European Finance Chiefs See ‘Worrying’ Trends in Bond Markets

[Joanne98]

Feb. 9 (Bloomberg) -- European finance ministers are increasingly concerned that certain governments are finding it harder to borrow in financial markets as budget deficits mount and economies slump, according to a confidential report prepared for this week’s Group of Seven meeting.

The widening gaps between the interest rates different euro- area nations must pay bond investors are “worrying developments,” according to a “speaking note” prepared for Luxembourg Finance Minister Jean-Claude Juncker. Ministers also are concerned about weak demand at some government bond auctions, according to the document. Juncker will represent counterparts from the euro-area nations at the gathering of G-7 finance chiefs on Feb. 14 in Rome.

The split between the rates Spain, Italy, Greece and Portugal must pay in financial markets to borrow for 10 years and the rate charged to Germany ballooned this year to the widest since before they joined the euro. That is threatening to hobble the recovery of the region’s weakest economies and even raising doubts about the future of the single currency bloc.

“These developments highlight the need for member states to take budgetary sustainability into account when devising and implementing rescue measures,” according to the note, which was obtained by Bloomberg News and prepared for Juncker by officials at Europe’s finance ministries and central bank.

http://www.bloomberg.com/apps/news?pid=20601068&sid=aj3CfCzfamgs&refer=home

[ixion]

1. Isn't it ironic? They fret over minute changes in their interest rate, yet

have no problem with banks jacking consumer interest rates by 10 or 20 percent.