Merkel: Toughest hour since WWII

GERMAN Chancellor Angela Merkel said yesterday that Europe could be living through its toughest hour since WWII as new leaders in Italy and Greece rushed to form governments and limit the damage from the eurozone debt crisis.

A rally on financial markets sparked by the appointment of respected European technocrats in Rome and Athens soon stalled. Analysts warned that daunting obstacles could hinder decisive action needed to breathe new life into their ailing economies.

Italy had to pay a euro-lifetime record yield of 6.3% to sell five-year bonds, with investors wary of buying its debt until prime minister-designate Mario Monti can undertake profound economic reforms.