Europe says can weather U.S. recession if it hits
BRUSSELS (Reuters) - Europe is no longer ruling out a U.S. recession but could weather it, finance ministers from the euro zone said on Monday as stock markets tumbled worldwide on fears that things were about to seriously unravel.
"The economic situation in the United States continues to worsen," Jean-Claude Juncker, who chaired talks among finance ministers from the 15 countries of Europe's common currency area, told a news conference.
"Over the last few months, we have ruled out the possibility of a recession in the U.S. but I think today we cannot rule that out completely. The economic situation in the U.S. is in no way comparable to that in Europe or the euro zone," he added.
Juncker voiced confidence in Europe's ability to resist and survive even if the United States went down, and he warned against rash judgments, especially in markets.
"We feel comfortable with our economic situation at the moment. The economic situation in Europe seems to be uncoupled from the situation in the U.S.," he said.
"We need to look at what is rational, irrational, what is part of a process of correction, what is people overreacting."
World stock markets tumbled on Monday on investor fears of a U.S. recession that would drag other economies down too, while investors bailed into safe-haven bonds and currencies.
Others at the euro zone meeting voiced a similar mixture of worry and confidence at a time when U.S. President George W. Bush has called for a vast stimulus package of tax breaks and other fast relief measures to prop up the U.S. economy.
French Economy Minister Christine Lagarde said she believed the European Central Bank would take account in its monetary policy of any marked weakening of the economy in the euro zone.
"If by any chance the economy were to weaken significantly in the euro zone, the ECB would take account of this in its monetary policy, I suppose," she told a news conference.
MELTDOWN
The stock market tumble added a sense of urgency.
"We are worried in the sense that we have to follow every hour," Spanish Economy Minister Pedro Solbes said.
"We hope things aren't as bad as they may look," said Andrej Bajuk, finance minister of Slovenia, a euro zone country that also holds the rotating European Union presidency.
European Economic and Monetary Affairs Commissioner Joaquin Almunia said Monday's market upheaval was logical and he hoped the planned U.S. package would counter possible recession there.
Europe was not as dependent on the United States as in the past, said Almunia and others.
"It seems that markets are considering the possibility of a more pronounced slowdown, even a recession, in the U.S., so it is a logical reaction," Almunia said.
"But I hope they will also pay attention to real information about the economy -- in particular in Europe -- and they will become more quiet."
European Central Bank President Jean-Claude Trichet declined comment as he entered and left the meetings in Brussels.
Spain's Solbes highlighted that Monday was a market holiday in the United States and that made market moves harder to read.
"The situation in Europe is today more volatile than in other conditions. We have a very special day and we should not take (make) excessive, permanent conclusions."
Dutch Finance Minister Wouter Bos stuck to the line that developments were troubling and that a U.S. downturn would affect Europe but that the hit in Europe should be limited.
"There will be an impact on the European economy but it will be moderate," he said.
Before the Brussels talks, France's Lagarde said the rout proved her country and others seeking closer supervision of financial markets were on the right track.
(Writing by Brian Love, editing by Dale Hudson)
