Euro leaders race against markets clock

AFP | May 9, 2010

Europe's leaders raced against an Asian clock on Sunday, hoping to lift financial markets when they open with a new crisis fund for debt-ridden euro countries and support from their central bankers.

Ahead of emergency finance ministerial efforts on a "watertight" defence against predatory threats to commercial banks and wider economic recovery, European Union officials scrambled to prepare the scope of their latest firewall.

An EU diplomat told AFP that a kind of "bank" would be set up with unused funds from the bloc's budget, which would then serve as "base capital on which to borrow 60 billion euros (76.5 billion dollars) on the bond market."

The source said that would be supported by a "gesture" from the politically independent Eurpean Central Bank, presented as a signal that it would intervene to buy euro governmental debt, what traders and analysts refer to as the 'nuclear' option.

Taken together, the latest bid to stabilise what Italian Prime Minister Silvio Berlusconi has described as a "state of emergency" for the 16 countries wedded in currency union could easily outstrip the unprecedented Greek bailout, due to be transferred to Athens within days.

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