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G8 for keeping Greece in euro zone; vows to combat financial turmoil

But it was clear that divisions remained.

Written by Reuters | Maryland | Published: May 21, 2012 1:15:17 am

World leaders backed keeping Greece in the euro zone and vowed to take all steps necessary to combat financial turmoil while revitalising a global economy increasingly threatened by Europe’s debt crisis.

A summit of the G8 leading industrialised nations came down solidly in favour of a push to balance European austerity — an approach long driven by German Chancellor Angela Merkel — with a new dose of US-style stimulus seen as vital to healing ailing euro zone economies. But it was clear that divisions remained.

“We commit to take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses,recognising that the right measures are not the same for each of us,” the leaders said in a joint statement issued at their meeting at the US presidential retreat,Camp David,in Maryland.

The overarching message from the summit hosted by US President Barack Obama reflected his own concerns that the euro zone contagion,which threatens the future of Europe’s 17-country single currency bloc,could hurt the fragile US recovery and his re-election chances in November.

With Greece’s political and economic upheaval high on the summit’s agenda and stoking concerns over instability in Spain and Italy,G8 leaders sought to calm the situation.

Anxious to quell investor fears,the G8 said: “We reaffirm our interest in Greece remaining in the euro zone while respecting its commitments.” But leaders offered no specific prescription for extracting Athens from its worsening crisis. It was unusual for the often-bland G8 communique to single out a relatively small nation. But fears that a political stalemate in Greece would lead to its departure from Europe’s monetary union at unknown costs to the financial system and global economic stability have spooked markets.

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