29 November 2011 Last updated at 06:31 ET Share this pageEmail
Eurozone finance ministers to discuss bailout fund
Eurozone finance ministers will meet in Brussels later to discuss ways to expand the region's bailout fund, seen as key to preventing more countries being sucked into the debt crisis.
They are also expected to discuss releasing more bailout funds to Greece.
Leaders had hoped to expand the European Financial Stability Facility to about 1tn euros ($1.3tn; £860bn).
This is now seen as unlikely, with some analysts fearing the total agreed will fall short of market expectations.
One way ministers hope to boost the value of the fund is to offer insurance on up to 30% of the value of sovereign bonds as a way of boosting demand for government debt.
Increasing the power of the EFSF from its current lending capacity of 440bn euros is seen by investors as vital to combating the debt crisis.
While current bailout provisions were adequate for countries such as Greece, Portugal and the Irish Republic, much greater firepower is needed in case larger economies such as Italy and Spain need help.
Fears that Italy in particular may need financial assistance were raised on Tuesday when the government was forced to pay much higher interest rates.
In an auction of 10-year bonds, Italy had to pay a rate of 7.6%, compared with 6.1% at a similar auction last month. Three-year bonds carried a yield of 7.9% compared with 4.9% a month ago. Such high interest rates are seen as unsustainable.
The sale raised 7.5bn euros, which was towards the top end of the target range.
Strong leadership
European leaders are coming under increasing pressure to agree a decisive plan of action to resolve the debt crisis.
On Monday, US President Barack Obama called for bold action while Poland's Foreign Minister Radoslaw Sikorski urged Germany, the eurozone's largest economy, to take a stronger lead.
"You know full well nobody else can do it," he said.
Also on Monday, France and Germany proposed closer ties between eurozone economies, including binding limits on borrowing. These plans were well received by investors, who hope closer union would give policymakers the tools to solve the debt crisis.
European markets rallied on the announcement, and continued to climb modestly on Tuesday.
Germany's Dax index was up 0.7%, France's Cac 40 climbed 0.6%, while the UK's FTSE 100 was 0.3% higher in late morning trading.
http://www.bbc.co.uk/news/business-15933685
Eurozone finance ministers to discuss bailout fund
Eurozone finance ministers will meet in Brussels later to discuss ways to expand the region's bailout fund, seen as key to preventing more countries being sucked into the debt crisis.
They are also expected to discuss releasing more bailout funds to Greece.
Leaders had hoped to expand the European Financial Stability Facility to about 1tn euros ($1.3tn; £860bn).
This is now seen as unlikely, with some analysts fearing the total agreed will fall short of market expectations.
One way ministers hope to boost the value of the fund is to offer insurance on up to 30% of the value of sovereign bonds as a way of boosting demand for government debt.
Increasing the power of the EFSF from its current lending capacity of 440bn euros is seen by investors as vital to combating the debt crisis.
While current bailout provisions were adequate for countries such as Greece, Portugal and the Irish Republic, much greater firepower is needed in case larger economies such as Italy and Spain need help.
Fears that Italy in particular may need financial assistance were raised on Tuesday when the government was forced to pay much higher interest rates.
In an auction of 10-year bonds, Italy had to pay a rate of 7.6%, compared with 6.1% at a similar auction last month. Three-year bonds carried a yield of 7.9% compared with 4.9% a month ago. Such high interest rates are seen as unsustainable.
The sale raised 7.5bn euros, which was towards the top end of the target range.
Strong leadership
European leaders are coming under increasing pressure to agree a decisive plan of action to resolve the debt crisis.
On Monday, US President Barack Obama called for bold action while Poland's Foreign Minister Radoslaw Sikorski urged Germany, the eurozone's largest economy, to take a stronger lead.
"You know full well nobody else can do it," he said.
Also on Monday, France and Germany proposed closer ties between eurozone economies, including binding limits on borrowing. These plans were well received by investors, who hope closer union would give policymakers the tools to solve the debt crisis.
European markets rallied on the announcement, and continued to climb modestly on Tuesday.
Germany's Dax index was up 0.7%, France's Cac 40 climbed 0.6%, while the UK's FTSE 100 was 0.3% higher in late morning trading.
http://www.bbc.co.uk/news/business-15933685