EU pledge on Greece fails to calm fears

A pledge by the European Union to stand by crisis-hit Greece punctured hopes in the financial markets yesterday of a swift rescue and raised fears of renewed selling.

Efforts by Nicolas Sarkozy and Angela Merkel, the French and German leaders, to paper over differences between Berlin and Paris on how to deal with the Greek debt crisis led to a summit statement in Brussels that stopped short of providing immediate support for Athens.

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But the lack of a detailed bail-out plan underwhelmed investors in financial markets. While global stocks and bonds made modest gains, the euro fell 0.9 per cent against the dollar.

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Jonathan Loynes, an economist at Capital Economics, said the agreement was "disappointing. It seems to amount to little more than a vague statement of support for Greece." Steven Major, at HSBC, said: "It all hangs on whether the implicit guarantees go down well with the markets. If they don't, then there could be a sell-off."

It all sounds like extorsion: "give us real money, or we'll keep on bringing your pals down"

In the long run, we're all dead. John Maynard Keynes