World Bulletin / News Desk
Former German Finance Minister Peer Steinbrueck, a possible challenger to Chancellor Angela Merkel in next year's election, spoke out in favor of common debt issuance in the euro zone even though the Berlin government and most Germans oppose it.
Steinbrueck, popular with the middle-of-the-road voters his centre-left Social Democrats (SPD) hope to win back in the 2013 election, told the Sueddeutsche Zeitung newspaper's Saturday edition that he backed SPD chairman Sigmar Gabriel's recent call for common debt issuance and closer fiscal integration.
"The party chairman is right about that and the development will go in this direction," Steinbrueck said, adding the European Union will have to be able to intervene directly more strongly than before in the fiscal policies of struggling countries.
Steinbrueck, known for his blunt manner, criticized those leaders in Merkel's centre-right coalition who have dismissed the SPD's proposals for common debt issuance as "debt socialism".
"They're being featherbrained," Steinbrueck said, adding that the euro zone already had become a 'Haftungsgemeinschaft' (community of liabilities).
Italy, Spain and France have been urging for the introduction of common debt issuance, such as euro bonds, as a way to counter the crisis of confidence on financial markets that has sent borrowing costs in those countries soaring to unsustainable levels.
But Germany, which has seen its borrowing costs fall, has opposed any joint issuance of debt, with Merkel's ruling coalition arguing it would take pressure away from those countries to enact reforms to their economies and cut state spending.
Merkel's coalition, however, has had to rely on SPD support to win approval of euro zone bailout measures because of a growing number of rebels in her ranks. She also needs opposition support in the upper house of parliament, where her coalition no longer has a majority.
Steinbrueck took his time to endorse the proposal from Gabriel, who is popular among the SPD's left wing. But after it won support from SPD parliamentary floor leader Frank-Walter Steinmeier, a moderate and another potential challenger to Merkel, Steinbrueck finally gave his blessing.
It is an endorsement fraught with risk for Steinbrueck and the SPD, eager to return to government after falling out of power in the 2009 election, as opinion polls show an overwhelming majority of Germans are opposed to the issuance of euro zone bonds.
Steinbrueck said the euro zone crisis had led to giving the European Union two choices: either the national states give up more of their sovereignty to Europe or move towards a "re-nationalization".
"That would be a fatal way to go" for an export nation like Germany, Steinbrueck said.
Volatility eased as traders focused on the world economy and corporate earnings after a week dominated by the dramatic spike in tensions over North Korea, which triggered a global sell-off before prices bounced back Monday.
Investors greeted the more conciliatory tone after US stocks dropped three days in a row last week on President Donald Trump's vow of "fire and fury" if North Korea continued to pursue its nuclear weapons and ballistic missile programs.
The ultra-conservative kingdom has moved to diversify its traditionally oil-dependent economy following a sharp fall in crude prices.
In its monthly report on the global oil market, the International Energy Agency said, however, that it believes the supply glut is easing, partly because demand is growing faster.
US stocks have been in retreat since President Donald Trump Tuesday issued a fiery warning to North Korea to halt its nuclear program.
The move by one of Japan's best-known firms greatly reduces the chance of an embarrassing delisting from the Tokyo Stock Exchange (TSE).
London's benchmark FTSE 100 index weakened by 0.5 percent to 7,503.39 points.
The approval by the European Commission comes just over two months after the European Central Bank -- which took on the role of the eurozone's banking supervisor in 2014 -- allowed the sale to go ahead for a symbolic fee of one euro.
BP, Chevron, ExxonMobil, Shell and Total have all published results in recent days, showing they pocketed $23 billion in net profit in the first half fo the year.
Higher cereal, sugar and dairy prices pushed food price index by 10.2 percent annually in July
HSBC was also a big riser, gaining three percent at £7.65 ($10, 8.5 euros) in late morning trade after the British banking giant announced a share buyback plan alongside a rise in first-half profits.
Both main crude contracts made strong gains, with WTI testing $50 a barrel for the first time since late May and Brent heading towards $53, while mining giants BHP Billiton and Rio Tinto saw their share price rise as commodities strengthened.