European leaders squabble over debt

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Kai Ryssdal: The euro hit a 10-month low against the dollar today. Amazingly enough for those who’ve been keeping up with the single currency, Greece had nothing to do with it. Fitch, the ratings agency, downgraded Portuguese government debt today. There is yet another big meeting in Brussels tomorrow where European leaders will try to figure out what to do about their debt problems and the stability of the euro. If they can stop squabbling, that is.

From the Marketplace European desk in London, Stephen Beard reports.

STEPHEN BEARD: On the eve of the summit, EU leaders are still bickering over a bailout for Greece. The French favor a rescue by the eurozone itself. But Germany would have to foot most of the bill.

German hostility to that idea will have deepened after Portugal’s downgrade, says analyst Graham Mather.

GRAHAM MATHER: The Portuguese problems are a warning that if you start bailing out one country with taxpayers’ money from Germany you may end up bailing out several others.

The Germans would rather the Washington-based International Monetary Fund stepped in. But a senior official in the European Central Bank said today that would undermine the euro. It would show Europe unable to keep its own house in order.

Currency strategist Steve Barrow doesn’t envy the EU leaders meeting in Brussels tomorrow.

STEVE BARROW: EU ministers are between a rock and a hard place here. I don’t think there’s an easy solution and probably not a solution that’s likely to lead to any significant strength for the euro.

He says the single currency is almost certainly headed lower.

In London, this is Stephen Beard for Marketplace.