July 19, 2011
European leaders are struggling to convince investors that they will agree on a second Greek bailout at a summit this week as record bond yields boosted financing costs at sales of Spanish and Greek debt.
European Union government chiefs plan to meet for the second time in a month on July 21, aiming to break a deadlock over a new Greek rescue that has spooked investors. Spanish and Italian bond yields surged yesterday, piling pressure on officials to end the turmoil. Spain and Greece sold 6.08 billion euros ($8.6 billion) of bills today.
“As another D-day looms on Thursday, we have few soothing words,” Suki Mann, senior credit strategist at Societe Generale SA in London, wrote in a note to investors. “Greece appears beyond repair, Italy is on the brink and the chances are that the euro might be no more very soon.”
EU President Herman van Rompuy asked leaders last week to meet in Brussels to discuss “the financial stability of the euro area as a whole and the future financing of the Greek program.” Yesterday, stocks declined around the world, the euro fell and the cost of insuring European sovereign debt rose to records amid concern the euro region isn’t any closer to solving the crisis a year after Greece’s initial rescue.
The euro fell toward its lowest in a week against the dollar on concern summit leaders won’t agree on steps to contain the crisis. It traded at $1.4176 at 12:02 p.m. in Frankfurt, up 0.5 percent on the day.
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