By James G. Neuger and Gregory Viscusi
May 9 (Bloomberg) — European Union finance ministers meet today to hammer out the details of an emergency fund to prevent a sovereign debt crisis from shattering confidence in the 11- year-old euro.
Jolted into action by last weekâ€™s slide in the currency to the lowest in 14 months and soaring bond yields in Portugal and Spain, leaders of the 16 euro nations agreed to the financial backstop at a May 7 summit. They assigned finance chiefs to get it ready before Asian markets open later today European time.
â€œWe will defend the euro, whatever it takes,â€ European Commission President Jose Barroso told reporters in the early hours yesterday after the leaders met in Brussels.
Europeâ€™s failure to contain Greeceâ€™s fiscal crisis triggered a 4.3 percent drop in the euro last week, the biggest weekly decline since October 2008. It prompted the U.S. and Asia to urge broader steps to prevent a global sovereign-debt crisis from pitching the world back into a recession.
â€œEurope is getting its act together,â€ said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. â€œTime will tell if this statement is enough to satisfy the European bond market vigilantes.â€
European officials declined to disclose the size of the stabilization fund, to be made up of money borrowed by the EUâ€™s central authorities with guarantees by national governments. Finance ministers will meet at about 3 p.m. in Brussels. A press briefing is scheduled for 6 p.m.
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