European leaders agree to press on with further steps to tackle their debt crisis but German Chancellor Angela Merkel has thrown out a proposal to boost risk-sharing with a fund to help euro zone states in trouble. Matt Cowan reports.
European leaders meeting in Brussels are hailing this as a breakthrough week for the bloc -- after a deal was clinched on banking supervision and long-delayed aid to Greece was approved. French President Francois Hollande says he hopes this marks the end of Europe making a spectacle of its problems. SOUNDBITE: (French) FRENCH PRESIDENT FRANCOIS HOLLANDE SAYING: "What I want to do next year, is to make Europe stronger and more solid." The leaders summit came on the heels of a meeting by EU finance ministers that made significant progress toward a 'banking union' - agreeing that the European Central Bank would be made the chief supervisor of euro zone banks. ECB President Mario Draghi said the creation of a single supervisory mechanism agree was a major step forward toward financial integration. SOUNDBITE: (English) EUROPEAN CENTRAL BANK PRESIDENT MARIO DRAGHI, SAYING: "It will help strengthen confidence and, in the medium term, will help restore and recreate, rebuild the inter-bank markets. And the way it's been conceived will ensure a separation between monetary policy and supervision." Still, cohesion within Europe continues to have its limitations, which was underscored on Friday when German Chancellor Angela Merkel threw out a proposal to boost risk-sharing with a fund to help euro zone states in trouble. Still, the sense of urgency has been quelled says, Chris Scicluna, head of Economic Research at Daiwa Capital Markets. SOUNDBITE: Chris Scicluna, Daiwa Capital Market head of Economic Research saying (English) "Actually the pressure is off the Euro area in the financial markets at the moment following the initiatives of the European Central Bank and the pressure is going to remain off for a few months to come." Data from Germany - Europe's largest economy - showed its private sector returned to growth for the first time in eight months in December. Rob Dobson is a senior economist at Markit, SOUNDBITE: Rob Dobson, Markit Senior Economist saying (English) "What we're seeing is at the end of the year, a little bit of growth from the German economy driven by the service sector and also manufacturing. If Germany was to fall into recession, it would also have to contract in the first quarter of last year. What we're seeing is maybe it's going to just miss that which would be positive for the euro zone as a whole." The service sector was the bright spot in a batch of data which also suggested the euro zone's private sector contracted for the 11th straight month.