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Markets fall as worries over eurozone lead to talk of 'radical overhaul'

Reports this morning that France and Germany are considering a radical restructuring of the eurozone amid uncertainty in Italy and Greece.

Image: Lee Jin-man/AP/Press Association Images

ASIAN MARKETS HAVE fallen overnight in response to the continuing uncertainty in the eurozone as two of its biggest members consider a radical overhaul, it is reported this morning.

Reuters reports that France and Germany have discussed the possibility of a more integrated and potentially smaller eurozone.

It cites a senior EU source as saying that it must be established who wants to be part of a eurozone going forward “and those who simply cannot be part”.

Such a radical overhaul of the European Union would be resisted by many of its members, Reuters reports, but the rumoured proposal could take on greater importance given that markets are falling worldwide.

In Hong Kong the Hang Seng is down by over 5 per cent while in Japan the Nikkei is down nearly 3 per cent.

American markets also took a tumble yesterday, the Dow Jones and the Nasdaq both closed down well over 3 per cent.

With the cost of Italian 10-year bonds soaring yesterday all eyes will be on the European markets when they open today.

Fears over Italy have been exacerbated by the rising cost of borrowing despite the pledge by prime minister Silvio Berlusconi to step down, a move that it was thought would calm the markets.

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The situation is also not helped by the fact that Greece has still not installed a new government despite a promise to do so as far back as Monday,

BBC News reports that politicians are still locked in unity talks with George Papandreou having committed to standing down as prime minister but still no agreement on who should succeed him.

Yesterday: Italian bonds hit 7.4 per cent as Europe enters crisis mode >

About the author:

Hugh O'Connell

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