EU Summit Doesn't Boost Euro's Outlook

Related article ~ EU Summit May Not Calm Investors For Long

December 12, 2011

EU Summit Doesn't Boost Euro's Outlook

NEW YORK—The euro isn't likely to see lasting relief from the outcome of Friday's European Union summit, with investors skeptical that the deal reached in Brussels will end the region's debt crisis.

Leaders sketched the outlines of a pact to enforce stricter budgetary discipline across 26 of the EU's 27 nations. But the lack of unanimity—most notably the stiff opposition from the U.K.—meant that countries would have to enforce the agreement as an understanding between governments rather than a treaty.

Analysts said the deal bears the hallmarks of yet another series of half-measures that doesn't address increasingly shaky banks, or go far enough to shore up the euro-zone's battered debt markets. It may also not be enough to stop Standard & Poor's from downgrading a raft of European economies, which it warned this week was a medium-term possibility.

"There's been progress, but this is not enough to constitute a satisfactory resolution" of the debt crisis, said John Lonski, chief economist for Moody's Analytics' Capital Markets Research Group.

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