THE WORST OF EUROPE'S FINANCIAL CRISIS APPEARS TO BE OVER WHILE THREATS STILL REMAIN

 
The worst of Europe's financial crisis appears to be over.
European leaders have taken steps to ease the panic that has plagued the region for three turbulent years. Financial markets are no longer in a state of emergency over Europe's high government debts and weak banks. And this gives politicians from the 17 countries that use the euro breathing room to fix their remaining problems.

Threats remain in Greece and Spain, and Europe's economy is forecast to get worse before it gets better. But an imminent breakup of the euro now seems unlikely, analysts say.
"We are probably well beyond the worst," says Holger Schmieding, chief economist at Berenberg Bank in London. He says occasional flare-ups in financial markets are likely, but "coming waves of turmoil will be less severe."

Evidence that Europe has turned a corner can be found in countries' falling borrowing costs, rising stock markets and a slow but steady stabilization of the region's banking system:

— The interest rates investors are demanding to lend to struggling countries such as Spain and Italy have plunged — a sign that investors are less fearful of defaults. Spain's two-year bonds carry an interest rate, or yield, of just under 3% — down from a July 24 peak of 6.6%. Italy's bond yields have dropped just as sharply.
— The Stoxx 50 index of leading European shares has surged 26% since June 1, while the euro has strengthened, from $1.26 to $1.29 over the same period.