The rally in European stocks has stalled, and developments in the next few weeks could decide if and when we see a renewed downturn in investor sentiment towards Europe.Next week, European leaders begin convening in the lead-up to the next EU summit on January 30.
But there plenty of other crucial events you’ll need to keep track of.
Eurozone finance ministers will meet ahead of a European summit the following week. We'll probably start hearing about their latest plans to take action to address the eurozone crisis around this date
Finance ministers from all 27 EU countries will meet to discuss economic policies.
Key here will be the relationship between U.K. minister George Osborne and the euro area ministers. U.K. PM David Cameron has sparred with eurozone leaders led by Merkel and Sarkozy lately, most recently in a refusal to pledge $50 million to the IMF to support the crisis effort.
Increasing tension between the eurozone and the non-euro area could change the structure of the EU.
January 26 is the date of an Italian long-term bond auction. We're not necessarily expecting bad news here since recent bond auctions have gone off without a hitch, however traders are placing a lot of weight on peripheral bond auctions and this could mark a change in sentiment, for better or worse.
This bond auction could be particularly important since it will be the first auction since S&P's downgrade of Italy on January 13.
EU leaders will meet for a summit on January 30, this time supposedly focused on addressing high unemployment across the euro area.
A few things to keep in mind for the meeting: Germany appeared poised to back a new fund directed at stimulating growth in Ireland, Portugal, and Greece, so we could hear more about this new plan in the lead-up to the summit. We could also hear about new plans to revitalize the immediate or long-term conditions of the debt deals leaders talked about in their summits in October and December.
January 31 marks the deadline for private holders of Greek bonds to agree to a swap deal with the Greek government.
While these talks have largely been conducted behind closed doors, the prognosis for a successful deal appears grim. Private bondholders are unenthused by the prospect of stomaching 50% losses on holdings of Greek debt, jeopardizing the voluntary participation necessary to avoid a credit event.
This will be another big day for bond auctions. Both Portugal and Germany are holding auctions, and the purchasers' manufacturing index for the eurozone in January will come out.
This could go quietly, or this could end up being a rough day. Who knows?
February 6 is the date for the Italian parliament to approve a new round of fiscal and growth measures. Measures by Greece to restore growth and cut spending are crucial to maintaining support for the troubled country.
The European Central Bank will announce its newest interest rate decision, after holding rates steady in January. We'll be looking for any changes to the ECB's forecasts on price stability, which could precede a change in policy. ECB President Mario Draghi will give a press conference directly afterwards.
Recently, the ECB has played a key role in the policy response to the crisis, particularly with the introduction of liquidity measures that appeared to cause a huge drop in short-term peripheral bond yields starting last month.