Euro Crisis: Spain Demands EU Summit Action

The prime minister of Spain says he will use this week's EU summit to demand that existing "instruments" are deployed to calm financial markets.

Mariano Rajoy told the Spanish parliament access to financial markets was his country's top priority - warning that Madrid would not be able to continue financing itself at current borrowing costs for a long time.

He said: "I will propose measures to stabilize financial markets, using the instruments at our disposal right now."

Mr Rajoy was speaking on the eve of the two-day meeting in Brussels and ahead of crucial talks tonight between Germany's chancellor Angela Merkel and the French president, Francois Hollande.

The French and German leaders will be aiming to patch up their differences and find some common ground before the summit.

The new socialist president of France wants less austerity and more growth while Germany won't relax austerity or agree to the issuing of Eurobonds, without stricter controls on member countries' finances.

While one of the summit's aims is to help ease the contagion felt in Spain and Italy, Berlin has consistently spoken out against the idea of joint borrowing as a eurozone bloc.

Germany fears that lower borrowing costs would encourage a shift away from tackling the wider debt crisis and ask too much of the German taxpayer.

Mrs Merkel reportedly told a private meeting last night there would be no eurobonds 'in her lifetime' - such is her personal opposition to the measure despite the growing pressure on her for a climbdown.

She told the Bundestag today the suggestion was "economically wrong" and "counter productive."

At the G20 summit in Mexico earlier this month, the eurozone's top politicians had promised measures to address the crisis at the EU summit.

But markets fear the lack of clear agreement means another meeting will come and go with little or nothing in terms of solutions.

Trading volumes remain very weak in equity markets as investors continue to shun risky assets.