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Monday, July 11, 2011

Eurozone ministers meeting to discuss debt concerns

Senior European Union officials are due to meet to discuss the eurozone's continuing debt woes.
The talks in Brussels were arranged by European Council president Herman Van Rompuy. His spokesman denied that it was a crisis meeting.
Reports say the meeting was organised because of worries that Italy could be drawn into the debt crisis.
It will be followed by a planned meeting of eurozone finance ministers.
The finance ministers are due to discuss a second financial support package for Greece.


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Greece's current bail-out funds, agreed last year, total 110bn euros ($157bn; £98bn), but the government requires more funds to prevent it defaulting on its debt payments in the future.
Widening gap Mr Rompuy's spokesman said the talks with fellow European Union officials were arranged to "co-ordinate positions as we have done in the past".
Also due to attend are the head of eurozone finance ministers, Jean-Claude Juncker, European Central Bank president Jean-Claude Trichet, European Commission President Jose Manuel Barroso and EU Economics Affairs Commissioner Olli Rehn.

Start Quote

Italy must itself send an important signal by agreeing on a budget that meets the need for frugality and consolidation”
End Quote Angela Merkel German chancellor
On Monday, shares in Italy's largest bank, Unicredit Spa, were down 0.2%, following after Friday's 7.9% fall.
The main Italian share index had also lost further ground, being 2.3% lower in afternoon trading.
The yield on Italian bonds continued to rise as well, since investors are less willing to purchase them.
The spread of Italy's 10-year government bond yield over the German equivalent hit 2.68%, its highest level since the euro was introduced.
As a result, the yield on Italian bonds reached 5.45%, which analysts say is close to levels that could put pressure on Italy's public finances.
German Chancellor Angela Merkel said on Monday that she had "full confidence" that the Italian government would pass an austerity budget to help cut its deficit.
"Italy must itself send an important signal by agreeing on a budget that meets the need for frugality and consolidation," she said.
"I have full confidence that the Italian government will pass exactly this kind of budget."
Also on Monday, EU Internal Markets Commissioner Michel Barnier called for limits on credit rating agencies being able to rule on a nation's debt, if the country in question is gaining EU bail-out funds.
However, analysts questioned whether such a move would be possible.
EU leaders have criticised credit rating agencies for downgrading the debts of Portugal and Greece, which they say unfairly adds to those countries' financial woes.
BBC

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