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February 11, 2010

Euro Falls After EU Leader Offer No Tangible Aid to Greece

by Lisa Bryant

The euro fell against other currencies again on Friday a day after European Union leaders offered their support, but no tangible aid to debt racked Greece. The fall of the European currency was not the only bleak economic news hitting the EU.

The 16-member eurozone was hit with more bad news on Friday, with a new report by the European statistical office, Eurostat, showing EU economies growing by only 0.1 percent during the last quarter of 2009.

The euro also slid in currency markets, reflecting lingering jitters about the eurozone - specifically deficit strapped member Greece.

Analysts suggest the slide also reflected disappointment in the failure of other EU members to offer strong assistance to Greece during a summit Thursday in Brussels.

While EU leaders said they support Athens, they stressed it was up to Greece to put its economic house in order. They did not offer tangible commitments or hard cash.

European finance ministers are expected to hammer out details of possible European aid to Greece during a meeting early next week.   But analyst Susanne Nies, for one, believes the EU must offer a strong economic plan for the future which includes strengthening the statistical agency Eurostat. Nies, who heads the Brussels office of the French Institute of International Relations (IFRI), says the Europeans should have seen the Greek crisis coming a long time ago. "What is really necessary is to reinforce Eurostat to avoid these kinds of things happening. Second, a clear sanction mechanism, which doesn't exist, and third, the Eurogroup has to become a real actor today. And in the long-term perspective, the European domestic market needs to function differently," she said.

In Brussels, the European Commission said it was preparing new measures to better coordinate among the 16 members using the euro currency and supervise their economic policies to avoid future crises. The measures could be part of the EU's longer term economic plans.