“European finance chiefs will seek to win back crisis-management momentum to navigate through emerging political pitfalls after markets signaled last week that the three-year crisis is far from over.
Ministers from the 17-member euro area meet in Brussels today to discuss aid to Cyprus and Greece as a tightening election contest in Italy and a political scandal in Spain disrupt market calm. Group of 20 finance chiefs and central bankers will gather in Moscow Feb. 15-16.
“We don’t know yet how we’re going to get out of the crisis,”Wolfgang Franz, the chairman of Chancellor Angela Merkel’s council of economic advisers, told Welt am Sonntag. “If the crisis is a marathon, we’ve got two-thirds of the course behind us. But the last third is always the hardest.”
European Union leaders who last week reached a seven-year budget agreement that for the first time cuts spending will look ahead to Italy’s Feb. 24-25 elections as polls show the vote might fail to deliver a governing majority. European stocks last week posted a second weekly drop as investor concern about policy roadblocks in Italy and Spain revived.
Yields on Italian 10-year bonds climbed to a year-to-date high of more than 4.5 percent as former Premier Silvio Berlusconinarrowed the lead of front-runner Pier Luigi Bersani. The euro’s climb was broken last week, falling 2 percent against the U.S. dollar to $1.3365, after European Central Bank President Mario Draghi voiced concern that euro strength could hamper the recovery. The currency was at $1.3373 at 9:45 a.m. in Frankfurt.
