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“We would lose a (central bank) president who has undisputedly done excellent work, has a good network, and could be very useful to Switzerland,” said Widmer-Schlumpf, who is also finance minister, on Swiss television late Friday.

What the Swiss National Bank chief had done was “excusable if you realise that you shouldn’t do that and that the rules should be changed as a result,” she said.

Hildebrand spoke publicly for the first time on Thursday to address revelations that began appearing late last month in the Swiss media about his personal fortune and currency transactions carried out by himself and his wife.

He said he would not quit as long as the federal government and the Bank Council, which oversees the central bank, retained confidence in him.

Press reports claimed that Hildebrand’s wife Kashya profited after buying $504,000 (396,000 euros) last August just weeks before an intervention by the SNB to halt the rise of the franc — a move that saw the dollar rise significantly against the Swiss currency.

The scandal took a political turn with revelations that the government last month received banking documents concerning Hildebrand’s personal trades from Christoph Blocher, chief of the conservative Swiss People’s Party (UDC), the largest in the Federal Assembly.

The Swiss weekly Weltwoche, close to the UDC, said the controversial currency trades were made by Hildebrand and not by his wife without his knowledge, as the central bank had indicated.

Hildebrand rejects the allegation, saying a report by PricewaterhouseCoopers auditors cleared the couple of any wrongdoing, even if they deemed the purchase “sensitive”.

A criminal investigation was opened into a Bank Sarasin employee who admitted taking part in leaking Hildebrand’s banking documents to the media.

Hildebrand does not face trial but he will be questioned again on Monday, along with Widmer-Schlumpf, by the economy committee of the Council of States, the Federal Assembly’s upper house.

The SNB said Saturday it would hire an outside firm to audit all banking transactions carried out by managers between 2009 and 2011.

“It became evident that, given the events of the past few days and developments in financial markets, as well as with a view to improving transparency, taking measures is in order,” the SNB said in a statement.

The audit would likely be carried out by KPMG or Ernst & Young.

Until regulations had been revised, senior staff members and those with access to privileged information must get prior approval for foreign exchange transactions exceeding 20,000 Swiss francs (16,400 euros.)

The duo at the heart of European efforts to stem the debt-driven turmoil threatening the single currency will gather in Berlin for their first monthly tete-a-tete in what is certain to be a rocky year.

For while Merkel and Sarkozy had made a show of unity in recent weeks, strategic differences began to emerge over plans to introduce a financial transaction tax in the European Union.

Sarkozy, who is facing an uphill battle for re-election this year, said France would charge ahead and roll out the tax on its own if necessary to set an example for Europe.

“We won’t wait for others to agree to put it in place, we’ll do it because we believe in it,” he said Friday after talks in Paris with Italian Prime Minister Mario Monti, who urged France not to go it alone.

Berlin also resisted Sarkozy’s call, saying it was still trying to build the broadest possible consensus for the tax, seen as a revenue generator and a penalty on speculation, in the face of fervent opposition from Britain.

“We would like to see a global financial transaction tax but that is not possible at the present time. The German government would thus aim to introduce the financial transaction tax within the EU,” Merkel’s spokesman Steffen Seibert told reporters.

The European Commission has adopted plans for the so-called “Robin Hood tax” but support would need to be unanimous among the 27 member states for it to be introduced across the EU.

Germany, which has said it could live with a tax applying only to the 17-member eurozone, said the issue was one of several on the agenda of Monday’s meeting.

“It is mainly about preparing the European summit at the end of January and its goal is to debate measures to boost competitiveness and growth,” Seibert said.

Wednesday will bring Monti to Berlin for talks.

Monti, a former eurocrat who has been critical of a Franco-German axis spearheading European reforms, has scrambled to restore Italian credibility in the post-Berlusconi era and passed a draconian austerity plan.

He has urged a “united, joint and convincing response” to the debt crisis from the EU, stressing that troubles on the bond markets for Italy as the eurozone’s number three economy were linked to wider European difficulties.

