EU to Craft Financial Backstop to Prevent Spread of Crisis

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By James G. Neuger and Gregory Viscusi

May 8 (Bloomberg) -- European leaders agreed to set up afinancial backstop to halt the spread of Greece’s fiscal woes,seeking to prevent a sovereign debt crisis from undermining theeuro.

Leaders of the 16 countries sharing the currency saidfinance ministers will meet tomorrow to hash out the details ofa “stabilization mechanism to preserve the financial stabilityin Europe.”

“We are facing exceptional financial circumstances,”European Union President Herman Van Rompuy told reporters earlytoday after the leaders met in Brussels.

Europe’s failure to contain Greece’s fiscal crisistriggered a 4.3 percent drop in the euro this week and led theU.S. and Asia to rally around in a bid to prevent a globalsovereign-debt crisis from pitching the world back into arecession.

To contact the reporters on this story:James G. Neuger in Brussels at [e-mail];Gregory Viscusi in Brussels at [e-mail].