“European leaders grappling with political deadlock in Italy and spiraling unemployment in Francewill turn to a financial rescue for Cyprus in an effort to stave off a return of market turmoil over the debt crisis.
European Union leaders will meet for a March 14-15 summit in Brussels to discuss terms for Cyprus, including the island nation’s debt sustainability and possibly imposing losses on depositors. That comes as Italy struggles to form a government after an inconclusive Feb. 24-25 election and as concern over the French economy mounts with unemployment at a 13-year high.
“We haven’t turned the corner yet, but we’re on a good path,” German Finance Minister Wolfgang Schaeuble told Austria’sDer Standard newspaper in a March 8 interview. “It would be wrong at this point to change course.”
The European Central Bank’s pledge to intervene in bond markets and the prospect of an economic recovery by the end of the year are holding the three-year-old sovereign debt crisis in check. Still, gridlock in Italy has raised the specter of renewed turmoil in the euro area’s third-largest economy, while growth has ground to a halt in France, the second-largest.
European bonds held steady last week, with Spanish debt advancing for a fourth week and Italian yields sliding. Spanish10-year yields declined for the ninth straight day, sliding 3 basis points to 4.73 percent at 9:12 a.m. in Madrid. Italian yields with the same maturity climbed 3 basis points to 4.63 percent.
