US, European leaders hold crisis talks

US President Barack Obama, German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed to consider further steps to pressure Syrian President Bashar al-Assad over his harsh crackdown on protests, the White House said.

Obama held separate phone calls with the European leaders, and they all condemned the Syrian government's "indiscriminate violence against the Syrian people," the White House said.

They also agreed to "consider additional steps to pressure the Assad regime and support the Syrian people," but the White House statement did not elaborate on any measures under consideration.

Earlier, the leaders of Germany, France, Italy and Spain held crisis talks after China and Japan called for global policy cooperation to stop panic on the markets.

The European Central Bank offered only limited help and told Italy and Spain – now at the eye of the storm – to take tougher austerity measures before it will step in to buy their bonds.

The comments from China and Japan, Washington's two biggest foreign creditors, highlighted fear that Europe's debt crisis could spin out of control and the US economy may go into reverse.

Sarkozy discussed the situation on euro zone financial markets with Merkel and Rodriguez Zapatero in separate telephone calls today, his office said.

Non-euro member Britain said it was in touch with euro zone leaders and the Group of Seven leading industrial powers on the market turmoil.

"Recent developments mainly reflect an increasing skepticism about the systemic capacity of the euro area to respond to the ongoing crisis," Greek Prime Minister George Papandreou wrote in a letter to European Commission President Jose Manuel Barroso, echoing an assessment from Barroso himself earlier this week.

The ECB reactivated its dormant bond-buying programme yesterday in an attempt to hose down the euro zone's deepening sovereign debt crisis, but only bought Portuguese and Irish debt. Influential members of the ECB opposed even that.