The calming effect arose from unconfirmed reports that Theo Waigel, the German finance minister, had suggested Germany was taking a more relaxed line over the need for countries to meet the Maastricht-imposed criteria of reducing debt to less than 3 per cent of GDP. German employment figures released this week also showed the first fall in jobless recorded in a year.
In the past, Germany has insisted on strict application of the Maastricht criteria. But Edgar Meister, Bundesbank directorate member, said yesterday it was not certain Germany would meet the criteria.
Martin Brookes, international economist at Goldman Sachs, said: "The German government wants to enter EMU regardless of the 3 per cent criteria."
Michael Lewis, senior economist at Deutsche Morgan Grenfell, said if EMU failed to go ahead on time, the German mark would strengthen and hit German competitiveness.