Merkel’s ‘no easy solution’ sparks market backlash

EUROPEAN markets were down yesterday as Germany said that a G20 ultimatum for a concrete solution to the eurozone debt crisis to be in place by early next week was unrealistic.

Last weekend’s G20 finance ministers’ meeting in Paris broke with a united call for a real plan to be agreed at next weekend’s EU summit.

But in response to this German Chancellor Angela Merkel said yesterday that European leaders won’t provide a catch-all solution next week. A spokesperson for Ms Merkel was quoted as saying: “Dreams that are taking hold that, with this package, everything will be solved and everything will be over on Monday, won’t be able to be fulfilled. The search for an end to the crisis surely extends well into next year.”

One of those G20 ministers, Canada’s Jim Flaherty said yesterday — on a visit to Dublin — “Clarity is essential to the markets. If the markets understand that Europe has a clear and comprehensive plan and will implement this plan decisively, the markets will support Europe on its path to recovery.”

However, the knock-on effect of German honesty was a widespread fall on global exchanges. In Europe, the CAC-40 in Paris was down by 1.61%, with the DAX in Frankfurt falling by slightly more.

The Borsa Italiana, in Milan, was down by 2.3%, while the IBEX in Madrid was down by 1.24%.

More moderate declines were evident in London and Dublin — with the FTSE-100 down by just over half a percent and the ISEQ shedding 0.6% in value.

Here, there were falls for the likes of CRH, Aryzta, DCC, Tullow Oil and Providence Resources (despite it bagging four of the 13 licences awarded in a new round of offshore exploration licences); while FBD, Elan, Smurfit Kappa, United Drug, Total Produce, Paddy Power and Irish Continental Group were among the climbers.

Though giving away gains later in the day, Bank of Ireland was up by over 5% at one point on the back of it agreeing to sell €5bn worth of loans. Aer Lingus’s share price was up by nearly 12% on the back of reports that Etihad Airways could be interested in buying the 25% of the Irish airline currently owned by the state.