EU leaders move to stabilise economy

- France and Germany said today they wanted full implementation of measures agreed at a eurozone summit in July in order to safeguard the single currency as markets brace for fresh turmoil this week.

"President (Nicolas) Sarkozy and Chancellor (Angela) Merkel reiterate their commitment to fully implement the decisions taken by the heads of state and government of the euro area and the EU institutions on July 21," a joint statement said.

"In particular, they stress the importance that parliamentary approval will be obtained swiftly by the end of September in their two countries," it added.

The statement comes as officials around the world scramble to head off fresh market turmoil on Monday as investors take on board Friday's unprecedented US ratings downgrade by Standard and Poor's on the grounds US politicians have failed to properly tackle the US debt problem.

The European debt crisis meanwhile threatens to snare Italy and Spain, after forcing bailouts for Greece, Ireland and Portugal.

In their statement, France and Germany said the measures were taken to "in order to avoid (debt) contagion."

They said they were confident that "ECB analysis will provide the appropriate basis for secondary market interventions (to buy government bonds) as it will help determine the case when financial stability of the eurozone as a whole is at risk."

The ECB has been reluctant to buy government bonds directly from the markets even though this should ease the pressure on weaker eurozone countries seeking to raise fresh funds.

Some analysts have blamed ECB chief Jean-Claude Trichet's failure to clearly back Spanish and Italian government bonds last week for contributing to the massive turmoil on the stock and debt markets.