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Eurozone battles to rescue currency

Eurozone leaders are still struggling to find compromise in Brussels on an economic crisis rescue package to calm the markets and stabilise the single currency.

After naming Wednesday as the deadline for final decisions on a raft of big-figure measures to stop the rot, the 17 leaders are still locked in discussions and with little sign of the promised masterplan for recovery.

The summit is under immense pressure to produce firm numbers for stepping up Europe's bailout fund, strengthen the most vulnerable banks and write off substantial Greek debt.

But the only agreement on the table after more than six hours of talks was one drawn up earlier with the other 10 EU leaders on boosting the liquidity of the most exposed banks in Europe.

The recapitalisation scheme does not involve UK banks and involves increasing their reserves by more than 100 billion euro (£87 billion). The money may have to come from national coffers - effectively taxpayers - if the banks cannot raise the obligatory extra money through private investors by a deadline of next July.

After attending a 90-minute 27-leader summit to sign up to the accord, Prime Minister David Cameron left to continue a trip to Australia saying "some good progress" had been made.

But the accord only stands if the other too much tougher agreements - on increasing bailout funds and writing down Greek debt - are reached between the 17 eurozone leaders left at the summit table. Even then the sums may not satisfy the markets, with decisions based on financial projections, "leveraging" of an existing bailout fund, and the readiness of banks to absorb massive 60% write-offs on repayments of loans they made to keep Greece afloat.

German chancellor Angela Merkel and French president Nicolas Sarkozy left the summit late on Wednesday night to negotiate on the write-down in another room with representatives of a consortium of global banks.

Officials indicated there was little agreement, with the banks suggesting a 40% write-down was more than the most they could cope with. That is not seen as enough to convince market about the long-term prospects of the package ringfencing the Greek crisis and stopping contagion to other, much bigger euro economies such as Italy, which is now giving major cause for concern.

In the early hours officials indicated that a broad agreement - not necessarily with final figures - might be achieved as the night wore on, with member states changing tack and insisting that a G20 summit in Cannes on November 3 and 4 is the real deadline for a full deal.


From Belfast Telegraph