Markets pin hopes on ECB to ease Europe debt crisis
FRANKFURT/BERLIN: The European Central Bank faced pressure on Thursday to take steps to contain the euro zone debt crisis and prevent it affecting the United States and Asia, but was unlikely to announce mass new bond purchases.
Pressure has grown on the ECB to act since last weekend's 85 billion-euro ($110.7billion) EU-IMF rescue of Ireland failed to dispel fears that other countries using the euro, such as Portugal or Spain, could require a bailout.
Suggestions that the ECB could rush through new anticrisis measures, such as expanding its government bond buying, helped the euro stabilize and lifted stock markets. A Spanish government source said EU leaders could hold a summit in the near future to show unity in the face of intense market pressure on the euro zone but a meeting depended on the actions of the ECB. "If the signal from the ECB was insufficient, the need for a meeting of leaders rises. The outcome of the ECB meeting can change things," a government source said.
German Economy Minister Rainer Bruederle said extra liquidity alone would not resolve Europe's debt problems and described the last U.S. fiscal stimulus package as excessive. "Permanently printing money is not the solution," German Economy Minister Bruederle said. "The money presses must not fall into the hands of politicians."
But the ECB could disappoint investors if it decides at its monthly meeting only to continue its current course of action-keeping its liquidity taps for euro zone banks wide openand does no more than hint at more government bond purchases. "The price action ... adds to risk that the market may be disappointed with today's outcome," Citigroup currency and markets strategists said. International Monetary Fund chief Dominique StraussKahn, visiting India, said the situation in Europe was "serious" and the IMF was ready to provide financial and technical support to member states if needed. -Reuters