Europe

Merkel and Sarkozy want EU to ban high-risk trading

French President Nicolas Sarkozy and German Chancellor Angela Merkel, 7 May 10
Image caption The famous Franco-German motor has been stalling recently

The leaders of France and Germany have urged the European Commission to impose an EU-wide ban on speculative trading known as naked short-selling.

It is a show of unity meant to ease concerns about policy divisions between the two biggest eurozone countries.

Germany's Chancellor Angela Merkel and France's President Nicolas Sarkozy urged the Commission president to speed up financial regulation.

The eurozone crisis will be the focus of an EU summit on 17 June.

Their joint letter follows the surprise postponement of a Merkel-Sarkozy meeting on Monday, when they were expected to co-ordinate their position ahead of the summit.

The last-minute cancellation led to renewed speculation that the chancellor and the president do not see eye-to-eye about how to deal with the crisis, just as the euro plummeted to a four-year low.

Their joint letter now seems to say between the lines 'We don't have to meet to agree on common action'.

Short-sellers usually borrow shares, sell them, then buy them back when the stock falls.

"Naked" short-selling is when a trader sells financial instruments he has not yet borrowed.

Austerity divisions

Berlin and Paris are calling on the European Commission to speed up work on stricter financial regulation, including proposals for an EU-wide ban of naked short-selling by July.

Last month, Germany surprised its EU partners by imposing a unilateral ban on the risky financial bets, blaming speculators for worsening the Greek debt crisis.

But the letter makes no mention of deeper divisions over Europe's future course.

Germany is resisting French calls for an EU economic government with a new secretariat, meant to enforce closer co-ordination of the 16 eurozone countries.

France seems reluctant to follow Chancellor Merkel's austerity regime of tough budget cuts.

President Sarkozy will meet Mrs Merkel in Berlin next Monday ahead of the EU summit in Brussels. But with their popularity floundering in the polls, both leaders are focusing on how to appear strong at home rather than united in Europe.

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