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| Version 6 | Version 7 |
|---|---|
| Stock markets fall on debt fears | Stock markets fall on debt fears |
| (about 6 hours later) | |
| Shares in Asia have fallen as investors reflected fears in Europe that the region's debt crisis could spread to Italy and Spain. | |
| Stocks also fell in Tokyo after the Bank of Japan downgraded its estimate for economic growth this year, following the devastation caused by the earthquake and tsunami in March. | |
| European stock markets fell heavily on Monday, especially Italy, where the market in Milan lost 4%. In New York the Dow Jones Industrial Average closed 1.2% lower. | |
| On Monday eurozone finance ministers, meeting to discuss a new aid plan for Greece, said they were ready to enhance "the flexibility and the scope" of a 400bn-euro (£353bn) rescue fund. | |
| "Ministers reaffirmed their absolute commitment to safeguard financial stability in the euro area," the group said in a statement after eight hours of talks. | "Ministers reaffirmed their absolute commitment to safeguard financial stability in the euro area," the group said in a statement after eight hours of talks. |
| "To this end, ministers stand ready to adopt further measures that will improve the euro area's systemic capacity to resist contagion risk, including enhancing the flexibility and the scope of the EFSF (European Financial Stability Facility), lengthening the maturities of the loans and lowering the interest rates, including through a collateral arrangement where appropriate. | "To this end, ministers stand ready to adopt further measures that will improve the euro area's systemic capacity to resist contagion risk, including enhancing the flexibility and the scope of the EFSF (European Financial Stability Facility), lengthening the maturities of the loans and lowering the interest rates, including through a collateral arrangement where appropriate. |
| "Proposals to this effect will be presented to ministers shortly." | "Proposals to this effect will be presented to ministers shortly." |
| 'Effective solutions' | 'Effective solutions' |
| Ministers discussed how, and by how much, banks and other financial institutions can contribute to a new rescue package for Greece. | Ministers discussed how, and by how much, banks and other financial institutions can contribute to a new rescue package for Greece. |
| Asked about specific details of dealing with Greece, Jean-Claude Juncker, the head of the eurozone group of finance ministers, said: "The reason why we are not more specific is that it is late." | Asked about specific details of dealing with Greece, Jean-Claude Juncker, the head of the eurozone group of finance ministers, said: "The reason why we are not more specific is that it is late." |
| The European Central Bank also confirmed its opposition to any selective default of Greece. According to the group of 17 EU finance ministers "The ECB confirmed its position, reaffirmed by its Governing Council last Thursday, that a credit event or selective default should be avoided." | The European Central Bank also confirmed its opposition to any selective default of Greece. According to the group of 17 EU finance ministers "The ECB confirmed its position, reaffirmed by its Governing Council last Thursday, that a credit event or selective default should be avoided." |
| Meanwhile, Greece's Prime Minister, George Papandreou, called for a comprehensive solution to his country's debt problems. | Meanwhile, Greece's Prime Minister, George Papandreou, called for a comprehensive solution to his country's debt problems. |
| "I believe that we must begin, as soon as possible, convening a series of closed working meetings of leaders, advisers, and technical experts that can offer effective, possibly even far-reaching solutions in place of one-off and ad hoc responses," he said in a letter to Jean-Claude Juncker. | "I believe that we must begin, as soon as possible, convening a series of closed working meetings of leaders, advisers, and technical experts that can offer effective, possibly even far-reaching solutions in place of one-off and ad hoc responses," he said in a letter to Jean-Claude Juncker. |
| "I thus believe it is time now to address our fundamental problems head on and produce a comprehensive package of solutions that clearly signals our determination not to see the European project further damaged or destroyed." | "I thus believe it is time now to address our fundamental problems head on and produce a comprehensive package of solutions that clearly signals our determination not to see the European project further damaged or destroyed." |
| Addressing contagion fears | Addressing contagion fears |
| Earlier, European bourses had seen big losses. In France the Cac index fell 2.7%, Germany's Dax fell 2.3%, and London's FTSE 100 was down 1%. | Earlier, European bourses had seen big losses. In France the Cac index fell 2.7%, Germany's Dax fell 2.3%, and London's FTSE 100 was down 1%. |
| US stocks also had their worst day in nearly a month, with the Dow Jones in New York falling 1.2% and the Nasdaq shedding 2%. | US stocks also had their worst day in nearly a month, with the Dow Jones in New York falling 1.2% and the Nasdaq shedding 2%. |
| Banking shares across Europe were hit hard, with Italy's Unicredit down 6.3% and Intesa Sanpaolo down 7.7%. | Banking shares across Europe were hit hard, with Italy's Unicredit down 6.3% and Intesa Sanpaolo down 7.7%. |
| The euro fell, while borrowing costs for Spain and Italy rose to 12-year euro-era highs. | The euro fell, while borrowing costs for Spain and Italy rose to 12-year euro-era highs. |
| Mr Juncker acknowledged that markets were concerned about the risk of contagion. | Mr Juncker acknowledged that markets were concerned about the risk of contagion. |
| "We are fully aware that Italy and other countries are in the focus of part of the financial markets and we do believe that this general statement, because this statement is not only limited to Greece, is offering adequate responses to the questions financial markets may have," he said. | "We are fully aware that Italy and other countries are in the focus of part of the financial markets and we do believe that this general statement, because this statement is not only limited to Greece, is offering adequate responses to the questions financial markets may have," he said. |
| "We didn't look in specific terms at what you have called the 'Italian crisis'. We've looked at things in an overall way, presenting the instruments we have. We think that those instruments are able to stop things spreading within the eurozone." | "We didn't look in specific terms at what you have called the 'Italian crisis'. We've looked at things in an overall way, presenting the instruments we have. We think that those instruments are able to stop things spreading within the eurozone." |
| Signal needed | Signal needed |
| Ahead of the finance ministers' meeting, Spanish Prime Minister Jose Luis Rodriguez Zapatero called for a "swift and precise clarification" of how a second bail-out for Greece might work. | Ahead of the finance ministers' meeting, Spanish Prime Minister Jose Luis Rodriguez Zapatero called for a "swift and precise clarification" of how a second bail-out for Greece might work. |
| The German Chancellor Angela Merkel also urged speedy action on new aid for Greece, and added that Italy needs to send a "very important signal" by passing an austerity budget. | The German Chancellor Angela Merkel also urged speedy action on new aid for Greece, and added that Italy needs to send a "very important signal" by passing an austerity budget. |
| Italy's Finance Minister Giulio Tremonti has proposed 48bn euros ($67bn; £42bn) in budget cuts over three years and aims to cut the deficit to zero by 2014 from this year's 3.9% of gross domestic product. | Italy's Finance Minister Giulio Tremonti has proposed 48bn euros ($67bn; £42bn) in budget cuts over three years and aims to cut the deficit to zero by 2014 from this year's 3.9% of gross domestic product. |
| However, financial markets were unsettled by remarks from Prime Minister Silvio Berlusconi, who indicated in a newspaper interview that the austerity plan might not have full cabinet support. | However, financial markets were unsettled by remarks from Prime Minister Silvio Berlusconi, who indicated in a newspaper interview that the austerity plan might not have full cabinet support. |
| In a sign that investors are growing more risk averse, the yield on Italian 10-year bonds jumped to 5.6% from 5.3%. Meanwhile, yields on 10-year bonds issued by the Spanish Government rose to 5.9%, from 5.7%. | In a sign that investors are growing more risk averse, the yield on Italian 10-year bonds jumped to 5.6% from 5.3%. Meanwhile, yields on 10-year bonds issued by the Spanish Government rose to 5.9%, from 5.7%. |