Treasury Secretary Geithner: European Markets Want Government Action

The fund would provide heavily conditioned loans to euro zone governments that had difficulty borrowing on capital markets after a separate bailout for Greece failed to calm fears of a sovereign debt default in southern European countries, Reuters reports.

European shares rallied by 3% from Tuesday’s nine-month lows and Wall Street was up nearly 1% in afternoon trading, but the euro remained under pressure amid continuing signs of banks’ reluctance to lend to euro zone counterparts exposed to south European sovereign debt.

Reuters notes that Geithner’s stress on coordination of new regulation appeared aimed chiefly at Germany, Europe’s biggest economy, which stunned markets and angered EU partners by unilaterally banning some speculative financial trades last week, then widening that ban on Tuesday.