And he has called for boosting the size of the European rescue fund, a bid Merkel has rebuffed.

Monti said Friday he would welcome Sarkozy and Merkel in Rome on January 20, three days before a eurozone meeting and 10 days before EU leaders gather in Brussels.

The summit will focus on hammering out a “fiscal compact” to tighten up budgetary discipline for all member states except Britain, which has opted out.

As uncertainty continues to rattle markets, EU leaders have set an ambitious timetable and hope to adopt the new rule book at another gathering in March.

The accord, which is to include automatic sanctions that can only be blocked by a majority of powerful states, aims to end past practices of overspending responsible for the two-year-old debt crisis ravaging Europe.

As if to underline the urgency of decisive political action, the eurozone hit a barrage of gloomy economic news in the first week of the year with joblessness hovering at a record high, retail sales down, and consumer and business confidence slumping as recession stalked the bloc.

Meanwhile the euro tumbled to another 16-month dollar low Friday, fallign under the $1.27 mark.

A further item on the agenda of both Berlin meetings was likely to be Hungary, Seibert said, after the International Monetary Fund and EU officials broke off talks last month about a possible credit line due to worries about a contested law threatening the independence of the central bank.

On Friday Fitch ratings agency joined Moody’s and Standard & Poor’s in downgrading Hungary’s debt to “junk” status.

“The euro is not in crisis, the currency has solidly maintained its exchange rate with the dollar,” Monti said on RAI 3 public television, adding that Italy’s “banking system is not under threat”.

“The problem we are facing is that some EU countries have a public debt crisis,” he said. “Our crisis is a systemic crisis.”

Monti, a former European commissioner who took office as Italy’s prime minister and finance minister in November, said Italian commercial banks “are not under threat”.

His comments came as Italy’s top bank UniCredit on Wednesday set a low price for the share issue to raise the 7.5 billion euros ($9.8 billion) it needs to meet new capital requirements, sending its share price plunging.

Unicredit said it would sell shares in the capital increase beginning on Monday at 1.943 euros each, which represents a 43 percent discount from their theoretical fair value based on the increase in the number of shares and Tuesday’s market price.

Referring to plans for a tax on financial transactions, Monti said the government headed by his predecessor Silvio Berlusconi had voiced its opposition at the EU level.

“I however have expressed the Italian government’s openness on that issue,” he said Sunday.

“We are prepared to work on it but never, and I mean never, if it was to apply only to Italy. By contrast, at a time when it is in our interest to cooperate closely with Germany and France, why not,” he said.

French President Nicolas Sarkozy said Friday that France should not wait for other European countries to get on board with the so-called Tobin tax, named after Nobel Prize-winning economist James Tobin.

Monti, who had already said on Friday he thought such a decision needed EU-wide backing, said his openness to the idea “has nothing to do with the fact that I was a student of Professor Tobin.”

Britain, which fears for the future of the City of London financial district, has said it would block any move to introduce an EU-wide Tobin tax.

Sarkozy is to hold talks with German Chancellor Angela Merkel in Berlin on Monday to harmonise their stance ahead of a January 30 European summit on the union’s debt crisis.

“This year, I’m going to keep doing whatever it takes to move this economy forward and to make sure that middle class families regain the security they’ve lost over the past decade,” Obama said in his weekly radio and Internet address.

“That’s my New Year’s resolution to all of you,” he added.

The comments came after new government statistics showed US unemployment had fallen for the fourth straight month in December and jobs creation picked up.

In its keenly awaited monthly jobs report Friday, the Labor Department said the unemployment rate slipped to 8.5 percent as 200,000 jobs were added last month.

The jobless rate is the lowest since February 2009, the month after President Barack Obama took office amid the worst US recession in decades.

As recently as August the rate stood at 9.1 percent, and economists cheered the new numbers as evidence that economic growth, feeble throughout much of 2011, was gaining traction.

