THE GUARDIAN: G7 demands action from Europe after markets plunge / Fears that banks' exposure to debt could wreck recovery
The growing crisis in the eurozone threatened to undermine the global economic recovery as markets plunged across the world on fears that European leaders may not be able to contain the debt contagion spreading from Greece.
Stock markets in London, New York, and Shanghai dived following criticism that much delayed and half-hearted measures to rescue Greece were undermining confidence in wider efforts to kick start the world economy.
European shares finished the day at a six-month low while the Dow was down around 1% at 10,424. In Asia, the Shanghai stock market fell to an eight-month low of 2688, down 6.8% on the previous day.
An emergency summit of the 16 leaders of the countries using the single currency was held in Brussels , with Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France demanding tougher and quicker regulation of the financial markets in what looked like a doomed attempt to contain contagion from the Greek drama.
One factor being discussed last night was to persuade the ECB to launch a new quantitative easing policy – entailing huge loans to distressed governments in the form of buying up their bonds. This is supported by the European Commission, Spain, Portugal, Italy and France, but is certain to run into German opposition.
With the pace of developments outstripping the ability of political leaders to respond, what was initially called as a summit to bless a €110bn (£95bn) rescue package for Greece turned into a frantic exercise in global crisis management.
Alarm bells were ringing in major capitals across the world where leaders voiced their exasperation with European attempts to contain the fallout from Greece. >>> Phillip Inman and Ian Traynor in Brussels | Friday, May 07, 2010
