By Hugo Duncan
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The euro sank for a fourth day and borrowing costs in Spain and Italy soared as European leaders met in Brussels for crisis talks.
The single currency fell as low as $1.2405 against the US dollar as doubts persisted that the 19th EU summit since the meltdown in Greece will stem the financial storm battering the eurozone.
Spain’s crucial 10-year bond yields â€" the amount the government pays to borrow â€" hovered around the 7 per cent danger zone that triggered bailouts in Greece, Ireland and Portugal.
Summit for nothing: The previous 18 meetings 'have had no discernible effect on the crisis', analysts say
Italy was forced to pay punitive rates at its latest debt auction amid fears that Rome will be the next domino to fall. The 10-year bond yield rose to 6.19 per cent.
Chris Beauchamp, market analyst at IG Index, said ‘a sour mood descended on financial markets’ as investors awaited the outcome of the meeting in Brussels.
‘Eighteen such previous summits have had no discernible effect on the crisis, being full of sound and the occasional bit of fury but ultimately signifying little,’ he said. ‘It will probably be the same story with this get-together.’
Italian prime minister Mario Monti warned of disaster if European leaders do not act to drive down borrowing costs in Italy and Spain â€" such as issuing joint debt effectively underwritten by Germany.
He said the deepening crisis could unleash ‘political forces which say let European integration, let the euro, let this or that large country go to hell, which would be a disaster for the whole of the EU’.
His Spanish counterpart Mariano Rajoy also called for action.
‘We are paying rates that are too high to finance ourselves and there are many Spanish public institutions that cannot finance themselves,’ he said.
French President Francois Hollande has also demanded the introduction of eurobonds as well as fresh support for the European banking system and a shift in focus away from austerity to growth.
But German Chancellor Angela Merkel poured scorn on the idea of pooling debt â€" which would put the burden on German taxpayers â€" until countries surrender control of budgets and banks.
European officials are working on a 10-year plan to shore up the crumbling single currency and prevent future crises, including the creation of a European treasury and banking union, but critics warned it would do nothing to calm the current turmoil.
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The party is over, enough of Germany running Europe on behalf of us all and thus making Russia, China and India ever more powerful. Finish this massive collusion between the communist east and Germany destroying southern and western Europe. How about Germany, Russia and China make their own single currency and leave the rest of us to pick up the pieces!
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‘We are paying rates that are too high to finance ourselves and there are many Spanish public institutions that cannot finance themselves,’ he said. Oh shame, perhaps you should start cutting them and start living within your means Mr Rajoy. All you want is someone else's money. You and Monti call for support from the entire EU. The rest of the EU is not in the Eurozone, why would they bankroll Spaniards. Just look at Greece. Took all the Euro money and where has it all gone. You are all screwed and you damn well know it.
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How many more summits do you need to have before you admit 'this ship is sinking'? I for one am totally happy and can't wait for the Euro to fail completely and the EU along with it. I have no desire to live in a soviet union controlled by Germany. THIS IS ENGLAND!
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burn baby burn euro inferno...well its about all these euro trash can do get lushed up and smooze around the bar and wait for the sky to fall in
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