Malta's lending to Greece will not affect targets - Fenech

Malta government lending to Greece as part of eurozone assistance to that beleaguered country will not mean new financial burdens on the country and will not affect the government's financial markets, Finance Minister Tonio Fenech has said.

Mr Fenech said that while the financial aid package to Greece was still being negotiated, should Greece call up all €30 billion offered to it by the eurozone countries, Malta's contribution would be of some €27 million.

Meanwhile, the euro edged slightly higher in Asian trade this morning after having taken a knock yesterday following a credit rating downgrade of Spain as fears grew that Greece's problems would spread.

The euro clawed up from one-year lows against the dollar to trade at 1.321 dollars, compared with 1.3201 in New York late yesterday.

The euro also bought 124.1278 Japanese yen compared to 122.95 yen the day before.

Among the most direct impacts of a weaker euro on Malta would be a higher bill for oil purchases and a more favourable exchange rate for British tourists wishing to come to Malta. Exports to non-eurozone countries would also be more competitive.

"I think it's a relief rally, given some talk last night on... funds for Greece," said Thio Chin Loo, senior currency analyst of BNP Paribas in Singapore.

The euro gained some respite as Germany signalled that it was more willing to bail out Greece, with Chancellor Angela Merkel saying that rescue talks with the EU and International Monetary Fund must be "accelerated".

But euro gains were constrained by fears of the Greek crisis spreading.

Standard and Poor's cut Spain's long-term debt rating by one notch a day after it sent shockwaves through the markets by relegating Greek bonds to junk status and downgrading Portugal by two notches.