Markets fall as Germany opposes fund change plans

INTERNATIONAL stock markets fell for a second consecutive day yesterday largely on the back of the German government opposing changes to the current guise of the EU bailout funds and expressing doubt over a positive outcome from this week’s summit in Brussels, which kicks off today.

After a good end to last week and a positive start to this week, markets have suffered consecutive daily hits, as investor confidence surrounding future economic stability has worn off due, firstly, to credit rating agency Standard & Poor’s threatening to downgrade nearly all eurozone economies (including the big two of Germany and France) and, now, Germany opposing fresh proposals that would see the new permanent European Stability Mechansism (ESM) run in unison with the current bailout fund, the European Financial Stability Facility (EFSF), rather than simply succeed it.

“This, once again, highlights the difficulties European leaders are having in reaching agreement. Combining the two funds would have allowed them to rapidly attain the sufficient power to fight contagion. The rejection by Germany complicates matters,” one European analyst told the Bloomberg news service.