Italy, France meet as eurozone under pressure again

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Italy, France meet as eurozone under pressure again

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Italy and France leaders meet to reassure markets that an end to the crisis is in sight.

07 January,2012 02:25 am

The eurozones debt-wracked economies came under renewed pressure on Friday as bad economic data undermined leaders attempts to reassure markets that an end to the crisis is in sight.Italys Prime Minister Mario Monti met Frances President Nicolas Sarkozy in Paris as the single currency blocs second and third biggest economies sought to head off doubts about their deficit reduction plans.The pair announced a mini-summit with Germanys Chancellor Angela Merkel on January 23 but also revealed a split in Europes position, with France warning that it may go it alone on a financial transaction tax.European governments and markets were also confronted with a raft of gloomy economic figures from Brussels -- unemployment stuck at a record high, retail sales down and consumer and business confidence sinking.The eurozones economy contracted in the last quarter of 2011 and will likely shrink again in the first quarter of the year, putting it in recession, analysts said.New US figures showed unemployment there falling to 8.5 percent but in Europe the picture was bleak. Eurozone unemployment remained at a record 10.3 percent for the second month running in November.The combination sent the euro plunging briefly under $1.27 for first time since September 2010.Todays batch of eurozone data has recession written all over it, said ING analyst Martin van Vliet.Nervous European banks parked 455 billion euros ($582 billion) in the safe haven of the European Central Bank overnight -- a new record -- preferring to earn low interest rather than take the risk of lending to each other.After a brief respite from bad headlines over the New Year holiday period, the eurozone debt crisis has resurfaced with a vengeance, driving down the single currency and threatening Italy and Spain.France has yet to face the same soaring interest rates as its southern neighbours but its Triple-A debt rating is under threat of a downgrade, and bond markets are quickly losing faith in EU financial reform plans.