Sarkozy, Merkel in euro regime plan | business | Hindustan Times
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Sarkozy, Merkel in euro regime plan

France and Germany unveiled far-reaching plans on Tuesday for closer euro zone integration but they disappointed investors by declaring that any thoughts of common euro bond issuance would have to wait.

business Updated: Aug 17, 2011 21:56 IST

France and Germany unveiled far-reaching plans on Tuesday for closer euro zone integration but they disappointed investors by declaring that any thoughts of common euro bond issuance would have to wait.

Under heavy pressure to restore confidence in the euro zone following a dramatic market slump, President Nicolas Sarkozy and Chancellor Angela Merkel stopped short of increasing the bloc's rescue fund but vowed to stand side by side in defending the euro and laid the groundwork for future fiscal union. Their message was that the focus should be on further economic integration rather than signing bailout cheques, and suggested that straying from euro zone rules and fiscal targets would no longer be tolerated.

It was the lack of action on the creation of euro zone- backed bonds that triggered further concern in financial markets that European leaders aren't showing the ability to contain the region's sovereign debt crisis.

"The market wanted to see at least some forward movement, something concrete coming out of the meeting that would've been supportive to what's been dragging the market lower," said Marc Pado, US market strategist at Cantor Fitzgerald in San Francisco.

The announcement of a plan to tax financial transactions also hit stocks. Shares of NYSE Euronext fell 8.4% to $26.54, making it the worst performer in the S&P 500.