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Secret meeting on Irish bailout held as euro flounders

DEPUTY finance ministers from the world's most powerful economies have secretly met to review the €85bn Irish rescue package.

It emerged today that the ministers from the G20 held a teleconference on Monday amid fears that the IMF/EU bailout wouldn't stop other countries needing help.

As market attacks on Portugal, Spain and Italy gathered momentum, European Central Bank (ECB) chief Jean-Claude Trichet launched a thinly veiled attack on German Chancellor Angela Merkel, who many blame for spreading concern about the possibility of Ireland defaulting.

Many observers blame the German leader for causing the spiral of EU problems in recent weeks with her suggestions that bondholders should be forced to suffer losses in any future crisis.

Mr Trichet's attempt at reassuring the markets was an obvious slap on the wrist for Ms Merkel as he accused EU policymakers of "communication ambiguity".

He said the "soundness" of the single currency should not be underestimated even though markets have reacted badly to the Irish bailout.

Speaking in the EU parliament, he called for calm and considered rhetoric.

"Verbal discipline is essential," Mr Trichet said.

"A number of observers were probably underestimating the soundness of the euro area as a whole and the soundness of a number of countries," he said.


Over the weekend, finance ministers from the 16 eurozone countries issued a statement noting that there is no question of investors being called upon to take haircuts until after 2013 at the earliest.

It was after this "useful clarification" that the G20 representatives held a teleconference.

"It's a tradition of the G20 to share information whenever there's an important situation going on," the source, who took part in the call, said.

The euro continued to struggle today and was stuck near an 11-week low against the dollar.

The euro suffered another setback as Standard & Poor's threatened to cut Portugal's credit rating while premiums on Spanish and Italian bonds over German debt hit their highest in the euro's lifetime.

Portugal is continuing to deny that it will need a similar financial rescue package but many observers now believe that this is inevitable.