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The leaders of Germany, France, Italy and Spain will meet in Rome on Friday in a bid to restore confidence in the euro zone ahead of a full EU summit next week.
German chancellor Angela Merkel is likely to find herself outnumbered.at the meeting as the four look for a practical way to achieve banking and fiscal union. She is expected to resist any pressure from Italian prime minister Mario Monti, French president Francois Hollande and Spanish prime minister Mariano Rajoy for less stringent euro zone fiscal policies or the issuance of common euro zone bonds.
There was some better news for Spain’s banks as independent auditors said they may only need up to 62 billion euros ($77 billion)) extra capital rather than the 100 billion euros initially feared. Spain’s medium term borrowing costs had earlier spiked to a euro era high on Thursday morning.
The announcement came as euro zone finance ministers met in Luxembourg to discuss how to channel financial aid to Spanish lenders, which are suffering as a result of the collapse of the domestic property market.
Madrid's economy minister said a formal request would be made within days for the bailout, which was agreed two weeks ago.
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