Greece, Greece Debt | featured news

German Chancellor Angela Merkel sought Tuesday to calm market fears that Greece is heading for a chaotic default as Europe struggles to contain a crippling financial crisis. Merkel rejected the notion that a Greek bankruptcy — a possibility raised a day earlier by her deputy that spooked markets — would provide a quick solution to the eurozone debt crisis.

After a series of positive announcement from Greek FinMin Venizelos, rumors that Moody's would downgrade French banks and Germany was preparing for a Greece to default send equities tanking, particularly French banks.

By insisting that it receive collateral from Greece in return for aid, Finland threatens to upend an agreement that euro zone countries made in July to expand the E.U. bailout fund.

Several European countries that banned short-selling have extended the prohibition until the end of September. When concerns about European banks’ exposure to Greek debt sent their stocks plummeting two weeks ago, market regulators in Belgium, France, Greece, Italy and Spain stepped in to prohibit traders from betting on the decline in a share’s price.

Greece’s finance minister has called on the EU to implement “fully and immediately” an agreement reached last month overhauling the eurozone’s rescue fund and extending Greece a €109 billion ($157 billion) bailout. The finance ministry says Evangelos Venizelos wrote to senior officials, including European Central Bank President Jean-Claude Trichet, EU economic commissioner Olli Rehn and eurozone finance ministers. Excerpts of the letter were released Sunday.

Standard & Poor's cuts Greece's credit rating, saying eurozone plans to restructure the country's debts would constitute a default.

European leaders are holding an emergency summit on Greece's debt crisis, trying to prevent a meltdown for the euro and a global economic slump.

Fitch Ratings on Wednesday downgraded Greece deeper into junk territory, citing the absence of a new and fully funded financing program for the country.

The International Monetary Fund's executive board on Friday said it approved a disbursement of about 3.2 billion euros to help Greece pay debts due this month.

A credit agency warning that Greece could face default if it follows an international plan designed to help the country cope with its massive debts caused Asian markets to stall Tuesday.