Draghi urges eurozone nations towards fiscal union

European Central Bank (ECB) President Mario Dragh has warned risks facing the eurozone will increase unless governments adopt a closer fiscal union.

Draghi, presenting the ECB's 2010 Annual Report in the European Parliament, said  eurozone leaders must adopt fiscal union to restore confidence in markets.

"What I believe our economic and monetary union needs is a new fiscal compact - a fundamental restatement of the fiscal rules together with the mutual fiscal commitments that euro area governments have made," said Draghi.

He added the ECB will only snap up a 'limited' amount of government debt from periheral nations and restated the bank's central role is to control inflation.

Draghi's downbeat speech sent the Dow Jones back into the red, dropping 0.28% to 11,942 on the opening bell, losing some of the ground gained in yesterday's session, in which the index surged 490 points.

The Dow posted its largest rise in three years on Wednesday as a co-ordinated plan by the world's major central banks to help struggling lenders boosted sentiment.

Meanwhile the FTSE 100 was up 0.63% or 45 points to 5,540 at 3pm, while the French Cac was fairly flat and the German Dax was 0.54% lower at 6,055.