BRUSSELS — Eurozone ministers threw a lifeline to Greece on Tuesday as they scrambled to prevent financial chaos from spreading further and driving Europe's common euro currency into a catastrophic breakup.
The monthly meeting of 17 nations was dominated by attempts to keep Greece afloat and find enough money to coat a veneer of credibility over Europe's rescue fund. It came on the third straight day that Italy has taken a beating in the bond markets, with investors growing increasingly wary of the country's chances of avoiding default.
Markets rose for the second day Tuesday on hopes that the enormous pressures on the ministers would produce some results.
The finance ministers approved the next installment of the Greece's bailout loan — $10.7 billion. Without that money, Greece would have run out of cash before Christmas, unable to pay employees or provide services. Two officials in Brussels reported the development, speaking on condition of anonymity while the meeting was still going on.
The installment is part of a $150 billion bailout from eurozone nations and the International Monetary Fund that Greece has been dependent on since May 2010. The new cash came after the EU demanded, and received, letters from top Greek political leaders pledging their support for tough new austerity measures.Comment on this story
In the latest sign of trouble, Italy was forced to pay an excruciatingly high interest rate on an auction of three-year debt Tuesday. Demand was strong, but the 7.89 percent rate was nearly three percentage points higher than last month, an enormous increase. The auction raised $10 billion.
Italy is too big for Europe to rescue. If Italy were to default on its $2.5 trillion debt, the fallout could break up the currency used by 322 million people and send shock waves throughout the global economy.