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Market worries before EU debt meeting

Tuesday, July 19, 2011 - 02:07

July 19 - Investors continue to worry about the euro zone sovereign debt crisis spreading to Italy and Spain as their bond yields rise ahead of the European leaders' summit on Thursday. Joanna Partridge reports.

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Greek taxi drivers take to the streets of Athens once again. They're calling on the government to change its mind about a controversial new law which deregulates their industry. Athens is introducing reforms as its comes under increasing pressure to get its affairs in order, while international lenders are working on its second bailout. The euro zone's debt problems began in Greece, but they're now threatening to spread to larger economies like Italy and Spain, in what's become the euro's biggest crisis in its 12 years of existence, says Francois Chaulet from Montsegur Finance. SOUNDBITE: Francois Chaulet, Associate Director of Montsegur Finance, saying (French): "The difficulty is containing the fire which is touching the peripheral countries of the euro zone, so it doesn't affect the countries which would bring the whole system into difficulty. And if we're talking about Italy and Spain, then we're talking about systemic risks." Euro zone leaders will try to agree on the second rescue package for Greece and a strategy to stop contagion when they meet on Thursday. Some analysts think they'll suggest raising extra money for Greece with a bank tax, as a way of avoiding a Greek default. Financial markets are on edge ahead of the meeting and investors have flocked to the safe haven of gold - pushing it to a record high. German Chancellor Angela Merkel, speaking at a joint conference with the Russian President, says the meeting won't resolve Greece's debt struggles. SOUNDBITE: German Chancellor Angela Merkel, saying (German): "Whoever takes political responsibility seriously knows that such a spectacular step won't happen, not tomorrow, or on Thursday, but that it's simply about producing a controlled and dominating process of steps and measures, a process which has one single goal, namely to get to the root of this problem. This means dealing with the issue of debt reduction and with the issue of increasing competitiveness." Merkel's remarks sent the euro lower against the dollar. These comments also won't calm the nerves of investors, who claim the European leaders have not taken control of the debt crisis. Joanna Partridge, Reuters

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Market worries before EU debt meeting

Tuesday, July 19, 2011 - 02:07