Worries over euro crisis climb
By Robert Hetz and Giuseppe Fonte |
December 2, 2010, Thursday
|
Print Edition
Print Edition
GLOBAL concern about the debt crisis rocking the eurozone mounted yesterday, with Washington sending a top United States Treasury envoy to Europe and G20 officials discussing the turmoil in a conference call.
A day after investors pushed the risk premiums on Spanish and Italian government debt to new highs, the bond spreads of countries on Europe's southern periphery narrowed and the euro steadied on speculation that the European Central Bank could unveil new anti-crisis steps at a meeting yesterday.
But calmer markets failed to remove deep worries about contagion in the 16-nation euro bloc that has pushed European policy makers onto the defensive and forced them to search for new ways to stabilize their 12-year-old currency project.
An 85 billion-euro (US$110.7 billion) EU/IMF rescue of Ireland last weekend and public reassurances from European politicians and central bankers have been largely ignored by investors, who have targeted Portugal, Spain and Italy, intent on testing the European Union's resolve and crisis-fighting resources.
"You may think and you sometimes read that Europe is in chaos, disintegrating, the euro about to disappear. This is wrong," Klaus Regling, the head of the EU's temporary rescue mechanism, said in a speech in Singapore.
Reflecting global concerns about the eurozone crisis, the US Treasury announced late on Tuesday that it would dispatch Undersecretary for International Affairs Lael Brainard to Europe this week to discuss the turmoil.
Brainard will visit Madrid, Berlin and Paris to discuss "economic developments in Europe" and the "shared agenda on strong and sustainable growth," the Treasury said in a brief statement.
G20 sources told Reuters that deputy finance ministers from the group of major rich and developing nations had discussed the financial situation in Europe on Monday in a previously arranged conference call, although they described the call as routine.
Citigroup Chief Economist Willem Buiter warned in a research note this week that the eurozone turmoil may be the "opening act" of a global sovereign debt crisis that could soon infect the US and Japan.
A day after investors pushed the risk premiums on Spanish and Italian government debt to new highs, the bond spreads of countries on Europe's southern periphery narrowed and the euro steadied on speculation that the European Central Bank could unveil new anti-crisis steps at a meeting yesterday.
But calmer markets failed to remove deep worries about contagion in the 16-nation euro bloc that has pushed European policy makers onto the defensive and forced them to search for new ways to stabilize their 12-year-old currency project.
An 85 billion-euro (US$110.7 billion) EU/IMF rescue of Ireland last weekend and public reassurances from European politicians and central bankers have been largely ignored by investors, who have targeted Portugal, Spain and Italy, intent on testing the European Union's resolve and crisis-fighting resources.
"You may think and you sometimes read that Europe is in chaos, disintegrating, the euro about to disappear. This is wrong," Klaus Regling, the head of the EU's temporary rescue mechanism, said in a speech in Singapore.
Reflecting global concerns about the eurozone crisis, the US Treasury announced late on Tuesday that it would dispatch Undersecretary for International Affairs Lael Brainard to Europe this week to discuss the turmoil.
Brainard will visit Madrid, Berlin and Paris to discuss "economic developments in Europe" and the "shared agenda on strong and sustainable growth," the Treasury said in a brief statement.
G20 sources told Reuters that deputy finance ministers from the group of major rich and developing nations had discussed the financial situation in Europe on Monday in a previously arranged conference call, although they described the call as routine.
Citigroup Chief Economist Willem Buiter warned in a research note this week that the eurozone turmoil may be the "opening act" of a global sovereign debt crisis that could soon infect the US and Japan.
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