Hedge fund showdown in Europe

(Reuters): London and Paris face a showdown over new rules for hedge funds within weeks of British elections, with both sides refusing to budge on a controversial law to control the secretive industry, diplomats said. Spanish Economy Minister Elena Salgado is preparing to ask European finance ministers at a gathering next month to give the green light to new curbs on hedge funds and private equity, one diplomat said. The move is set to escalate a long-running Anglo-French spat over the treatment of foreign funds under the new regime.

It will also fuel tensions between Brussels and Washington, which fears the rules will stop U.S. funds operating in Europe. Privately, Paris has threatened to use EU voting rules to push through the law over the objections of Britain.

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