Top EU official seeks closer political, financial union

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While waiting for approval of the agreements, the ECB has stepped in to buy government bonds and drive down borrowing costs for Italy and Spain.

Fears that the eurozone’s third- and fourth-largest economies, respectively, may get sucked into Europe’s debt crisis have stoked fears they would lose access to market funding and be forced into requesting bailouts, as Greece, Ireland and Portugal already have.

The ECB launched the purchases only reluctantly, and Mr. Trichet indicated he expected the bailout fund — the European Financial Stability Facility — to be in a position to take them over.

Still, the 440 billion euros ($597 billion) available from the EFSF has not reassured markets, and so far, European leaders have resisted suggestions to increase its size.

Markets also have watched nervously as eurozone authorities pushed Greece to make more cutbacks to qualify for an installment of bailout money that is needed to keep the country from defaulting.

Greece’s international debt inspectors will return to Athens on Thursday after suspending their review of the country’s finances early this month amid talk of budget shortfalls.

Once the fact-finding mission has made its conclusions, the finance ministers of the eurozone will organize a special meeting in October to assess them.

A positive review is required before the International Monetary Fund, ECB and European Commission can release the next batch of rescue loans Greece needs to avoid bankruptcy.

A default by Greece or another country would send shock waves through the global economy, particularly in Europe, authorities fear. Banks would suffer such large losses on government bonds they hold that they would cut off credit to the wider economy and cause a recession.

David McHugh in Frankfurt, Germany, contributed to this report.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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