Markets edgy after EU makes no new move on debt crisis
BRUSSELS/ LONDON: Tension on European bond markets was undiminished on Tuesday after German and fellow euro zone states resisted IMF calls to do more to quell the currency bloc's debt crisis.
After a five-hour meeting on Monday, the 16 ministers said they would take no new measures to tackle the threat of contagion, arguing the existing emergency fund was sufficient and that a proposal for issuing pan-euro zone bonds had not even been broached.
"We don't have any new decision to announce to you," Jean-Claude Juncker, the chairman of the Eurogroup, told reporters after the talks.
The premium investors demand to hold the bonds of high-debtors Portugal increased in response while Spain's stayed at a high level.
"My gut feeling is that spreads are going to carry on widening for a while yet," said Chris Scicluna, deputy head of economic research at Daiwa Capital Markets.
"Anyone in the market who is expecting someone, somewhere to fund more support for the periphery, whether it be the EFSF or the ECBthey're going to be disappointed." Investors remain on edge about the debt crisis spreading from Greece and Ireland, which have already been granted EU bailouts, to Portugal and possibly Spain.
The expected passing of Ireland's tough austerity budget later on Tuesday may help underpin the market. -Reuters