Debt-Ridden Greece 'Integral' Part Of Eurozone

The leaders of Greece, France and Germany have said the debt-ridden country is an "integral" part of the eurozone.

During an emergency phone summit the leaders said additional austerity measures Athens announced recently will ensure the country achieves its fiscal targets.

Fears that Greece was heading towards a default and the possibility it would leave the euro have hit markets for days.

Nicolas Sarkozy , Angela Merkel and Greek prime minister George Papandreou spoke after the International Monetary Fund held an informal board meeting on the situation.

The meeting was not a "decision-making" one, the IMF said in a statement, but was held to update board members of the latest developments.

US Treasury Secretary Timothy Geithner has moved to bolster confidence by claiming that European leaders are ready to do more to support the euro.

Athens has warned it will run out of cash in a few weeks' time and needs 8bn euros next month to pay wages and pensions.

Investors have been increasingly sceptical the debt debacle in the 17-nation currency area can be resolved.

Credit markets are factoring in a 90% chance Greece will default and Italy also remains under pressure.

However, the Italian Chamber of Deputies is expected to approve a 54bn euro austerity package this evening now prime minister Silvio Berlusconi's government has won a key confidence motion.

Despite the signs of political action today, there has been growing international alarm over events in the single currency area.

Chinese Premier Wen Jiabao said: "What we have to take note of now is to prevent the sovereign debt crises from spreading and expanding further."

China and the so-called BRICS of Brazil, Russia, India, China and South Africa are in early talks on increasing their holdings of European debt to help ease the burden.

US President Barack Obama has said the eurozone needs better fiscal co-ordination.

In a speech to the European Parliament in Strasbourg, the EU Commission president Jose Manuel Barroso urged governments to implement agreed reforms without delay.

He spoke about the need for international partners, EU citizens and the markets to see action and said "the truth had been drowned out" - a reference to the assault on equities and bonds.

A rebound in stock prices and the euro stalled in Asia overnight as investors remained spooked about a crisis that has also hit French banks because of their debt exposure to Italy but especially Greece.

Moody's cut the credit ratings of both Credit Agricole and Societe Generale, citing their Greek loans, in the run up to Europe opening this morning.

Its statement said that despite the downgrade, both are strong enough to withstand a default by the Greek government.

The share price of both banks has fallen by around half since the begining of the year.

The FTSE 100 opened 0.5% lower but later closed up 1% on hopes of further political measures to ease the euro crisis.

Banks were among those seeing improved values while BP shares were also making gains as an official US report on last year's oil spill in the Gulf of Mexico shared around some of the blame for the disaster.

The CAC 40 in Paris gained 1.9% while the German DAX closed up by 3.4%.

In the United States, the Dow Jones Industrial Average opened 0.6% higher.