European Leaders Step Up Talks

European leaders were taking their shuttle diplomacy into the next round on Tuesday, as markets indicated their growing impatience with the ongoing sovereign debt crisis with a fresh cut to the European Union’s credit outlook.

Angela Merkel the German chancellor, met with Herman van Rompuy, the E.U. president, in Berlin. No details were released about the talks, which had been expected to focus on ideas proposed in June for how to weave the Union more tightly together as part of efforts to create structures for an economic and monetary union.

The problems facing the Greek government had also been expected to figure in their talks, as Europe awaited the latest report from representatives of the European Commission, the European Central Bank and the International Monetary Fund, known as the troika, on whether to release the latest installment of funding to Athens.

Mr. Van Rompuy is to meet later in the week with the Greek prime minister, Antonis Samaras, and the French president, François Hollande, both of whom were recently in Berlin.

By short-term, Mr. Draghi said the debt maturities would be between one year and three years, said one of the lawmakers, who spoke on condition of anonymity as the meeting was supposed to be private. 

Mr. Draghi’s comments appeared to be laying the groundwork for a much-anticipated announcement at the monthly policy meeting of the E.C.B. on Thursday. Purchases of short-term maturities could be a key way for the E.C.B. to respond to calls to help Italy and Spain control their borrowing costs.

Read more: European Leaders Step Up Talks - NYTimes.com

China frets about EU debt woes For more

China urged European policymakers to back their tough talk with action on Tuesday by showing they can contain the euro zone’s festering debt problems.

China, which has invested an undisclosed portion of its $2.65 trillion (U.S.) reserves in the euro, said it backed Europe’s efforts so far to tackle the debt problems, but made clear it would like to see the measures having more effect.

“We are very concerned about whether the European debt crisis can be controlled,” Chinese Commerce Minister Chen Deming said during a dialogue between China and the European Union (EU), its biggest trade partner.

For more: China frets about EU debt woes - thestar.com

France Joins Germany Ganging Up on Bondholders to Share Pain - by Mark Deen and Francine Lacqua

French Finance Minister Christine Lagarde said investors must share the cost of sovereign debt restructurings, backing a German call that helped send yields on Irish and Portuguese bonds to record highs.

“All stakeholders must participate in the gains and losses of any particular situation,” Lagarde said during an interview yesterday in Paris for Bloomberg Television’s “On the Move” with Francine Lacqua. “There are many, many ways to address this point of principle.”

Irish 10-year bonds dropped for a 13th day, driving the yield up 19 basis points to 8.95 percent and the risk premium over benchmark German 10-year bunds to a record 652 basis points. Ten-year Portuguese yields rose 9 basis points to 7.27 percent, while Greek and Spanish bond yields also climbed.

For more: France Joins Germany Ganging Up on Bondholders to Share Pain - Bloomberg