Tue Jan 18, 2011 1:23am EST
* Some scepticism over euro ministers' urgency for EFSF deal
* Euro slides in Asia, although picks up later
* Ministers discussing size and scope of rescue fund
* Head of euro zone finance ministers says to work quickly
By Sarah Marsh and Daniel Flynn
BRUSSELS, Jan 18 (Reuters) - Investors showed growing
scepticism on Tuesday that euro zone finance ministers will
thrash out an agreement soon to beef up a rescue fund as part of
measures to end the region's sovereign debt crisis.
The ministers showed no indications they were closing in on
any firm decisions on Monday. The chairman of euro zone finance
ministers, Jean-Claude Juncker, said they discussed many
options, but favoured none.
In response, the euro fell broadly as hopes faded for
an immediate agreement to increase the size of the bailout fund
and the currency continued to slide in Asian trade on Tuesday.
Germany, the biggest euro zone economy that is key to any
agreement on changes, has indicated no rush to take action
especially since bond markets are calmer following successful
debt auctions by Portugal and Spain.
"What indications we have heard from European officials over
the past several days is that they just don't feel the same
sense of urgency that the market does," said Todd Elmer,
currency strategist at Citi in Singapore. "I think for the time
being that means the euro is likely to trade lower."
The European Financial Stability Facility (EFSF) was set up
in May 2010 to borrow money on markets with euro zone government
guarantees of up to 440 billion euros.
But because it wants to have the top credit rating of triple A, the
effective amount the fund can lend to countries in
need is around 250 billion euros
with some divisions on the best approach for bolstering the
rescue fund.
Both Greece and Ireland have been bailed out during the debt
crisis and markets are worried that Portugal and possibly Spain
could be next.
Markets want to see more money available for the fund
because they estimate the current amount would not be sufficient
if both Portugal and Spain applied for emergency financing.
Source: Reuters.Com
