Italy's Monti sees 'light at the end of the tunnel' for euro

(PARIS) - Italy's Prime Minister Mario Monti said Tuesday he could see the "light at the end of the tunnel" for the eurozone, amid growing hopes Europe is readying decisive action to tackle the debt crisis.

With European leaders keen to keep momentum after a series of confidence-boosting statements, Monti was due to meet Tuesday with French President Francois Hollande in Paris at the start of a mini-tour of Europe.

New data meanwhile provided a stark reminder of the devastating effects of the crisis, with the European Union saying unemployment across the eurozone hit a record 11.2 percent in June.

"We and the rest of Europe are getting closer to the end of the tunnel. There's light at the end of the tunnel," Monti said in an interview with Rai Radio ahead of his meeting with Hollande.

Monti said he could sense "greater willingness on the part of European institutions and governments" to implement reforms agreed at an EU summit in June and to take action to help debt-ridden countries.

After Paris, Monti will travel to Helsinki and Madrid as part of a tour he said would help "secure the euro and give a decisive boost to European growth."

Hopes for a concerted effort to address the two-and-a-half-year debt crisis were raised last week when European Central Bank chief Mario Draghi vowed to do "whatever it takes" to preserve the euro.

The markets are now waiting for direct intervention to help bring down dangerously high borrowing costs for Italy and Spain and so prevent them needing what would be hugely costly bailouts.

Such hopes were bolstered by a verbal offensive from top European policymakers, including Eurogroup chief Jean-Claude Juncker who said the eurozone had reached a "crucial point" and vowed action with the ECB.

In telephone calls with Monti and Hollande, German Chancellor Angela Merkel also agreed to do "everything possible" to save the euro.

The statements had an immediate effect, with stock markets soaring, Spain's 10-year borrowing costs falling on the bond markets and Italy selling benchmark bonds at 5.96 percent -- below the key 6.0-percent danger threshold.

Luxembourg Foreign Minister Jean Asselborn upped the ante again Tuesday, saying the ECB, whose governing council will hold its monthly meeting in Frankfurt on Thursday, should do more to address the crisis.

The ECB's primary task was to "conduct monetary policy (and) ... fight inflation. But we're not facing inflation. What we're confronted with is speculation," Asselborn told Germany's ARD television.

US President Barack Obama on Monday urged Europe to take action.

"I don't think ultimately that the Europeans will let the euro unravel. But they're going to have to take some decisive steps," Obama said.

As well as record European unemployment, both economic powerhouse Germany and struggling Italy reported rises in joblessness in Tuesday.

German unemployment rose to 6.8 percent in July from 6.6 percent in June while Italy's jobless total hit a record 10.8 percent in June, up from 10.6 percent in May, with youth unemployment at 34.3 percent.

Asian stock markets were generally higher Tuesday, their third consecutive positive session, as traders looked for new stimulus measures from both the European and US central banks while European markets were stable in morning trading.

But Europe's biggest banks reported slumping second quarter earnings, with profits at Germany's Deutsche Bank down by nearly half, Swiss banking giant UBS down by 58 percent and Spain's BBVA 57.5 percent lower.