German Chancellor Angela Merkel and French President Nicolas Sarkozy are planning to meet next week to see if they can craft a plan to contain Europe's governmental debt contagion and improve financial management in the 17-nation bloc that uses the common euro currency.
The leaders of the two countries with Europe's biggest economies said Thursday they would meet in Paris next Tuesday.
Mr. Sarkozy's office said that the two leaders hope to produce “joint proposals” by September on how they can better manage the euro and stem the turmoil that has rocked the continent's major stock exchanges this week. Mrs. Merkel's spokesman said the meeting would look at suggestions on how to improve economic policy and crisis management across the continent.
World stock markets have been volatile the last four days, with alternating days of massive losses and huge gains at the most prominent exchanges.
In part, the trading has been sparked by the first-ever credit rating downgrade for the United States, but also by investors' continued worries that Italy and Spain might need international bailouts after those already secured by Greece, Ireland and Portugal. Investors also voiced fears that France's AAA credit rating could be cut, even though three major credit rating companies affirmed it and the French government has vowed to adopt new austerity measures.
Major European stock markets in London, Paris and Frankfurt all rallied sharply on Thursday. But the head of the French central bank, Christian Noyer, was forced to defend the operation of his country's largest banks against fears that they are carrying too much European government debt on their books.