Europe. French President Nicolas Sarkozy, German Chancellor Angela
European shares fell Thursday as the message from eurozone debt crisis talks failed to ease market worries.
French President Nicolas Sarkozy,
German Chancellor Angela Merkel and new Italian Prime Minister Mario Monti met in Strasbourg Thursday and pledged to do whatever it took to save the euro.
However, their commitments, which focused on the medium to long term, disappointed a market awaiting short-time solutions.
NO CONCESSIONS MADE
Sarkozy told a press conference following the talks that France, Germany and Italy were determined to do everything possible to ensure the euro\'s durability. He also said Paris and Berlin had proposed to change EU treaties to tighten budget discipline in the 17-nation euro zone.
Monti reiterated Italy\'s goal of achieving a balanced budget by 2013, saying he was favorable toward the \"solid fiscal union\" for Europe advocated by Merkel.
The market has been expecting a more aggressive role for the European Central Bank (ECB), to relieve the situation and many analysts have backed the idea of issuing euro bonds to stem the debt crisis. However, Germany rejected both of these proposals.
Merkel reaffirmed her position Thursday against giving the ECB a bigger role in easing the crisis.
She said the EU treaty bars the ECB from acting as a lender of last resort. Any \"eventual modifications to the treaties will not concern the duties of the ECB,\" she said.
Veronika Pechlaner, a fund manager with the Ashburton European equity fund, said: \"The comments about the ECB were a clear message to the market not to expect anything in the short term.\"
Merkel also reiterated her opposition to introducing joint euro bonds, saying the bonds would not solve \"structural flaws\" with the euro.
Germany fears that introducing euro bonds would drive up its long-enjoyed low borrowing costs and it would then be forced to pay higher rates to tap bond markets.
NO CLEAR MESSAGE SENT
The meeting came amid fresh signs that the crisis is spreading: a failed German bond auction on Wednesday and a downgrade of Portugal\'s rating to junk status. However, with the absence of any breakthrough, the talks failed to give the market a clear lead.
European stock markets closed mostly lower, despite a technical rebound in the morning session.
London\'s FTSE 100 index dropped 0.24 percent to 5127.57 points. The CAC-40 index in Paris ended slightly down at 2,822.25 points while the DAX 30 index in Frankfurt shed 0.54 percent to 5,428.11 points.
Madrid\'s market was down 0.23 percent after choppy trade. Stocks in Portugal were down 0.9 percent.
As European stocks resumed their losing streak, the bond market attacked the debt-ridden countries. Yields on Italian 10-year bonds jumped back above 7 percent Thursday, widely seen as unbearable in the long term.
BNP Paribas Bank debt strategist Patrick Jacq said: \"European leaders promised today better coordination of eurozone economic policy. In other words, on medium-term decisions that produce results in the long term.\"
\"However, the market is looking for short-term solutions and essentially for a greater role for the ECB. This meeting was rather disappointing,\" he said.