Confidence ‘not boosted’ by euro zone pact

Confidence among financial trading professionals has not been bolstered by a summit meeting in Europe to help improve budget discipline in the region.

Stocks tumbled and the euro fell after the gathering, with the European Union (EU) being split on the best approach to take, Reuters reports.

Borrowing costs for both Spain and Italy climbed as investors tried to decide on their next move after Britain opposed a treaty change – a decision that meant other nations had to piece together a new agreement separate from the EU.

France's prime minister Nicolas Sarkozy told Le Monde newspaper that the legal basis of the new setup should be in place before Christmas, which may enable the drawing out of a treaty to be finalised by March.

Mr Sarkozy explained this action signals the arrival of a new Europe, adding this is "the Europe of the euro zone, in which the watchwords will be the convergence of economies, budget rules and fiscal policy".

The politician added it is "a Europe where we are going to work together on reforms enabling all our countries to be more competitive without renouncing our social model".

However, Jean-Michel Six, chief European economist at Standard & Poor's, warned that expectations for the continent's immediate future should not be raised too high.

The industry figure noted time is of the essence and action needs to be taken sooner rather than later with regard to both fiscal and monetary matters.

Meanwhile, a rise in Italian and Spanish yields resulted in the European Central Bank purchasing short-term Italian debt to bring the matter under closer control.

The news comes after Pier Carlo Padoan, chief economist at the Organisation for Economic Cooperation and Development, recently told Reuters that the ongoing crisis in the euro zone is currently the most notable threat to the stability of the global economy.