President Sarkozy and Chancellor Merkel moved to reassure jittery investors, reaffirming their commitment to measures recently agreed by European leaders to quell the eurozone debt crisis, as financial markets continued to bet that the region's debt woes could ensnare some of its largest economies.
In a joint statement, the leaders of the eurozone's two biggest economies stressed the importance of the French and German parliaments approving by the end of September the new measures aimed at boosting the scope of the eurozone's current rescue fund, together with a second bailout package for Greece. The Franco-German statement came as finance ministers of the Group of Seven major industrialised nations planned to hold a telephone conference late Sunday, while the European Central Bank was holding a video emergency conference. Both were aimed at quelling the crisis surrounding the eurozone, which in recent days has increasingly engulfed Italy and Spain, the currency area's third- and fourth-biggest economies.
World leaders also fear steep losses in financial markets on Monday after rating company Standard & Poor's Friday decision to strip US debt of its AAA status.
Ms Merkel and Mr Sarkozy in their statement also said they welcome recent announcements by Italy and Spain to speed up fiscal consolidation and improve competitiveness. "Especially the Italian authorities' goal to achieve a balanced budget a year earlier than previously envisaged is of fundamental importance", the statement read, stressing the need for a speedy implementation of the announced measures in order to restore market confidence. Bond yields for both countries had widened to critical heights last week amid growing doubts about the Mediterranean countries' ability to reduce their excessive debt and deficit levels.
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