While Merkel and Sarkozy Talk, Traders Act

Even as the leaders promised quick action to stem the crisis, investors signaled the depth of their concern when they bought German debt at a negative interest rate for the first time ever.

Germany joined the Netherlands and Switzerland on Monday as perceived havens where customers of short-term debt are willing to lose money in return for shelter from upheaval and from the possibility of even greater losses. In an auction of six-month bills, investors agreed to take less money back half a year from now, or a negative yield for German debt.

Speaking at a news conference after the two leaders met at the Chancellery in Berlin, Mr. Sarkozy acknowledged the uncertainty in the markets, saying, “The situation is very tense, very tense.”

Asked whether she feared that ratings agencies would downgrade additional European countries and in the process further upset markets, Mrs. Merkel replied coolly, “Fear does not motivate my political actions.”

The holidays may have created a lull, but the New Year promised to be just as hectic as the old for European leaders and Mrs. Merkel in particular. The head of the International Monetary Fund, Christine Lagarde, was to arrive Tuesday evening for talks, and the Italian prime minister, Mario Monti, comes to Berlin on Wednesday.

Mrs. Merkel hit several familiar themes in her remarks Monday, emphasizing that there were no quick solutions to the euro crisis and that Greece was an exception when it came to debt write-downs, often known as a haircut, for private investors.

“Our intention is that no country must withdraw from the euro area,” Mrs. Merkel said. She called the plan to stabilize the euro “an ambitious but attainable goal.”

Economic data continue to point to economic stagnation in Europe, including predictions of a return to recession for many of the countries that use the euro. At the same time, European countries and financial institutions need to raise roughly €1.9 trillion, or $2.4 trillion, in 2012.

Mr. Sarkozy has been Mrs. Merkel’s most important partner in the efforts to stem the crisis, but he is likely to be distracted by his re-election bid. The first round of the presidential election comes in April.

Mrs. Merkel expressed her support for Mr. Sarkozy’s goal of pressing ahead with a tax on financial transactions, saying that European Union finance ministers should make a formal proposal by March. Although an agreement between the 27 members of the Union was preferable, one between the 17 countries in the euro currency zone was acceptable.

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