MARKETS EDGY AFTER EU MAKES NO NEW MOVE ON DEBT CRISIS
LONDON : Tension on European bond markets was undiminished on Tuesday after German and fellow euro zone states resisted International Monetary Fund's calls to do more to quell the currency bloc's debt crisis.
After a five-hour meeting on Monday, the 16 ministers said they would take no new measures to tackle the threat of contagion, arguing the existing emergency fund was sufficient and that a proposal for issuing pan-euro zone bonds had not even been broached.
'We don't have any new decision to announce to you,' Jean-Claude Juncker, the chairman of the Eurogroup, told Reuters on Tuesday.
According to a Reuters, the premium investors demand to hold the bonds of high-debtors Portugal increased in response while Spain's stayed at a high level.
The Deputy Head, Economic Research, Daiwa Capital Markets, Mr.Chris Scicluna, said, 'My gut feeling is that spreads are going to carry on widening for a while yet.
'Anyone in the market who is expecting someone, somewhere to fund more support for the periphery, whether it be the EFSF or the ECB — they're going to be disappointed,' he added.
Investors remain on edge about the debt crisis spreading from Greece and Ireland, which have already been granted European Union bailouts, to Portugal and possibly Spain.
The expected passing of Ireland's tough austerity budget later on Tuesday may help underpin the market.
All 27 EU finance ministers meet on Tuesday to discuss the EU economy but it would be highly unusual for them to come up with policy decisions after the Eurogroup of euro zone finance ministers did not.
Before Monday's meeting, the IMF had urged the ministers to increase the size of a ¤750bn ($1tn) bailout mechanism for debt-stricken states and suggested the European Central Bank step up purchases of government bonds.