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Markets await outcome of key meeting

Monday, August 15, 2011 - 02:37

Aug. 15 - Germany rejects calls for common eurobonds, ahead of a key euro zone meeting in Paris between German Chancellor Angela Merkel and French President Nicolas Sarkozy. Kirsty Basset reports.

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European markets closed flat ahead of a key meeting on the euro zone debt crisis between German Chancellor Angela Merkel and French President Nicolas Sarkozy. Merkel and Sarkozy meet in Paris on Tuesday and are expected to come up with initiatives to restore confidence in the markets. One issue they've ruled out discussing is the introduction of a common euro zone government bond, despite calls in support of the idea from the head of Germany's leading export association and Italy's Economy Minister Giulio Tremonti. Germany has always been against common eurobonds, saying they don't make sense. German Economy Minister, Philipp Roesler. (SOUNDBITE) (German) GERMAN ECONOMY MINISTER, PHILIPP ROESLER, SAYING: "We still think that eurobonds are the wrong way (to go). It would punish those countries that were doing their homework, which are economically sound, like Germany, which enjoy a good credit rating and therefore pay low interest rates. And Eurobonds would mean that everyone has the same interest burden because the conditions for financing would be the same. That would punish the 'good' countries, and we don't want that for Germany, or for Europe." German officials have warned not to expect a major breakthrough from tomorrow's meeting. Rabobank analyst Jane Foley says she's not expecting concrete measures to come from it - and believes the euro zone crisis will get worse, before it gets better. (SOUNDBITE)(English) RABOBANK SENIOR CURRENCY STRATEGIST JANE FOLEY SAYING: "We think it needs pinnacles of each crisis to bring politicians the ammunition they need to convince their electorates to move ahead with the reform for the euro zone as a whole so we do think there will be an intensification of the crisis." Whatever the meeting's outcome, many will be looking for strong economic leadership. That's something which World Bank head Robert Zoellick says has been missing during events of the last couple of weeks in the United States and Europe. Speaking at a weekend dinner in Sydney, he said leaders need to get ahead of their problems. (SOUNDBITE) (English) HEAD OF THE WORLD BANK, ROBERT ZOELLICK, SAYING: "The process with dealing with the sovereign debt, but more than the sovereign debt some of the competitive issues have been done a day late and a euro short I guess I'd say." Investors will also be watching for euro zone second-quarter GDP data out Tuesday, for more clues on the health of the global economy. Kirsty Basset, Reuters.

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Markets await outcome of key meeting

Monday, August 15, 2011 - 02:37