Source: TODAY online

French President Nicolas Sarkozy  threatened to pull France out of the eurozone unless German Chancellor Angela Merkel agreed to back the European Union bailout plan at a summit last week in Brussels, El Pais newspaper reported on Friday.

The Madrid-based newspaper cited comments made by Spanish Prime Minister Jose Luis Rodriguez Zapatero at a May 12 meeting of Socialist politicians. Spokespersons for Mr Sarkozy, Mrs Merkel and Mr Zapatero declined to comment.

France, Italy and Spain pressed the Germans to back the rescue at a May 7 meeting of euro-area heads of government in Brussels. Finance ministers hammered out the details of what became a record ?750 billion ($1.32 trillion) package of emergency lending facilities at an all-night meeting two days later.

According to El Pais, Mr Zapatero said that Mr Sarkozy demanded “the commitment of everyone, that everyone should help Greece, everyone according to their means, or France would reconsider the situation of the euro”.

Mr Sarkozy banged his fist on the table and threatened to quit the euro, which forced Mrs Merkel to cave in, Mr Zapatero told Spanish politicians, according to El Pais. “If at this point, given how it’s falling, Europe isn’t capable of making a united response, then there is no point to the euro,” the newspaper quoted the French President as saying.

On Friday, the euro slumped as much as 0.8 per cent to US$1.2433 in afternoon trade in Europe, sliding below US$1.25 for the first time since March last year. That is well below US$1.2755 before the leaders met last week as doubts grew that Greece would avoid default.