Europe is poised to mount the largest ever defence of a currency in the next few hours.
The European facility will be worth around 500 billion euros, or around $A650 billion.
But there were signs that the EU is split with Britain saying it will not be a part of this new fund.
British officials said the country will not underwrite a EU bailout fund worth some 60 billion euros ($A85.5 billion) that finance ministers were discussing at emergency talks in Brussels.
The stabilisation scheme is expected to include government-backed loan guarantees worth 440 billion euros provided by eurozone members, according various media reports.
This will come on top of the 60 billion euro expansion of an existing balance of payments facility that the EU has used to help Latvia, Hungary and Romania, three non-eurozone countries.
The facility would be increased to 110 billion euros with the European Commission raising money on the markets using the EU’s 141billion euros-a-year budget as collateral in other words, the UK would be indirectly supporting the scheme.
This would cover all 16 eurozone member nations.
Australian and Japanese markets saw the first impact of the support plan for the euro and battered European banks and markets.
The euro and the Australian dollar rose in early Australian trading monday morning as the announcement was delayed.
Driving it, the growing fear stalking the markets as the fallout from Greece’s financial problems ripples across the globe.
Markets plunged late last week as the euro fell sharply, shares and commodities fell and bank shares in all EU countries were sold down heavily.
At least 10 companies suspended or withdrew initial offerings in the US, UK, Europe and Asia as investors abandoned risky investments and headed for the safety of US dollars or yen assets.
There were signs of liquidity strains in financial markets.
The Bank of Japan injected US22 billion of short term money on Friday to help its markets.
Interbank rates rose, bond yields on securities across the continent rose on selling.
European banks appealed, and got some commitment from the Eurozone leaders for support.
We will see the shape of that today from all 27 member countries of the EU.
Europe’s banks on Friday appealed for the European Central Bank to buy the bonds of crisis-hit eurozone members such as Greece (which it is already doing), Portugal, Spain and others.
That was a day after such a move was ruled out by the ECB with head, Jean-Claude Trichet, saying it hadn’t even been raised at the central bank’s monthly meeting earlier Thursday.
The Financial Times reported that bankers from 47 European groups urged the ECB to become a “buyer of last resort”of eurozone government bonds to steady markets.
Eurozone leaders agreed Friday that they would have special measures ready before financial markets open today in Asia today to prevent financial turmoil in Greece spreading to other countries such as Spain and Portugal, and shaking countries and economies elsewhere, as we saw on Thursday and Friday.
Portugal indicated that it would make quicker and deeper cuts to its budget deficit this year to reassure markets that it was committed to reining in spending.
Newsagencies reported the government as saying it would cut the country’s budget deficit further than planned this year to 7.3%, instead of 8.3%.
Eurozone leaders also decided to ask all 27 EU countries to agree a financial mechanism to ring-fence the Greek crisis before markets open on Monday. The UK will not be putting up any money.
All 27 EU finance ministers met overnight to agree on the fund. That means the outgoing British Labour Government participated as the Conservatives have yet to reach agreement with the Liberal Democrats on some sort of power sharing.
European leaders agreed to set up an emergency fund to halt the spreading impact of Greece’s financial implosion from triggering a wholesale crisis of confidence in sovereign debt across the continent.
The euro fell 4.3% against the US dollar last week; all European stockmarkets are now in losing territory for the year (as are the US markets and others elsewhere).
