Eurogroup President Jean-Claude Juncker said the eurozone and the European Central Bank agreed to work together to save the bloc's single currency. The eurogroup is composed of finance ministers of the eurozone.

ECB Chief Mario Draghi earlier said the regional central bank was ready to do whatever is needed to preserve the euro, specifically tough measures. His assurance helped boosted the stock market and bring down sharply Spain's borrowing cost sharply last week.

French and German leaders also made similar joint declarations on Saturday, but they did not state specific actions they plan to put in place.

"We have come to a crucial point. But we have to outline the pace and scope. We will act together with the ECB," Le Figaro quoted Mr Juncker who was former finance minister and current prime minister of Luxembourg.

The European Financial Stability Facility (EFSF), the bloc's bailout fund, has only $245 billion which is not sufficient to rescue Italy if Rome would need a Greek-style rescue. The EFSF is allowed to intervene on primary markets only for nations that had signed an official reform programme in exchange for a financial rescue, similar to what Greece and Portugal inked. The fund could purchase public debt on the secondary market and offer credit lines as precautionary measure as well as lend money to recapitalise banks.

In the last European Union summit in June, EU leaders agreed that the EFSF would recapitalise banks directly to avoid adding to the national debt of problematic governments.

Spanish banks are seeking a €100-billion credit line which would help the Spanish government avoid the fallout from a full-blow bailout request.

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