Merkel, Sarkozy meet to tackle differences over euro crisis

Sat Oct 8, 2011 6:14pm EDT
 
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By Sarah Marsh

BERLIN (Reuters) - German Chancellor Angela Merkel will thrash out differences with French President Nicolas Sarkozy Sunday over how to use the euro zone's financial firepower to counter a sovereign debt crisis threatening the global economy.

With the turmoil threatening to spiral into financial meltdown as the value of banks' sovereign bond holdings slide, Merkel and Sarkozy are likely to discuss in Berlin both how to manage Greece, prevent contagion and strengthen lenders.

The implosion of Belgian lender Dexia, the first victim of the crisis, has added a sense of urgency to the talks.

"Dexia will be among the topics that will be discussed but the main topic is Greece and the euro zone, as banks are only a consequence" of the crisis, a source at the French finance ministry told Reuters.

Sarkozy is due to arrive in Berlin late Sunday afternoon and hold a meeting with Merkel followed by a working dinner.

Talks are continuing over a vital aid tranche for Greece, which could run out of cash as soon as mid-November.

"There is a high risk that this crisis further escalates and broadens," German Finance Minister Wolfgang Schaeuble was cited as saying by a newspaper Sunday.

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