EU leaders have closed in on a broad agreement to resolve the euro crisis and pressed Italy to slash its debt mountain to reassure jittery world markets.
A summit of EU leaders on Sunday came together on plans to boost the firepower of the eurozone rescue fund - the European Financial Stability Facility (EFSF) - and backed plans to recapitalise banks who would be hit by a massive writedown of Greek debt.
They also agreed to explore a re-opening of the core European Union treaty to cover closer eurozone integration although non-euro states remain wary about moves that might leave them out.
For that reason, the bloc was forced to bring all 27 member states back for a second meeting on Wednesday to finalise a response to the debt crisis.
The second summit in four days was originally meant to involve only the 17 nations that share the euro single currency.
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Speaking alongside German Chancellor Angela Merkel at a joint press conference, French President Nicolas Sarkozy said "a quite broad agreement is taking shape on the reinforcement of the EFSF".
Merkel said a French idea for the fund to acquire a banking licence was dead and buried, leaving a mix of plans to use the EFSF to offer insurance to eurozone bond holders, and moves to create a 'fund within the fund' that would be topped up by some of the main emerging nations.
The "leveraging" of the EFSF comes alongside a deal being negotiated with banks for them to accept a 50 per cent write-off on Greek debt, in exchange for a new bailout by the EU and the International Monetary Fund.
All of the outline decisions reached so far over a frenetic three-day series of high-level talks in Brussels need to be ratified by the 27 members at the full summit that EU president Herman Van Rompuy called for Wednesday.
Italy emerged as a new source of concern, with Italian Prime Minister Silvio Berlusconi under intense pressure to cut his country's deficit and debt.
"We have to reassure investors and reassure other states," Van Rompuy said.
He underlined: "Clearly, we are asking for a major effort on the part of the Italian authorities."
Italy is carrying debts of 1.9 trillion euros ($A2.57 trillion) - equal to 120 per cent of what the eurozone's third-largest economy produces in a year and way above the EU limit of 60 per cent.
Germany's Merkel urged "credible" cuts in the debt as part of efforts to save the eurozone.
"Italy is a great economic force but Italy also has a very high level of debt and it must be reduced in a credible way over the coming years," she said. "That's what we expect of Italy."
In return, Europe will boost the firepower of the 440-billion-euro EFSF set up last year after Greece's first EU-IMF bailout to defend the euro single currency.
Germany already needed, for domestic reasons, to run any eurozone deal past its parliament's budget committee before being able to sign up to any accord.
But now non-euro nations led by Britain and Poland also want to see all the small print first to make sure the eurozone is not taking decisions that would affect their interests.
The outcome of the back-to-back summits is being keenly watched around the world as concerns have grown that the eurozone debt crisis could spark a fresh global recession.
Leaders know that the financial markets are hoping for a concrete agreement this time around after months of agony and uncertainty over whether they really can tame the debt crisis for good.
