European leaders are to gather Thursday night in Brussels to begin seeking agreement on the latest series of measures to support euro-zone governments that are facing a crisis of confidence in their finances.
After meetings in Germany on Tuesday, Mr. Geithner arrived in Paris for talks with French officials including Prime Minister François Fillon and President Nicolas Sarkozy.
Mr. Geithner said he had confidence in what French officials “are doing with Germany to try to build a stronger Europe,” adding that he was “encouraged by the progress they’re making.”
“I want to emphasize again how important it is to the United States and to countries around the world that Europe succeeds in this effort to build a stronger Europe, and I’m confident they will succeed,” he added.
He spoke as the German Finance Agency sold €4.1 billion, or $5.5 billion, of 5-year debt securities at an average yield of 1.11 percent, up slightly from the 1.0 percent it paid to sell similar debt on Nov. 2. Investors had been watching the auction carefully, after a November offering of 10-year bonds flopped, sending markets reeling.
This time, there were a healthy 2.1 bids for each of the 5-year bonds sold, up from 1.5 on Nov. 2. Stock markets in Europe were generally flat Wednesday, after early gains.
“Today’s tender reflects volatile and uncertain market conditions,” Reuters quoted the agency as saying in a statement. “Investors are looking for, and trust, the quality of the paper from the euro zone’s benchmark issuer.”
The European Union’s main bailout fund, known as the European Financial Stability Facility, will provide another test of investor confidence later this month, when the German debt management office begins auctioning the fund’s 3-, 6- and 12-month bills.
“The launch of a short-term funding program is in line with the enlarged scope of activity of E.F.S.F. to use its new instruments efficiently,” Klaus Regling, the fund’s chief executive, said Wednesday in a statement.
The fund currently enjoys the highest short-term credit ratings from all three of the major agencies, Standard Poor’s, Moody’s Investors Service and Fitch Ratings.
But analysts are skeptical that it can maintain that rating if the top-rated European governments cannot maintain their own ratings.
S.P. warned Monday that the ratings of 15 euro-zone countries, including Germany and France, faced a possible downgrade, and it said Tuesday that the bailout fund also faced a downgrade if top governments’ ratings were cut.
The fund said the auctions would be held “before year end.”
Annie Lowrey contributed reporting.
Article source: http://feeds.nytimes.com/click.phdo?i=f6be44c9d1b0eef108eb12dcebecad66
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