Currency markets Thursday snubbed European leaders' vague pledge of support for Greece in case it defaults on debt, sending the euro down against the U.S. dollar and doing little to halt fears of market contagion. The euro traded back near eight-month lows just above $1.37, having been as high as $1.38 earlier in the day on hopes of more substantive Greek bailout news. It was $1.51 in December. The 16 countries that use the euro said they were ready to take “coordinated measures” if necessary to help out of its debt crisis. European Union President Herman Van Rompuy, speaking at a summit of 27 EU leaders in Brussels, gave no firm offer of financial aid to Greece, and insisted that Greece hadn't asked for any. “Euro area members will take determined and coordinated action if needed to safeguard stability in the euro zone as a whole,” he told reporters, reading out a statement agreed by all euro members. This failed to soothe traders seeking concrete assurance that the 27-nation European Union can help Greece stave off a default and keep the crisis from spreading to other vulnerable countries, threatening Europe's hesitant economic recovery. Analysts said markets are disappointed. Neil Mackinnon, global macro strategist at VTB Capital said, “it just looks like a pledge of solidarity, but no actual details of a program which is why the euro is still in the doldrums.” “Unless, there's further news out later this afternoon, the markets will consider the EU summit response as a disappointment,” he said. Markets see Greece at risk of defaulting on its massive borrowings because it faces several years of sluggish growth and mounting debt that current austerity plans may not be able to stem. Those fiscal problems have shaken the euro and exposed the vulnerability of Europe's monetary union in times of crisis.
