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German, Italian leaders vow to protect eurozone

BERLIN — The German and Italian leaders issued a new pledge to protect the eurozone, while the influential eurogroup chairman was quoted Sunday as saying that officials have no time to lose and will decide in the coming days what measures to take.

The weekend comments capped a string of assurances from European leaders that they will do everything they can to save the 17-nation euro. They came before markets open for a week in which close attention will be focused on Thursday's monthly meeting of the European Central Bank's policy-setting governing council.

Last Thursday, ECB president Mario Draghi said the bank would do "whatever it takes" to preserve the euro — and markets surged on hopes of action.

German Chancellor Angela Merkel and Italian Premier Mario Monti "agreed that Germany and Italy will do everything to protect the eurozone" in a phone conversation Saturday, German government spokesman Georg Streiter said, a statement that was echoed by Monti's office.

That was nearly identical to a statement issued Friday by Merkel and French President Francois Hollande, which followed Draghi's comments.

Though they didn't pledge any specific action, the comments raised expectations that the ECB might step in to buy Spanish and perhaps Italian government bonds to lower the countries' borrowing costs, which have been worryingly high in recent weeks. Another possibility might be for the eurozone's temporary rescue fund, the European Financial Stability Facility, to buy bonds.

"What measures we will take, we will decide in the coming days," Jean-Claude Juncker, the Luxembourg prime minister who also chairs meetings of the eurozone finance ministers, or eurogroup, was quoted as telling the German daily Sueddeutsche Zeitung. "We no longer have any time to lose."

Italy and Spain have the eurozone's third- and fourth-largest economies, respectively, behind Germany and France.

Merkel and Monti agreed that decisions made by last month's European Union summit "must be implemented as quickly as possible," Streiter said, again echoing Friday's Merkel-Hollande statement.

Those included allowing Europe's bailout fund to give money directly to a country's banks, rather than through the government.

Countries that pledge to implement reforms demanded by the EU's executive commission also would be able to tap rescue funds without having to go through the kind of tough austerity measures demanded of Greece, Portugal and Ireland, which have had to get international bailout packages.

German, Italian leaders vow to protect eurozone 07/29/12 [Last modified: Sunday, July 29, 2012 11:08pm]
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