Mar­kets pin hopes on ECB to ease Europe debt cri­sis

The Pak Banker - - International3 -

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

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