EU begins 9 day sprint to save eurozone

The European Union begins a nine-day sprint on Thursday towards expected historic federal-style changes to save the eurozone, with France presenting its policy towards common budget control. The European Central Bank was quick to draw a hard line after concerted bank action to avert global system breakdown, insisting on Thursday it will not yield to pressure to rescue eurozone governments with huge purchases of debt bonds. The new ECB president Mario Draghi told the European Parliament that the central bank will not act beyond rules laid down by EU treaties and that its current programme of buying devalued government bonds is \"temporary and limited.\" Germany strongly backs the ECB line, arguing that the first condition of a solution to the crisis is cast-iron federal-type corsets controlling national budgets and economic reforms to release growth. Chancellor Angela Merkel is due to lay down her vision of how the EU should work, and her conditions, in a speech to the Bundestag lower house of parliament on Friday. French President Nicolas Sarkozy is to lay out later on Thursday how far France will go in pooling sovereignty, possibly with a change to treaties, a day after world central banks acted in what was widely seen as a first salvo in a new strategy to shore up the eurozone and global system. The central bank action to ease distress in parts of the banking system sparked a surge on stock markets around the world, and European markets opened on a steady note on Thursday shortly before the new Italian Prime Minister Mario Monti was to explain his crisis strategy in Brussels. But tension remains acute on the critically important eurozone debt market where German bonds have risen after a shock setback last week. France, under pressure recently, raised funds at reduced rates on Thursday but Spain had to offer increased high rates. Italy, with a huge amount of debt to redeem next year, ran into serious problems on Monday when an auction generated record high rates and an inverted yield curve -- a sign that investors see a high risk of default. Germany and France have warned that if Italy\'s finances become unsustainable the eurozone will break up. In Greece, workers were staging a new general strike against deep reforms tied to the latest rescue money, approved on Tuesday, which are also linked to loss of about 50.0 percent for banks on their Greek bonds. Eurozone finance ministers are now looking towards the International Monetary Fund to play a central role in providing bailout guarantees to the eurozone, admitting that their own EFSF lifeboat fund will be too weak to do the job even with a boost agreed on Tuesday. But this would imply a big change of attitude by the European Central Bank, in providing funds to the IMF and in providing direct help to eurozone countries. In London, analysts at Moneycorp commented that market reaction to the central banks\' move had been \"ecstatic\" in the belief that it must be \"a component of new and decisive action to quell the Euroland debt crisis.\" But Moneycorp questioned this view, saying: \"There is every chance that this latest breakthrough will turn out to be yet another nine-minute wonder.\" The measures of making dollars available and facilitating funding for banks in other ways, \"is aimed at the symptoms not the disease.\" Moneycorp said: \"EU leaders have until their summit meeting next weekend to come up with something investors can believe in. Until then the euro is on parole.\" The catastrophic risks and importance of an EU summit deadline on December 9 were highlighted by the EU\'s Euro Commissioner Olli Rehn who declared that monetary union \"will either have to be completed through much deeper integration or we will have to accept a gradual disintegration of over half a century of European integration.\" French Foreign Minister Alain Juppe also warned starkly on Wednesday that the breakdown of the eurozone could cause an \"explosion\" of the European Union and bring back dark shadows of past conflicts. Sarkozy, in his speech later on Thursday, will have to balance suspicion at home of being given orders by EU powerhouse Germany with suspicion on financial markets that EU leaders will again fail to come up with a big-bang solution to the crisis at a summit on December 9. The central issue is whether and to what extent France and Germany, the two EU and eurozone pillars, will lead partner countries towards a new architecture for the European Union and especially to pool sovereignty for federal-style control of budgets.