July 12 - Asian stocks fall despite EU pledge to help Greece and other EU debtors; including allowing a possible selective default to help Athens deal with its debt. Arnold Gay reports.
Asian stocks tumbled across the board Tuesday (July 12), despite a wide-ranging pledge from euro zone finance ministers to help Greece, including the option of a selective default to help Athens deal with its debt. Asia's banks and financial plays led the losses after another day of global market turmoil, particularly in Italian and Spanish stocks. In a bid to stem the spread of the Greek debt crisis to other EU debtor nations, the euro zone ministers are promising cheaper loans, longer maturities, and a more flexible rescue fund, but Europe's economics affairs commissioner, Olli Rehn, set no deadline. (SOUNDBITE) (English) EUROPEAN COMMISSIONER FOR ECONOMIC AND MONETARY AFFAIRS, OLLI REHN SAYING: "It's very important that the ministers reaffirmed their absolute commitment to safeguard financial stability in the euro area and they stand ready to adopt further measures that will improve the euro area systemic capacity to resist contagion risk including enhancing the flexibility and the scope of European finances stability facility, lengthening the maturity of loans and lowering interest rates." Eurogroup president Jean-Claude Juncker also insists private bondholders would be involved, despite concerns this could trigger a default rating. (SOUNDBITE) (English) PRESIDENT OF THE EUROGROUP, JEAN-CLAUDE JUNCKER SAYING: "There will be a private sector involvement. That was a decision taken by the European Council. You like it or you don't. But this is a decision that has been taken by the European Council and talks with private sector representatives will go on in the next coming days in order to conclude them as soon as possible." The council and private bond holders, like banks and insurers, are said to be moving closer to sharing the cost of additional funding for Athens. Ratings agencies have threatened to classify such agreements as defaults, but policymakers are now moving with a greater sense of urgency after Italy came under market attacks in the past two days. The selloffs have led to fears that further delays in putting together a second Greek package, could poison investor confidence in weak economies around the region. Arnold Gay, Reuters.