German court ruling clears way for European bailout fund

A German court has cleared the way for a new European bailout fund, but also set limits on the amount of its own country's contribution. The German Constitutional Court Wednesday rejected legal challenges to the establishment of a permanent European bailout fund, but also said that Germany itself would provide no more than 190 million euros. The remaining 73% of the European Stability Mechanism (ESM) would be funded by other governments, the court said, adding the fund shouldn't incur unlimited liabilities. The ESM is to be used alongside the latest program from the European Central Bank to buy sovereign bonds to help struggling eurozone countries like Spain and Italy. Last week, ECB President Mario Draghi said his Outright Monetary Transactions bond purchase program would be available only to countries willing to request help and meet conditions set out in rescue funds including the ESM. Opponents in Germany had argued that the ESM would cost their country too much. But supporters of the rescue fund, including German Chancellor Angela Merkel, said it was a crucial component of a series of measures aimed at supporting ailing European economies and avoiding the collapse of the euro. Financial markets - particularly bank stocks - cheered the ruling.