Eurozone Finance and Economic Ministers will meet in Luxembourg on Monday to discuss the region's top issues with Madrid and Athens at the top of the agenda.

The so-called Eurogroup will debate with Spain's Economic Minister Luis de Guindos about the country's possible use of the European Central Bank's (ECB) bond-buying programme.

Despite the constant insistence by Spanish politicians, including the country's Prime Minister Mariano Rajoy, that a bailout isn't imminent, the market judges recent austerity measures to be a preview of the conditions that Brussels would impose in order to approve financial assistance.

As far as Greece is concerned, the talks with the Troika (representatives from the European Commission, International Monetary Fund and European Central Bank) continue as they attempt to reach an agreement on required budget cuts for the approval of the next aid disbursement. This as the country awaits German Chancellor Angela Merkel's first visit to the country since the beginning of the crisis to meet with Greek Prime Minister Antonis Samaras.

RBS's economist for Europe, Silvio Peruzzo, told BloombergTV that he doesn't expect any clear message from today's Eurogroup meeting. "They'll be more informative at the European summit [scheduled for October 18th and 19th]", he said.

Also on the bill will be the inauguration of the permanent ESM bailout fund. Unicredit experts expect there to "be a debate over the type of assistance offered to the countries and that a base case plan may be established. Markets will appreciate any decision to intervene with direct purchases in primary or secondary bond markets."

Analysts from Link Securities said that the Eurogroup will also examine the situation in Cyprus and Portugal. "It seems that Portugal will get another year to comply with its deficit goal. Its Eurozone partners and the European Commission (EC) are satisfied with the progress this country has made.

"With regard to Spain, its minister of Economy Luis de Guindos will try to convince his partners that the country will reach its 6.3% objective for the deficit-GDP ration. The general opinion in the EC is that Spain's partners think it will be 'difficult, but not impossible' to reach this goal. We believe that Spain's margin is directly related to the possible revaluation of pensions and think the government will use them to balance its numbers."

With respect to the ESM, Link adds that Spain wants to see July's agreement put to work and allow direct recapitalisation of the Spanish banking sector without this increasing the financial institutions' debt. Nevertheless, "we don't believe that this topic will be finished today," they said.

MG

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