Germany and France clash over ECB role in crisis

FRANCE and Germany, Europe’s two central powers, clashed yesterday over whether the European Central Bank should intervene more forcefully to halt the eurozone’s accelerating debt crisis after modest bond purchases failed to stop the rout.

Facing rising borrowing costs as its AAA credit rating comes under threat, France appeared to plead for stronger ECB action, adding to mounting global pressure spelled out by US President Barack Obama.

Bond market contagion is spreading across Europe. Italian 10-year bond yields have risen above 7%, unaffordable in the long term. Yields on bonds issued by France, the Netherlands and Austria — which along with Germany form the core of the eurozone — have also climbed.