EURO CRISIS SPARKS 'MANAGED DEFAULT' PREDICTIONS - The Brussels summit was to have drawn the line under a year-long sovereign debt crisis in the euro zone, but events in Portugal confirmed the challenges still facing EU leaders, and that they pose a whole new threat to the euro zone's credibility.
Financial Times columnist Wolfgang Munchau, speaking in Brussels, said he believed there would ultimately be a 'managed default', though it would not be done under the current system. He said a new financial stability mechanism to come in in 2013 would make restructuring of debts easier.
Justin Urquhart-Stewart of Seven Investment Management in London said he agreed with Mr Munchau, though other words such as 'restructuring' or 'adjustment' would be used, rather than 'default'.
But he said the other main issue to be dealt with was reforming the structure of the euro to ensure this did not happen again. He said the euro had the potential to be the world's reserve currency, but France and Germany must sit down and re-think its structure.
Mr Urquhart-Stewart also said fears were now growing about Italy's finances, particularly because of its links with Libya.
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CURRENCIES - The euro is trading at $1.4188 and 87.98p sterling.
