Financial Market Tremors
Opposition Demands Merkel Suspend Vacation
German Chancellor Angela Merkel will speak with French President Nicolas Sarkozy Friday afternoon by phone to discuss the shaky global markets. But opposition parties demanded that she cut her vacation short and return to Berlin to deal with the issue instead. Meanwhile, positive news from the US labor market helped the DAX edge higher following a morning nose-dive.
With global financial markets still deeply shaken by concerns over the United States economy and the European debt crisis, German Chancellor Angela Merkel planned to speak by phone with French President Nicolas Sarkozy about the markets Friday afternoon. Her opponents in Berlin, though, demanded that she return from her Italian vacation to deal with the issue head-on.
A spokeswoman for French President Nicolas Sarkozy said Friday that he would be talking to both Merkel and Spanish Prime Minister Jose Luis Rodriguez Zapatero by phone in the afternoon about the turmoil in the markets. Sarkozy, who is on vacation on the French Mediterranean, was following the situation "instant by instant," the spokeswoman said.
'The Chancellor Must End Her Vacation Before Markets Force Her To'
Members of Merkel's opposition party, the Social Democrats (SPD), weren't satisfied with her response, and called on her to return to Berlin. "The federal chancellor must end her vacation, before the markets force her to," Carsten Schneider, a spokesman for the SPD fraction in the German parliament told SPIEGEL ONLINE. He said this is not the year for the chancellor to be taking a vacation.
Merkel has been on holiday in South Tyrol, and has planned to return to Germany over the weekend and to take another week off there.
The German DAX index of blue chip companies fell by more than 4 percent in early trading Friday, but rallied after a better-than-expected jobless report from the United States eased some fears over the state of the US economy.
Across Europe, other leaders have had to cut their traditional August vacations short to address the
growing instability in the markets. French Finance Minister Francois Baroin returned to Paris Friday, and European Economic and Monetary Affairs Commissioner Olli Rehn also broke off his vacation and addressed reporters in Brussels Friday. He said international policy coordination through the G-7 and G-20 is of "critical importance." France holds the rotating presidencies for both groups in 2011.
"Some of the reasons for these tensions relate to developments outside the euro area," Rehn said. "Investor sentiment has been negatively affected by the impact of the debt ceiling negotiation in the United States and by recent data suggesting a softer patch in the global economy."
Both China and Japan called Friday for more international cooperation on the global economy. Japanese Finance Minister Yoshihiko Noda said that policymakers need to address currency distortions, the debt crises and concerns about the US economy. Chinese Foreign Minister Yang Jiechi, on a visit to Poland, urged the US to adopt "responsible" monetary policies and protect the dollar investments of other countries.