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European leaders try to stabilise euro

Euro zone leaders decided on Friday to prepare special measures before financial markets open on Monday to prevent financial turmoil in Greece from spreading.

The leaders of the 16 countries that use the single currency said after talks with the European Central Bank and the executive European Commission they were ready to take whatever steps were needed to protect the stability of the euro area.

“We will defend the euro whatever it takes. We have several instruments at our disposal and we will use them," European Commission President José Manuel Barroso said after a euro zone summit in Brussels.

He declined to give any details of the proposals, which will be presented to all 27 European Union finance ministers for approval on Sunday.

Financial markets have been pounding euro zone countries with high deficits or debts as well as low economic growth, threatening to force Portugal, Spain and Ireland into a position where, like Greece, they would need to seek financial aid.

Euro zone leaders, who have been accused of heightening market uncertainty with a lack of action, agreed in the face of rising market concern to accelerate budget cuts and ensure budget deficit targets are met this year.

They agreed to sharpen EU budget rules and have more effective sanctions for rule-breakers, and to pay close attention to debt levels and competitiveness.

They agreed they faces an extraordinary situation after giving their political approval to an EU-IMF deal to release €110 billion euros (SFr155 billion) to Greece over three years.

They said they fully supported the European Central Bank in its actions to safeguard the stability of the euro zone. The leaders’ statement said all euro area institutions, including the ECB, would use the “full range of means available to ensure the stability of the euro area”. and agencies

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