BERLIN — German Chancellor Angela Merkel urged the world’s economic powers Thursday to send a “signal of strength” by agreeing to stronger global financial regulation, as markets sagged on doubts about whether European leaders have a handle on their continent’s debt crisis.
European stocks and the euro slipped, still unnerved by a unilateral German move to ban some speculative trading practices — a step Merkel’s finance minister defended against pointed remarks by other officials that Europe needed to regulate as one.
The trading-practices ban was taken by some as a sign European leaders are not coordinating their efforts to shore up government finances in the 16-nation euro zone, despite agreeing on a $1 trillion loan backstop for governments in danger of defaulting on debt. That package has given markets respite from fears of immediate collapse, but long-term worries about the European economy continue to depress sentiment.
Britain’s stock market slid 1.7 percent, Germany’s 2 percent and France’s 2.3 percent. Worry infected Wall Street too, as the Dow Jones industrial average dropped 3.6 percent and the broader Standard & Poor’s 500 dropped 3.9 percent.
European leaders have admitted they need to strengthen the rules underlying the euro to limit governments’ ability to pile up debt, but many analysts are skeptical that they have the political will to carry through on that. Meanwhile, severe cutbacks to reduce debt in heavily indebted Greece, Portugal, Spain and Ireland will weigh on growth there for years.
