The Organization for Economic Cooperation and Development said Monday that the euro crisis remained “a key risk to the world economy.” The research group, which is based in Paris, sharply cut its forecasts for wealthy Western countries and cautioned that growth in Europe could come to a standstill.

The warning came just hours after Moody’s Investors Service issued its own bleak report on Europe’s sovereign debt crisis. Moody’s, a leading credit rating agency, warned that the problems could lead multiple countries to default on their debts or exit the euro, which would threaten the credit standing of all 17 countries in the currency union.

Despite the gloomy predictions, stock indexes rose sharply in Europe and Asia, and were surging in Wall Street trading, and the euro strengthened, on hopes that European leaders were working on a new approach to resolve the crisis.

Finance ministers from the euro zone were to meet Tuesday in Brussels to try to agree on how to increase the firepower of their bailout fund, and also hope to sign off on an €8 billion, or $10.7 billion, loan installment to prevent Greece from defaulting. A proposal for a Europe-wide solution to the crisis is expected before a summit meeting of European Union leaders on Dec. 9.

Concerns about the European crisis hung over a meeting Monday at the White House between President Barack Obama and three European leaders: José Manuel Barroso, the president of the European Commission; Catherine Ashton, the European foreign policy chief; and Herman Van Rompuy, the president of the European Council.

Those concerns also surfaced during a White House news briefing, when a questioner asked the press secretary, Jay Carney, whether the White House shared the view that “the euro is in a particularly perilous state, perhaps poised to collapse within days.”

Without going that far, Mr. Carney replied that “our position is and has been that it’s critical for Europe to move with force and decisiveness now, particularly with new governments coming into place in Italy, Greece and Spain.”

He added: “We continue to believe that this is a European issue, that Europe has the resources and capacity to deal with it and that they need to act decisively and conclusively to resolve this problem.”

In Brussels, European officials rejected suggestions that the euro was days away from breaking up, pointing out that countries have completed most of their bond issuance for this year, though they know the respite will only be a matter of weeks.

Belgium had to pay higher interest rates to borrow money in the markets on Monday, illustrating how the country’s failure to form a government has increased concerns about its ability to tackle its debts. The yield on 10-year bonds was 5.66 percent as opposed to 4.37 percent last month.

Concern also mounted regarding Italy, where borrowing rates skyrocketed at a bond auction Monday for the second consecutive business day. The interest rate Italy had to pay to get investors to part with their cash for 12-year issues soared to 7.20 percent, a full 2.7 percentage points higher than the previous similar auction.

There was alarm in several capitals Monday over French-German plans to create strict new budget rules for countries that use the common currency — something seen in Berlin as a precondition of further steps to save the euro zone.

On Sunday, France, Germany and Italy signaled they were ready to agree on new rules to enforce budget discipline in the euro zone, and to encourage more coordination of economic and fiscal policy.

On Monday the German Finance Ministry published comments from the finance minister, Wolfgang Schäuble, suggesting that this could be done by amending a protocol of the E.U. treaty, though officials said this would still need approval by all 27 E.U. members.

Article source: http://www.nytimes.com/2011/11/29/business/global/moodys-warns-of-escalating-dangers-from-europes-debt-crisis.html?partner=rss&emc=rss