BRUSSELS: European Union leaders gathered on Thursday for a two-day summit crucial to the future of the euro, playing down divisions as the sovereign debt crisis threatens to engulf even the bloc's top economies.
"This is a summit where we will take important decisions," said EU president Herman Van Rompuy on opening the summit. "Europeans expect no less from us."
The 27 EU heads of state and government began talks at 3:20 pm (1320 GMT) with the world anxiously awaiting a grand plan to save the single currency from a collapse with unfathomable global repercussions.
European stock markets and the euro slid in anticipation of the summit after a week that saw Cyprus and Spain, the Eurozone’s fourth economy, join earlier victims of the two-and-a-half year crisis, Greece, Portugal and Ireland.
"There will be a domino effect across all of Europe. We need emergency measures," said Belgian premier Elio Di Rupo as he joined counterparts.
With Italy, the Eurozone’s third-largest economy, also under threat, leaders of Europe's "big two", France and Germany, headed into Brussels careful to show unity despite their divisions.
Chancellor Angela Merkel sees austerity and long-term steps towards economic and monetary union as the best way to tackle the crisis, while France's just-elected Socialist leader Francois Hollande touts solidarity and immediate steps to stimulate growth.
"I have come to find very quick solutions to support the countries facing the biggest problems in the markets," Hollande said in a clear reference to Italy and Spain.
"Growth must be at the heart of our commitments," Hollande added in reference to a growth pact of between 120 billion and 130 billion euros to be debated at the summit.
Weighing in behind the new French leader, Merkel agreed Europe needed growth to revive sluggish economies facing record 11 percent joblessness.
"We have worked out a good programme, in particular for future investment and to give young people a better chance at a job," she said.
"I hope that we can agree this pact today and give an important signal - combined with the fiscal pact - that on one hand we of course need solid budgets and on the other hand, as the other side of the coin, also growth and jobs."
All eyes in past weeks have been on the "big two" Eurozone economies, traditional drivers of the union but which seem poles apart, with northern and southern European nations largely falling into line behind.
And after 18 previous summits and piecemeal solutions since 2010, markets remain wary.
This summit "is perhaps the most important since the foundation of the EU" 60 years ago, said the head of the global IIF bank lobby Charles Dallara.
"It's about winning back the trust and confidence of long-term investors," he told the German weekly, Die Zeit. "I'm afraid they'll only allow themselves to be convinced by comprehensive solutions."
Spanish Prime Minister Mariano Rajoy warned that the Eurozone’s fourth largest economy was running out of time and could not finance itself for long at the high rates of almost 7.0 percent it now pays on markets.
"There are many Spanish public institutions that cannot finance themselves," he warned on the sidelines of the meeting, shortly before the Spanish parliament approved a new austerity budget.
And Italy had to pay investors higher rates of return at a five and ten-year bond sale just hours before the Brussels meet as markets continued to panic following banking turmoil in Spain and fears the summit will produce scarce results.
"Markets have doubts about the survival of the Eurozone," said an EU diplomat.
However, a senior German government official said Italy and Spain should not be overly worried about their high borrowing costs. "I caution against exaggerated panic," said the official, who declined to be named.
Italy's Prime Minister Mario Monti has warned he is ready to stay until Sunday if necessary to come up with answers to the crisis that will satisfy markets ahead of Monday's opening.
Echoing what many economists have said for years, that the single currency needs a single government, a group of countries led by Germany want stricter central control by Brussels over national budgets to put a stop to deficits and debt.
But France for one is reluctant to relinquish sovereignty.
At the summit, leaders nonetheless will discuss a roadmap toward tighter economic and monetary union over the next decade, with the first step a banking union, possibly agreed in principle at the summit but set up end year.
"Unless France and Germany can soon agree on a grand bargain, disaster may loom," said analyst Charles Grant of the Centre for European Reform.
Hollande, along with Monti, also favours dipping into the Eurozone’s 500-billion-euro (Dh2.3 trillion) rescue pot to help Spain's distressed banks or buy bonds of virtuous economies whose borrowing costs are soaring due to market pressure.
But Merkel is firmly opposed to throwing money at struggling banks or poorly-run economies.