Three pivotal moments in Europe's biggest week since WWII

Rathbones fixed income manager Bryn Jones has said this week is the most important for Europe since the Second World War, as leaders try to resolve the debt crisis.

German Chancellor Angela Merkel and French Prime Minister Nicolas Sarkozy have ironed out an agreement to rescue the eurozone, ahead of a crucial summit on Friday.

Jones, running the Rathbone Strategic Bond and Ethical Bond funds, said investor must brace themselves in case the talks fail.

"We could finally see a state with individual countries without economic frontiers, but the bar has been set very high, and there is a huge amount of room for disappointment. The market must brace itself for that too," said Jones.

Jones also warned that, in the short term, three major events will be pivotal to ensuring long-term stability.

"The first is the US central bank's dollar-funding tenders. While a high uptake may be considered an increase in the financial system, it also marks a positive development that authorities are in control of the situation," he said.

"Secondly, there is this week's meeting of the ECB. Should we get a cut in the refinancing rate to 1% then this will also mark a positive, as too will any intention to step up the Securities Market Programme.

"But most pivotal is Friday, which brings us to the EU Leaders meeting, and a map of where we go over the next few years. A Treaty change is required. I suspect any news would likely come out after the market is closed, which could lead to a lot of position-squaring ahead of the weekend. Next Monday could herald a very interesting day as a result."