- Germany said restoring confidence in the euro was its "top priority", demanding tougher regulation and oversight on Thursday to protect the single currency, and joint EU action on withdrawing support for its economies. German Chancellor Angela Merkel said the eurozone's problems must be tackled at their root, telling a financial conference rules governing the single currency zone should be tightened.
-- France says it does not share Merkel's concerns over euro
-- Juncker: markets irrational, no immediate action needed
The euro slumped to a four-year low on Wednesday after a unilateral German move to ban naked short selling on some instruments exposed political divisions in Europe and stoked fears of tighter financial regulation. Naked short selling involves selling a financial instrument without first borrowing the instrument or ensuring that it can be borrowed, as would be done in a conventional short sale.
Underscoring the splits within the European Union, France, still smarting from Germany's failure to consult it on the ban, said it did not agree with Merkel's comment on Wednesday that the euro was under threat. "I absolutely do not think that the euro is in danger," French Economy Minister Christine Lagarde told RTL radio on Thursday. "The euro is a solid and credible currency."
Germany is the main EU paymaster in a 110 billion euro bailout with the International Monetary Fund (IMF) of debt-bound Greece and in a $1 trillion safety net for other vulnerable euro zone nations. But Merkel, forced to ditch an electoral promise of 16 billion euros in tax cuts to fund the rescue packages, is under pressure at home after voters angered by the Greek debt crisis punished her coalition in a key regional vote.
"The issue of exit strategies is of great importance to us. Quite frankly I am quite concerned about this issue," Merkel said. "We will focus on a co-ordinated exit strategy in Europe." Jean-Claude Juncker, chairman of the Eurogroup forum of euro zone finance ministers, said the weakness in the euro, down more than 7 percent against the dollar in the past month alone, was likely due to fears that economic growth in the 16 countries that share the currency will slow. Speaking to reporters after meeting Japanese Finance Minister Naoto Kan, he said he did not see the need to take immediate action on the euro's rapid plunge, but that central banks were in close contact.
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