Obama said the new drop in unemployment numbers showed the country is “heading in the right direction,” but more needs to be done.

“We’ve got to keep at it. We’ve got to keep creating jobs,” he said in the address.

“And we’ve got to keep rebuilding our economy so that everyone gets a fair shot, everyone does their fair share – and everyone plays by the same rules. We can’t go back to the days when the financial system was stacking the deck against ordinary Americans. To me, that’s not an option.”

The president announced that on Wednesday, the White House will host a forum called “Insourcing American Jobs,” during which he will discuss with business leaders ways of bringing back home the jobs that had been “outsourced” to foreign markets.

Obama has backed government investment to generate jobs, while opposition Republicans have resisted, arguing that government spending has been holding back private hiring.

A total of 1.6 million jobs were created over the past 12 months.

Friday’s jobs report was stronger than generally expected. Analysts on average had forecast a rise in the jobless rate and weaker job gains of 150,000.

“Unfortunately, we need more like 300,000 jobs (a month) to get the unemployment rate coming down consistently and rapidly, and that is not likely to happen this year,” said Joel Naroff of Naroff Economic Advisors.

The number of unemployed people continued to trend down in December, to 13.1 million, after topping 14 million in mid-2011. Hourly wages and hours worked rose.

But the data showed the lingering deep strains in the labor market since the recession ended in June 2009.

The number counted as long-term unemployed — people without a job for 27 weeks or more — barely budged at 5.6 million, or 42.5 percent of the unemployed.

Other indicators were flat, including the labor force participation rate, unchanged at 64 percent.

The private sector again delivered all of the job gains, adding 212,000 in December.

Governments at all levels shed a net 12,000 jobs, a slower pace of layoffs amid strained budgets.

The job gains were broad-based, with jobs added in transportation and warehousing, retail trade, manufacturing, health care, and mining.

Analysts cautioned that big risks remained in front of the long, slow jobs recovery, including tensions with Iran over its nuclear problem, which could lead to higher oil prices, and Europe’s public debt crisis that has pushed the 17-nation eurozone to the brink of recession. Both could hamper US growth.

“South Africa’s recent economic performance has been impressive. Good macroeconomic policies which, together with a flexible exchange rate and sound financial sector, have mitigated the output drop during the global recession,” she said in a statement.

“South Africa has become increasingly integrated into the global economy,” she said following talks with President Jacob Zuma.

“In our highly interconnected world, this integration also exposes South Africa to global business cycles. The ongoing difficulties in the euro area, one of South Africa’s main export markets, present significant downside risks to the economic outlook.”

Earlier in the day she had a private meeting with Zuma, after holding talks Friday with Finance Minister Pravin Gordhan, national planning boss Trevor Manuel, and Central Bank Governor Gill Marcus.

Lagarde hailed South Africa’s prudent fiscal policy, which helped shield the country from the global recession.

“The challenge now is to ensure that monetary policy remains supportive and competitiveness improves. At the same time, moderation in wage growth and enhanced competition would support the ongoing recovery and lay the foundation for higher growth in the medium term,” she said.

South African labour unions regularly stage strikes to demand increases of more than double the rate of inflation, a trend that business leaders warn is unsustainable.

On Friday, Lagarde cautioned that the eurozone debt crisis was taking a toll on Africa and the rest of the world, with the IMF set to release a report around January 25 that is likely to lower the global growth forecast from the 4.0 percent estimated in September.

“In these difficult times for the global economy, emerging economies are a key part of the solution,” she said in her statement.

South Africa has an important role to play on behalf of the interests of developing economies and the African continent in particular.”

South Africa fell into its first recession since the fall of apartheid during the 2008 global financial crisis.

While the recession lasted only nine months, the country has struggled to boost its growth rate to levels that the government says are needed to make a dent in a 25 percent unemployment rate that keeps 38 percent of the population living in poverty.

