconi’s government has already announced some €20bn of austerity measures, but has come under fire at home and abroad for not providing any details. Berlusconi has made a handful of statements since the beginning of the month and pledged to speed up reform measures, without elaborating. The immediate response from the Italian stock market is not encouraging – having surged in early trading, the FTSE MIB is now flat for the day. 11.36am: In the roller coaster world of the financial markets, European shares surged at the start of trading – with the FTSE 100 up more than 140 points (to 5151 points) But in the last few minutes the rally has fizzled out, as French bank shares took a kicking. Shares in Société Générale just fell by 6.6%, having been 7% higher in early trading. BNP Paribas are down nearly 7%. It doesn’t take much to alarm the London stock market at present, and the FTSE has subsided to 5047 (up 40 points). Traders say the rumours continue to swirl that SocGen and/or BNP are in trouble, despite robust denials. Here’s the view of David Jones of IG Index: The rally has stalled with many traders unwilling to believe that this is anything more than just another dead cat bounce. We could well be in for a choppy few hours until the US opens….. There is still the feeling that there is no smoke without fire [about France] which simply adds to the lack of commitment in the current rally. As we reported last night, there is fevered speculation that France’s AAA rating is at risk – which is forcing French president Nicolas Sarkozy to consider tougher austerity measures. 11.30am: Good morning, on a day when the UK economy and the European debt crisis are both in the spotlight. In the next few hours, the UK chancellor will give a statement to MPs on the state of the economy, and his European counterparts will battle to avoid being sucked deeper into the eurozone debt crisis. George Osborne ‘s address to parliament is due to start around 1pm – sandwiched between a statement from the Prime Minister on the UK riots, and the full parliamentary debate on this issue. Our colleague Andrew Sparrow will be covering all the riot-related action from Westminster – yup, he’s been recalled as well. Elsewhere, the Italian finance minister is presenting a new austerity package – Giulio Tremonti is under pressure to offer more detail about his plans to repair Italy’s public finances, and opposition from union leaders who oppose deep cuts. Meanwhile, the French government has been rattled by speculation that its AAA credit rating is at risk – we’ll be watching the latest developments there too. Financial crisis European debt crisis Stock markets European Central Bank Italy George Osborne France Market turmoil Graeme Wearden Julia Kollewe guardian.co.uk