October 13, 2008

Update: Eurozone Leaders Hold Emergency Summit on Financial Crisis

Update: Eurozone leaders hold emergency summit on financial crisis

PARIS, Oct. 12 (Xinhua) -- Leaders from the eurozone countries met in Paris on Sunday for their first ever summit in an urgent bid to seek a joint response to the spreading financial crisis.

"This meeting's purpose is to draw up a joint action plan for the euro area member states and the European Central Bank (ECB) in response to the current financial crisis," the French government, which holds the European Union (EU) rotating presidency, said in a statement.

Speaking ahead of the summit, French President Nicolas Sarkozy, appeared hopeful for an ambitious plan at the eurozone level.

"I expect an ambitious and coordinated plan that will bring solutions," Sarkozy said. "On Wednesday we will try to pull all of Europe in the same coordinated and ambitious direction."

Leaders from the whole EU were scheduled to start a regular meeting in Brussels on Wednesday, with the financial crisis set to top the agenda.

"I expect Europe to speak with a single voice," Sarkozy added.

The first eurozone summit brought together leaders of the 15 countries that have adopted the euro as their currency. They were also joined by the European Commission President Jose Manuel Barroso and European Central Bank President Jean-Claude Trichet.

It came after the European markets underwent a rarely turbulent week despite furious efforts by individual countries to contain the financial crisis.

The financial crisis, which originated in the United States, has taken its toll on Europe in the latest two weeks.

Despite furious efforts by individual European countries to bail out their troubled banks and the injection of billions of euros into the financial system by the Frankfurt-based ECB, the past week saw the most turbulent days in the history of European markets.

Europe's major markets plummeted for a fifth straight day on Friday, with the FTSEurofirst 300 index of top European shares falling 7.8 percent on the day, down by 22 percent for the whole week, which was its worst ever performance.

Panic in the markets came partly from lack of a joint European response to the financial crisis. So far, European countries have been fighting the crisis on their own rather than working on a trans- national plan.

Arriving for the summit, German Chancellor Angela Merkel said it would give a much-needed boost to the financial markets after a dark week.

"I think that the meeting today will send a very important signal to the markets," she said.

Merkel said the goal of the meeting "is to define a coordinated common procedure for the euro zone that enables us in the next few days to take national steps to stabilize the financial market."

"But measures that do not discriminate against individual member states," she added.

Germany has been against a proposal to set up Europe-wide bailout fund modeled after the U.S. rescue plan to help troubled banks. Instead, Berlin insisted on coordination of national measures and is working on its own rescue package.

A German Finance Ministry spokesman said Sunday that Berlin was scheduled to announce a massive rescue package to salvage its financial system as early as Monday.

Media reports said the German package would be more than half the size of the U.S. bailout plan and was similar to the British one.

The British government announced on Oct. 8 a massive rescue plan which would inject 50 billion pounds (about 87 billion U.S. dollars) into its banks and to provide guarantee totaling 250 billion pounds for interbank lending.

Britain has urged other EU countries to follow its suit so as to encourage banks to start lending to each other, but the call has so far received cool response.

Attending the summit, European Commission President Jose Manuel Barroso repeated his call for a coordinated European response.

"It is very important that this response is coordinated and coherent. That is why we are going to have this meeting today in the framework of the euro zone. We hope this will be a basis for a common decision next Wednesday," Barroso said.

The eurzone summit came only days away from a regular EU summit starting in Brussels on Oct. 15, which highlighted urgency of the current situation. ( 1 U.S. dollar = 0.5747 euro)

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