The commission, the European Union’s executive body, has rejected Belgium’s 2012 budget as overly optimistic, and demanded it shave off 1.2 billion to 2.0 billion euros to avoid breaching the three percent deficit threshold.

“The commission has given us the choice to either come up this weekend with savings of 1.2 billion euros, which we refused to do, or to freeze some of our spending over a period of several months, which is what we have opted for,” minister Olivier Chastel told RTL-TVI television.

In a letter sent Thursday to Belgian Finance Minister Steven Vanackere, the commission said Belgium should “in the coming days” agree to pare down the budget by about 1.2 to 2.0 billion euros.

“This would allow us to conclude … that Belgium has undertaken the required fiscal effort,” it said, demanding a response by Monday morning at the latest.

Under new rules agreed in December that give the commission added powers to enforce budgetary discipline, infringement of the three percent deficit ceiling can set off a quick train of action including fines and judicial penalties.

The commission last year singled out Belgium and four other EU nations — Hungary, Poland, Cyprus and Malta — as possibly failing to meet the target. It will issue a statement on January 11.

Chastel said the freeze will not influence budget decisions to be taken by the government next month.

RTL said the main target of the savings freeze will be some 400 million euros destined for the railways. The defence department will also have to delay the purchase of helicopters because of a freeze on some 177 million euros.

The Belgian budget, based on a 0.8-percent growth rate, forecasts a 2.8 percent deficit after sweeping cuts of 11.3 billion euros aimed at avoiding a no-policy-change deficit that could have run up to 4.6 percent of gross domestic product (GDP).

But commission experts believe Prime Minister Elio Di Rupo’s government was over-optimistic on expected savings, notably in healthcare, and on expected revenues from the fight against tax evasion.

The Airbus superjumbo was three hours from Singapore when it hit a storm over Indian airspace early on Saturday and encountered “severe turbulence”, a Qantas spokeswoman said.

“Seven passengers were impacted, four of them were taken to hospital on arrival in Singapore. They’ve all since been discharged and cleared to fly,” she said.

They mostly suffered bruising and had been out of their seats when the air pocket hit, she added.

“The aircraft was assessed, there’s no damage and it’s scheduled to arrive (in Sydney) at 9 o’clock this evening.”

The incident extended a run of misfortune for Qantas’s A380 fleet. One of the airline’s double-decker planes suffered a mid-air engine explosion after take-off from Singapore in November 2010. The plane landed safely.

The same Qantas plane was last week announced to be one of several A380s in operation by airlines to have had small cracks on their wings. Both Airbus and the carriers said there was no safety issue.

Klaus Regling, who runs the European Financial Stability Facility (EFSF), is mulling plans to offer investors outside the eurozone an insurance of 30 percent against a possible default, the Bild am Sonntag weekly said.

Without citing sources, the paper quoted Regling as telling a meeting of German parliamentarians last week that the current 20 percent guarantees offered were “too low” to cover investors’ risk.

A temporary fund, the 440 billion euro ($560 billion) EFSF uses guarantees issued by eurozone governments to raise funds on money markets which are then lent to debt-wracked eurozone countries such as Ireland, Portugal and Greece.

However, raising the guarantees offered to investors would reduce the firepower of the fund, already considered far too small to intervene if the debt crisis were to claim a larger victim such as Italy.

European governments had hoped the fund would enjoy broad support in cash-rich countries such as China, but enthusiasm thus far has been muted.

Nevertheless, last week the fund reported strong demand for its first bond auction of the year, during which it raised three billion euros in three-year bonds.

EU leaders agreed in December that the permanent successor to the EFSF, known as the European Stability Mechanism or ESM, should come into force in July 2012, earlier than first mooted.

Bild am Sonntag said officials were also mulling changing the way the ESM should be set up.

Citing German government sources, the paper said debates were under way as to whether to arm the fund with its 80 billion euros in one go, rather than putting in smaller tranches over several years under the current plan.

