Opinion

Paul Taylor

Chinese demand could hasten euro zone bonds

Paul Taylor
Sep 19, 2011 08:27 UTC

PARIS (Reuters) – While European politicians battle over whether to issue common euro zone bonds to help resolve the currency area’s sovereign debt crisis, China could influence the outcome.

Europe is Beijing’s biggest export market and Chinese leaders have a declared interest in avoiding a financial meltdown in the European Union that could trigger a world recession.

They want to diversify their $3.2 trillion in foreign exchange reserves away from U.S. Treasury bonds and started long before Standard & Poor’s downgraded U.S. debt last month due to Washington’s political gridlock over reducing its deficit.

“European countries are facing sovereign debt problems. We’ve said countless times that China is willing to give a helping hand, and we’ll continue to invest there,” Premier Wen Jiabao told a World Economic Forum conference last week.

But he cautioned that the major developed economies should put their fiscal houses in order, and urged Europe to take a reciprocal step by recognising China as a market economy — giving Beijing better protection against EU anti-dumping action.

Greek default jitters hammer French banks, euro

Paul Taylor
Sep 12, 2011 11:10 UTC

PARIS, Sept 12 (Reuters) – Growing fears of a Greek default
sent a hurricane through heavily exposed French banks on Monday
and hit the euro as investor confidence in the European currency
area’s ability to surmount a sovereign debt crisis ebbed.

Shares in Societe Generale , BNP Paribas
and Credit Agricole slumped by more than 10 percent
amid expectations of an imminent downgrade by credit ratings
agency Moody’s, due largely to their exposure to Greek bonds.

The shock resignation of European Central Bank chief
economist Juergen Stark last Friday, and weekend comments by
German politicians suggesting Athens may have to default and be
“suspended” from the euro zone, drove the euro to a
10-year low against the yen and a 7-month low against the
dollar.

Stark ECB exit hits shaky euro zone at worst time

Paul Taylor
Sep 12, 2011 06:38 UTC

PARIS (Reuters) – The resignation of the top German official at the European Central Bank could hardly have come at a worse time for euro zone policymakers as they grope for a way out of the deepest crisis in the single currency’s 12-year history.

The ECB is the one institution that has kept the euro zone afloat in the sovereign debt crisis and prevented a bond market meltdown. The European Union has no federal government or common fiscal authority and speaks with many dissonant voices.

Juergen Stark’s departure from the ECB’s Executive Board in despair at the policy of buying government bonds to prevent the crisis spreading comes as policymakers in Berlin and beyond are preparing for the growing possibility of a Greek default.

Analysis: Stark ECB exit hits shaky euro zone at worst time

Paul Taylor
Sep 11, 2011 09:38 UTC

PARIS (Reuters) – The resignation of the top German official at the European Central Bank could hardly have come at a worse time for euro zone policymakers as they grope for a way out of the deepest crisis in the single currency’s 12-year history.

The ECB is the one institution that has kept the euro zone afloat in the sovereign debt crisis and prevented a bond market meltdown. The European Union has no federal government or common fiscal authority and speaks with many dissonant voices.

Juergen Stark’s departure from the ECB’s Executive Board in despair at the policy of buying government bonds to prevent the crisis spreading comes as policymakers in Berlin and beyond are preparing for the growing possibility of a Greek default.

Analysis – Euro zone crisis reaches France, turns existential

Paul Taylor
Aug 12, 2011 13:40 UTC

PARIS (Reuters) – It was the week the euro zone debt crisis reached France, one of the twin pillars of the European currency alongside Germany.

As jitters over Paris’ prized top-notch AAA credit rating took hold, President Nicolas Sarkozy returned from the beach to order up new austerity measures. Then panic selling of French bank shares and an abrupt halt to economic growth added to France’s plight.

The sight of the euro zone’s number two economy buffeted by rumours and investor anxiety in the midst of the holiday season raised existential questions about European monetary union that will confront Sarkozy and German Chancellor Angela Merkel when they meet in Paris next Tuesday.

Euro zone crisis reaches France, turns existential

Paul Taylor
Aug 12, 2011 13:40 UTC

PARIS (Reuters) – It was the week the euro zone debt crisis reached France, one of the twin pillars of the European currency alongside Germany.

As jitters over Paris’ prized top-notch AAA credit rating took hold, President Nicolas Sarkozy returned from the beach to order up new austerity measures. Then panic selling of French bank shares and an abrupt halt to economic growth added to France’s plight.

The sight of the euro zone’s number two economy buffeted by rumors and investor anxiety in the midst of the holiday season raised existential questions about European monetary union that will confront Sarkozy and German Chancellor Angela Merkel when they meet in Paris next Tuesday.

Euro zone parliaments seen approving rescue fund powers

Paul Taylor
Aug 9, 2011 14:07 UTC

PARIS, Aug 9 (Reuters) – The euro zone’s financial rescue
fund seems set to win parliamentary approval by mid-October for
expanded powers to help member states in difficulty despite
mounting hostility in northern Europe towards further bailouts.

A Reuters survey suggests new rules allowing
the European Financial Stability Facility to buy bonds on the
secondary market and give precautionary credit lines to
countries before they are shut out of credit markets face few
obstacles in national legislatures with vocal Eurosceptical
minorities.

Goverments in Germany, Austria, Finland, the Netherlands and
Slovakia say they are confident their parliaments will approve a
July 21 agreement by euro zone leaders to widen the scope of the
440-billion-euro EFSF when they resume business in the coming
weeks.

ECB backs Italy, Spain as policymakers pledge action

Paul Taylor
Aug 8, 2011 08:10 UTC

SYDNEY/PARIS, Aug 8 (Reuters) – The European Central Bank
stepped into bond markets on Monday, backing up a pledge to
support Spain and Italy with the aim of averting financial
meltdown in the euro zone, while the G7 and G20 offered soothing
words to investors shaken by a historic downgrade of the U.S.
debt rating.

Spanish and Italian bond yields fell as traders said the ECB
was broadening its bond-buying programme to include debt issued
by the bloc’s third- and fourth-biggest economies, in the latest
effort to staunch Europe’s sovereign debt crisis.

“They’re doing 20 to 25 million (euro) clips and they’re
spreading it around the market,” said a trader. “We expect them
to do billions today.”

Investor fear drowns out ECB, G7 pledges

Paul Taylor
Aug 8, 2011 06:37 UTC

SYDNEY/PARIS, Aug 8 (Reuters) – The European Central Bank
stepped into bond markets on Monday, backing up a pledge to
support Spain and Italy with the aim of averting financial
meltdown in the euro zone, while the G7 and G20 offered soothing
words to investors shaken by a historic downgrade of the U.S.
debt rating.

Spanish and Italian bond yields fell as traders said the ECB
was broadening its bond-buying programme to include debt issued
by the bloc’s third- and fourth-biggest economies, in the latest
effort to staunch Europe’s sovereign debt crisis.

“They’re doing 20 to 25 million (euro) clips and they’re
spreading it around the market,” said a trader. “We expect them
to do billions today.”

Analysis: ECB fumbles between fire hose and sprinkler

Paul Taylor
Aug 8, 2011 05:57 UTC

PARIS (Reuters) – The European Central Bank waved its big fire hose at blazing bond markets, then turned on a puny sprinkler.

Unsurprisingly, the fire refused to go out. Indeed, the flames grew higher, licking the feet of Italy and Spain, the currency area’s third and fourth largest economies.

Three days later, the bank’s governing council decided in an emergency Sunday night conference call to change course abruptly and resort to the big fire hose after all.

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