Sarkozy announces new measures but fails to calm markets

Best Growth Stock – French President Nicolas Sarkozy, who suspended his vacation today to discuss the economic situation and announce new measures to contain the deficit, failed to calm the markets sank to the rumors of a breakdown of the note debt gala.

Sarkozy met a crisis cabinet and promised new proposals to meet the commitments by France to reduce its public deficit measures to be adopted on the 24th after a first analysis on 17 this month.

Executive’s response was to the uncertainty hanging over the French sovereign, after the extension of a market rumor that one of the rating agencies downgrade the note is raised.

The meeting was attended by the Prime Minister, François Fillon, the foreign ministers, Alain Juppe and Economics, François Baroin, in addition to those responsible for budget, Valérie Pécresse, and European Affairs, Jean Leonetti, and Governor of the Bank of France , Christian Noyer.

Pécresse Baroin and pledged to hand over Sarkozy next week a set of proposals to reduce the deficit to be adopted in the first cabinet meeting after the summer day 24.

The Finance Minister said that it is taking a set of adjustment measures to ensure the deficit reduction “whatever the evolution of the economy.”

Responsible for budget and government spokesman, Valérie Pécresse, ruled out going to raise taxes and opted for an elimination of tax exemptions, a recipe that Paris has already implemented, which allowed him to collect 10,000 million last year.

“We are willing to make further efforts,” said Pécresse, which did not reveal what exemptions will be eliminated, but said the government will do with “social justice” for “effort calling on the French is divided equally among the large and small companies and individuals. ”

All with the objective of fulfilling the commitment of France to reduce the public deficit to 4.6 percent of Gross Domestic Product (GDP) next year and 3% in 2013 compared to 5.7% this year.

The meeting also served to show that Sarkozy welcomed the steps taken by the European Central Bank (ECB), which is buying sovereign debt in Italy and Spain, and proposed adjustments adopted by Rome and Madrid.

The French president, who in recent days had been very active in conversations with other world leaders from his vacation spot, returned to Paris to show that it is at the forefront of the situation but failed to calm markets in freefall swept away by the bank shares.

The index of the Paris Bourse, the CAC-40 fell 5.45% to close at 3002.99 points with banks leading losses to rumors that the rating agency Fitch to lower the note examines the France’s sovereign debt.

Some rumors were “formally” denied by the Ministry of Economy Gallo, which slowed somewhat falling financial stocks before the market close.

After the close of trading, Ficht, and Moody’s confirmed that the French note is in stable AAA, which on Saturday had indicated the chief economist at Standard and Poor’s for Europe, Jean-Michel Six.

But the rumor had already caused significant damage. Société Générale, the French bank debt more exposed to Greek, he lost a fifth of its value, to recover some lost ground and end up giving a 14.74%.

It was followed by BNP Paribas, which left a 9.47%, Crédit Agricole and Natixis a 11.81% a 9.11%, while insurer Axa dropped 10.64%.

The day before, had broken a streak of eleven consecutive sessions of losses, which amputated the CAC-40 was almost a fifth of its value.

The measures taken by the ECB seemed to calm the French market, but new uncertainties about sovereign debt in the euro zone, returned to penalize the stock market.

The fall of 5.45% was higher than that recorded on Monday (4.68%), as investors reacted to the decision by Standard and Poor’s to downgrade the U.S. debt notes.