The International Monetary Fund head met Zuma in the central city of Bloemfontein on the sidelines of celebrations for his ruling African National Congress’s centenary.

“It was a private meeting,” said Treasury spokeswoman Bulelwa Boqwana, adding that no details were available.

On Friday, Lagarde cautioned that the eurozone debt crisis was taking a toll on Africa and the rest of the world, with the IMF set to release a report around January 25 that is likely to lower the global growth forecast from the 4.0 percent estimated in September.

“We are currently revisiting our world forecast,” she said. “It is very likely to be revised downwards.”

“We should clearly prepare for a 2012 that will not be a walk in the park, that will not be an easy journey, but will be one of effort and focus on a combination of issues — the first one, the European crisis and its resolution.”

South Africa fell into its first recession since the fall of apartheid during the 2008 global financial crisis.

While the recession lasted only nine months, the country has struggled to boost its growth rate to levels that the government says are needed to make a dent in a 25 percent unemployment rate that keeps 38 percent of the population living in poverty.

Chancellor Angela Merkel hosts President Nicolas Sarkozy for talks in Berlin to kick off a flurry of diplomatic activity ahead of a key EU summit on January 30 that leaders hope will provide new impetus to efforts to stem the crisis.

However, facing an uphill battle for re-election this year, Sarkozy has thrown a spanner in the works by vowing to introduce a highly controversial tax on financial transactions, on his own if necessary.

“We won’t wait for others to agree to put it in place, we’ll do it because we believe in it,” Sarkozy said on Friday after talks in Paris with Italian Prime Minister Mario Monti.

But Monti, who is due in Berlin for talks with Merkel on Wednesday, urged France not to go it alone and Germany also resisted the call, saying it was trying to build a broad consensus for such a levy.

“We would like to see a global financial transaction tax but that is not possible at the present time,” Merkel’s spokesman Steffen Seibert told reporters at a regular news briefing.

“The German government would thus aim to introduce the financial transaction tax within the EU,” he added.

Seibert said the tax, which would have to be agreed unanimously within the EU and is fiercely opposed in Britain, was one of several issues on the agenda for the two leaders, together dubbed “Merkozy”.

“It is mainly about preparing the European summit at the end of January and its goal is to debate measures to boost competitiveness and growth,” the spokesman said.

British Prime Minister David Cameron vowed to block any attempt to introduce an EU-wide financial transaction tax because he said it would harm jobs and prosperity in Europe.

And the Association Paris Europlace, which represents key players in the French financial world, said such a tax would hurt the country’s economy unless it was implemented across the European Union.

Analysts say time is running out to hammer out the details of a “fiscal compact” agreed in principle in December that would tighten up budgetary discipline for all EU members except Britain, which has opted out.

“Whatever the outcome of these discussions (between France and Germany), a clear post-crisis landscape … needs to be mapped out at the forthcoming EU summits,” said Thomas Harjes from Barclays Capital.

“Without this, the crisis will continue to pose serious risks to the euro area’s cohesion,” he added.

Adding to the pressure in the run-up to the Berlin meeting was a raft of disappointing economic data from the eurozone, including joblessness hovering at a record high and slumping consumer and business confidence.

Meanwhile, the euro tumbled to another 16-month low against the dollar, falling under the $1.27 mark and Italian borrowing costs rose above the seven-percent barrier that many economists consider to be unsustainable.

Also on Merkel and Sarkozy’s plate at the lunchtime meeting is Hungary, after the International Monetary Fund and EU officials broke off talks over a possible credit line due to concerns over the independence of the central bank.

The tete-a-tete is the first of a series of high-level meetings to prepare the EU summit on January 30.

After Monti’s visit to Berlin on Wednesday, a three-way France-Germany-Italy summit will take place in Rome on January 20, three days before a key meeting of eurozone finance ministers in Brussels.