G7 finance ministers confer on Europe's debt crisis
The euro traded lower Tuesday as traders reacted to a communique after a conference call among finance ministers of the world's seven wealthiest economies focused on trying to find a way out of Europe's debt crisis.
The common currency was down 0.37 per cent at $1.24 US late in the afternoon.
Japan's finance chief Jun Azumi has reportedly said in Tokyo that the European members in the call pledged to "speed up their efforts" to contain the crisis.
It was not clear what pledges were made by Europe's representatives, which included Germany, France, Italy and Britain.
Canada's finance minister, Jim Flaherty, disclosed Monday that the call, usually confidential, would be held today.
Flaherty's office in Ottawa released a statement, but it did not provide details of any pledge from European leaders.
"The G7 counterparts reviewed developments in the global economy and financial markets and the policy response under consideration, including the progress towards financial and fiscal union in Europe."
The U.S. Treasury Department said the conference among the finance ministers and central bank presidents ended with agreement to keep monitoring developments closely in the runup to a leaders' summit of the Group of 20 major economies on June 18-19 in Los Gatos, Mexico.
The statement said the talks considered how to forge a stronger financial and fiscal union in Europe.
Taking central focus was Spain, whose own finance minister appealed Tuesday for European leaders to set up a method for its troubled banks to get direct financial help.
Cristobal Montoro warned that the country's high borrowing costs mean that it faces increasing trouble accessing credit markets.
"The door to markets is not open for Spain," Montoro said.
Data suggests slump ongoing
Lenders want to know whether that will prevent Spain from bailing out its troubled banking sector, which is weighed down by bad real estate loans.
Adding to the crisis was the uncertainty of how Greeks would vote in an election on June 17 that is widely seen as a referendum on whether the country will continue with the austerity measures that are a condition of continued international bailouts required to keep it part of the currency zone.
The urgency of finding a response to the crisis was underscored by data that suggested that services and manufacturing output in the eurozone slumped at the sharpest rate in almost three years last month.
London-based Markit Economics said its composite index of purchasing managers in both industries fell to 46 from 46.7 in April. A reading below 50 indicates an economy in contraction.
The G7 call came ahead of a summit of European leaders on June 28.
It’s expected the European Commission and the European Central Bank will propose a "banking union," which would oversee banks and perhaps even be granted the authority to bail out financial institutions directly. Now, they can only rescue national governments.
"There’s no divergence in views when it comes to how to tackle this crisis overall," a spokesman for EU Commissioner Olli Rehn said in Brussels.
With files from The Canadian Press and The Associated Press
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