Inside Story – Deepening Eurozone crisis?

November 25, 2011 – BERLIN – The euro extended its recent slide against major rivals on Friday as European equities fell across the board on irresolute European debt crisis. The recent run of bad news crippled the already flaccid European currency, with the rating agency Fitch slashing Portugal’s credit rating to junk while Moody’s cut Hungary’s investment-grade rating. French President Nicolas Sarkozy and German Chancellor Angela Merkel said at a joint press conference with Italian Prime Minister Mario Monti that they were confident the new Italian PM was capable of tacking his country’s economic challenges. However, the positive mood was overturned as Germany strongly opposed to Eurobunds. Although traders earlier believed that Germany will soften its stance on common bonds following poor bond auctions, Merkel reiterated her opinion that the eurobonds are “not needed and not appropriate.” Meanwhile, the Financial Times reported that the European Financial Stability Facility may not be able to increase its capacity from the current 440 billion euros to over 1 trillion euros due to worsening of market conditions over the past month. Thus far, the U.K. FTSE 100 index fell 0.55 percent, Germany’s DAX dropped 0.70 percent and France’s CAC-40 index slipped to 0.61 percent. –NASDAQ