What Europe's leaders need to maintain eurozone's stability

MARKET volatility has surged lately, apparently vindicating those who have warned of lofty equity valuations.

But, even as the US stock market suffered one of its worst weeks since the financial crisis, the eurozone's public-debt market has remained relatively stable, with risk spreads - which have usually increased amid market volatility - scarcely changing, even for the peripheral eurozone countries.

The eurozone owes its ostensible immunity from financial-market gyrations to major improvements in the peripheral economies' fundamentals: growth has picked up, and unemployment, though still high, is declining rapidly. The question is whether these improvements are stable enough to ensure the eurozone's continued resilience.