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Meeting fails to reassure markets

Wednesday, August 17, 2011 - 02:07

Aug. 17 - A highly anticipated meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy fails to calm markets over the euro zone debt crisis. Kirsty Basset reports

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European markets fell early on Wednesday, with investors underwhelmed by the outcome of a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy. While the two leaders unveiled plans for closer euro zone integration, many were disappointed that the size of the European rescue fund wasn't increased - and that calls for a common euro bond - seen by some as the best way for leaders to get ahead of the curve - were for now, rejected. Robert Halver is an analyst from Baader bank. (SOUNDBITE) (English) ROBERT HALVER FROM BAADER BANK AG, SAYING: "In the long term, it's a wonderful thing to have this perspective of a European common government, definitely, but there's a long way to go. I guess in the short term it's more important to have (cooperation) to calm the financial markets because it's necessary to keep Italy and Spain in the euro zone. A long provision is wonderful but we have to pay attention to short term solutions." One unexpected proposal from the summit was to tax financial transactions, which was met with a lukewarm response from the German Banking Association, among others, who said it would lead to a distortion of competition - and wouldn't calm markets. Chris Hughes is from Reuters Breaking Views. (SOUNDBITE)(English) REUTERS BREAKING VIEWS ASSISTANT EDITOR, CHRIS HUGHES SAYING: "Slapping a tax on financial transactions, which puts euro zone, European financial firms at a disadvantage, I mean it's not going to solve the crisis, it's totally irrelevant to the crisis and very unhelpful." Other proposals included the election of a president to represent the euro zone, and a common corporate tax base and tax rate in France and Germany from 2013. Disappointment over the meeting's failure to provide concrete measures for funding weaker euro zone states increased investors' appetite for safe-haven assets such as German government bonds. Kirsty Basset, Reuters.

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Meeting fails to reassure markets

Wednesday, August 17, 2011 - 02:07