EU deal 'agreed' on Greece debts
EU leaders have reached a deal on helping Greece tackle its debt crisis, EU President Herman Van Rompuy says.
He gave no further details, but all 27 EU leaders are now set to discuss it.
German Chancellor Angela Merkel said Greece "will not be left on its own, but there are rules and these rules must be adhered to".
It is an important signal to the markets that France and Germany are standing shoulder-to-shoulder with Greece, a BBC correspondent says.
Greece's debt crisis has put pressure on the euro, and it will dominate the EU summit now under way in Brussels.
There was an instant reaction on the markets, where traders welcomed news of the deal. Major European markets rebounded from earlier falls and the euro rose against the US dollar.
Mr Van Rompuy, the new President of the European Council, said the 16 eurozone countries "will take determined and coordinated action if needed to safeguard stability in the eurozone as a whole".
“ The Greek people will be watching to see if they face additional austerity measures ”
Gavin Hewitt BBC Europe editor
He also stressed that Greece had not asked for financial aid, and added that the EU was expecting "rigorous" action from the Greek government.
The BBC's Dominic Hughes in Brussels says the details of the EU help for Greece may not emerge until Monday, when eurozone finance ministers will meet.
It is the first big test for Mr Van Rompuy, who wanted the summit to focus on a new strategy for jobs and growth - a blueprint for the next 10 years. But defending the euro is now a more pressing issue.
EU rules prevent the eurozone from collectively bailing out Greece, but the debt crisis has forced EU leaders to seek ways to help nevertheless.
UK Prime Minister Gordon Brown stressed that "the discussions at the moment are within the euro area," when asked if UK taxpayers' money would be part of any EU aid.
Eurozone contagion fears
The markets remain sceptical that Greece will be able to pay its debts.
Any EU budget support for Greece is likely to come with stringent conditions, to ensure that Athens fulfils its austerity plans and to reassure European voters that their taxes will not be diverted to propping up Greece.
GREEK AUSTERITY PLAN
Cut budget deficit below EU ceiling of 3% of GDP by 2012, from 12.7% in 2009
Freeze public sector salaries and cut bonuses
Replace only one in five of people leaving civil service
Raise retirement age by two years to 63, by 2015
Raise taxes on fuel, tobacco, alcohol and property
Thursday's talks are all the more urgent coming just hours after a public sector strike brought many services to a standstill in Greece.
The government's decision to freeze public sector salaries and raise the retirement age are among the austerity measures that have angered Greek trade unions.
Other eurozone countries with big deficits, such as Portugal and Spain, are seen as vulnerable if Greece's budget crisis is not tackled resolutely.
Greece's deficit is, at 12.7%, more than four times higher than eurozone rules allow. For years Greek spending has ballooned while tax revenue has diminished.
Its debt is about 300bn euros ($419bn; £259bn), and the government estimates it will need to borrow about 53bn euros this year to cover budget shortfalls.
Debt servicing is now costing Greece 11.6% of its gross domestic product and it has to pay more interest on loans now because its credit rating has been downgraded.
Wary of IMF help
Analysts say that powerful eurozone members such as Germany may be able to help by buying Greek government debt or by providing loan guarantees.
In addition, the European Commission may decide to disburse regional aid to Greece earlier than planned.
But EU leaders appear reluctant to call on the International Monetary Fund to shore up the Greek economy. That would be a big blow to pride in the single currency.
HAVE YOUR SAY Since the Greek debt problem put them some three times over what the EU is supposed to allow I can't see the justice in this nothins_ever_easy, Belfast
The BBC's economics correspondent Andrew Walker says a default by any of the high-deficit eurozone countries would hit banks in Europe which hold government debt. The risk is that the contagion could trigger a rapid decline in the euro's value, he says.
So far the decline of the euro has been substantial - about 9% since early December - but not disorderly, he says.
The European Commission is working on a blueprint for the EU's long-term recovery and growth, called Europe 2020, which is expected by early March.
It will replace the Lisbon Strategy, launched in 2000, which became a victim of the global financial crisis and of fiscal rule-breaking by EU governments.
Mr Van Rompuy is reported to favour tighter EU co-ordination of economic policy and enhanced EU surveillance of member states' budgets.
Story from BBC NEWS:
Published: 2010/02/11 12:25:39 GMT
© BBC MMX