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UPDATESebastien Galy, senior currency strategist for Societe Generale, tells us that the report is in fact false:
“German government official says there were no discussions at G20 meeting about any plans to use EU’s rescue funds to buy the bonds of the crisis-hit members.”
Markets have given up some of their gains on the news.
The Dow is at its highs of the day, up 150.
This report in The Guardian is the culprit.
Angela Merkel is poised to allow the eurozone’s €750bn bailout fund to buy up the bonds of crisis-hit governments in a desperate effort to drive down borrowing costs for Spain and Italy and prevent the single currency from imploding.
Germany has long opposed allowing the eurozone’s rescue fund, the European Financial Stability Facility, to lend directly to troubled eurozone countries, fearing that Berlin would end up paying the bill, and the beneficiaries would escape the strict conditions imposed on Greece, Portugal and Ireland.
We’d be super-sceptical of this, but for the moment, this headline seems to be all the buzz.