US President Barack Obama has called on European leaders to do more to get to grips with the debt woes of the 17-nation eurozone. He said the world economy would continue to show signs of weakness until the crisis was resolved.

Obama said Europe's debt predicament would be a "significant topic" for the next Group of 20 (G-20) meeting in France and that while Washington was "deeply engaged" with EU countries on tackling the crisis, ultimately it was up to Europe to solve it.

"In the end the big countries in Europe, the leaders in Europe must meet and take a decision on how to coordinate monetary integration with more effective coordinated fiscal policy," Obama told a reporters at the White House on Tuesday.

"Greece is obviously the biggest immediate problem. And they're taking some steps to slow the crisis - but not solve the crisis," Obama said.

"The bigger problem is what happens in Spain and Italy if the markets keep making a run at those very big countries."

He added that in an increasingly globalized economy, the eurozone's problems were having a major impact on the United States. His comments reflect growing doubt across the Atlantic that Europe's piecemeal approach to solving the crisis would prove fruitful.

Market volatility

Stock markets around the world have yo-yoed incessantly in recent months as efforts to contain the contagious debt crisis emanating from countries like Greece, Portugal, Ireland and Italy have hit roadblock after roadblock.

European stocks slid deeper into the red on Tuesday and the euro fell on rising expectations that Greece was set for a default despite fresh international efforts to resolve its debt crisis.

Whilst on an official visit to Finland, German Chancellor Angela Merkel sought to ease fears over a possible Greek bankruptcy, saying the eurozone had to stick together and that an "uncontrolled insolvency" must be avoided.

"I have made my position very clear that everything must be done to keep the eurozone together politically. Because we would soon have a domino effect," said the chancellor.

In response to the crisis, US Treasury Secretary Timothy Geithner will take the unprecedented step of attending a meeting of EU finance ministers in Poland on Friday. He is likely to urge Europe's leaders to expedite ratification of changes to the eurozone's bailout fund and consider boosting its size.

Meanwhile, the emerging economies which make up the BRIC grouping - Brazil, Russia, India and China - are to discuss possible financial aid to the European Union next week in Washington.

Brazilian Finance Minister Guido Mantega said BRIC representatives would already be gathered in the US capital as part of annual meetings of the International Monetary Fund and World Bank.

Author: Darren Mara (Reuters, AFP)
Editor: Andreas Illmer