A last minute interjection by Peter Gauweiler, a member of Angela Merkel´s own coalition, threatened to derail what seemed to be the likely approval of the new Eurozone rescue fund, the so-called European Stability Mechanism (ESM), by Germany´s Constitutional Court, tomorrow.

Germany is the largest contributor to the €500bn strong ESM.

Mr. Gauweiler called on the court this past weekend to first assess the impact of the ECB's "outright monetary transactions."

The Constitutional Court announced that it might well have to respond to that objection, but it has decided to hold firm on the date -tomorrow- to rule on the legality of the ESM.

If the Court had decided to first weigh in on the legality of the ECB´s new bond purchase mechanism then observers feared that any intervention in sovereign bond markets could have been pushed back to the beginning of next year.

That could have provoked a very negative reaction in capital markets. In fact, it is likely one of the main factors weighing on markets even now, as traders react to the contradictory news reports.

AB

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