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Euro Zone Nears New Anti-Crisis Package

France and Germany have reached an agreement to make further steps to enhance economic organization within the euro zone as part of a comprehensive anti-crisis package.  the package will also ascertain that Europe’s bailout fund is now strengthened.

Officials in Germany said on Wednesday that Chancellor Angela Merkel and French President Nicolas Sarkozy will give combined proposals to boost policy coordination in the 17-nation bloc on Friday at an EU summit in Brussels.

Sending the strongest signal yet, German Deputy Finance Minister said that Berlin is ready to give new powers to the euro zone’s rescue fund to swap for fiscal discipline commitments by other members.

Asmussen told at a conference in Frankfurt that they will do all that is required to keep the stability of the entire euro zone and that might include changing the scope and efficiency of the EFSF. He was referring to the 440 billion euro European Financial Stability Facility.

The final agreement on the new scheme for battling the euro zone’s sovereign debt crisis is not yet expected before the March 24-25 summit.

However, markets are already welcoming signs that leaders in Europe are zeroing in on an agreement to stop contagion from Greece and Ireland to susceptible countries like Portugal and Spain.

In the past three weeks, the euro has gained 7 percent on the dollar to trade over $1.38 for the first time since early November. The Spanish and Greek risk premiums on its 10-year bonds are still on three-month lows.

The spreads between Irish Bonds and German benchmarks also narrowed on Wednesday. But, it was a relief that a ratings downgrade from Standard & Poor’s was not profound.

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