August 7, 2011 / 6:45 PM / in 6 years

UPDATE 1-Berlin, Paris stress commitment to European reforms

 * Berlin, Paris issue joint statement to reassure markets
 * Say to obtain parliamentary approval by end Sept
 * Say Italy, Spain reforms key for restoring confidence
 (Adds details, quotes, background)
 By Sarah Marsh and Astrid Wendlandt
 BERLIN/PARIS, Aug 7 (Reuters) - Germany and France on
Sunday reiterated their commitment to implementing the
decisions of last month's emergency EU summit, in an effort to
restore confidence in turbulent financial markets.
 "They stress the importance that parliamentary approval
will be obtained swiftly by the end of September in their two
countries," German Chancellor Angela Merkel and French
President Nicolas Sarkozy said in a joint statement.
 Twin debt crises in Europe and the United States are
causing global market turmoil and stoking fears of the rich
world sliding back into recession. [ID:nL3E7J700K]
 Before troubled financial markets reopened on Monday,
Merkel and Sarkozy underlined the importance of the decisions
made at the European summit on July 21.
 They would allow the euro zone's bailout fund to buy bonds
of debt-stricken states on the secondary market "on the basis
of an ECB analysis ...and on the basis of a decision by mutual
agreement of the member states, in order to avoid contagion."
 After a week that saw $2.5 trillion wiped off world stock
markets, political leaders are under searing pressure to
reassure investors that Western governments have both the will
and ability to reduce their huge and growing public debt
 Worries are growing that Spain and Italy will be the next
victims of the euro zone debt crisis.
 Merkel and Sarkozy said they welcomed the recent budget
consolidation measures by Italy and Spain, stressing that
"complete and speedy implementation of the announced measures
is key to restor(ing) market confidence."
 Italian Prime Minister Silvio Berlusconi announced new
measures on Friday to speed up deficit reduction and hasten
economic reforms.
 The European Central Bank faced a decision on Sunday
whether to buy Italian bonds to try to prevent the euro zone
debt crisis from widening. [ID:nL6E7J707B]=
 For the full text of the statement issued on Sunday, please
click on [ID:nL6E7J70E0]
 (Editing by Marguerita Choy)

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