European members of the Group of 20 leading and emerging economies will "take all necessary measures" to protect the integrity and stability of the eurozone, according to a draft of the summit declaration obtained by dpa Monday.
"Against the background of renewed market tensions, euro area members of the G20 will take all necessary measures to safeguard the integrity and stability of the area, improve the functioning of financial markets and break the feedback loop between sovereigns and banks," the document reads.
The G20 formally began its meeting Monday afternoon in Los Cabos, Mexico, with the European financial crisis at the top of its agenda one day after Greek voters voiced support for a pro-bailout party that aims to keep Athens in the eurozone.
But despite the election result, Europe still must work to convince markets, as problems remain not only in Greece, but also in Spain. The European Union agreed this month to inject up to 100 billion euros (126 billion dollars) into the country's ailing banks.
European and US stock markets closed down again Monday as a steep rise in Spanish and Italian bond yields overcame optimism about Greece.
The interest rate in Spain's benchmark 10-year bond rose as much as 34 basis points to 7.21 per cent, the highest since the creation of the euro in 1999. Seven per cent is regarded as the level above which Spain's borrowing costs could become unsustainable, forcing the country to follow Greece, Ireland and Portugal in seeking a EU-led financial rescue.
Spain's Finance Minister Luis de Guindos stressed at the summit, however, that "Spain is a solvent country."
"We in the government are convinced that the current situation of penalizing by the markets does not fit either the efforts or the potential of the Spanish economy, and that is something that will eventually be acknowledged within the coming days or weeks," De Guindos told a press conference.
Despite the pressure, EU leaders said they will not tolerate lectures on how the bloc should handle its economic crisis.
"We are extremely open and we are engaging with our partners, but we certainly are not coming here to receive lessons from nobody," European Commission President Jose Manuel Barroso vehemently told reporters before meeting with G20 leaders.
The G20 draft said it welcomed Spain's plan to recapitalize its banking system and said it would work in concert with the euro area and the next Greek government to keep Athens on a reform path. The draft also says the group supports further efforts to integrate the European bloc.
Mexican President Felipe Calderon expressed confidence that Europe can solve its economic woes as he opened the two-day summit.
"We have confidence in you," he said to the Europeans. "We know that you're making great efforts."
He pointed to the seriousness of the situation and the potential for problems in one area to impact the broader world economy.
Non-European countries, including the United States and China, have expressed concern the crisis could seriously hamper the broader world economy.
"Obviously we are going to be very busy over the next day and a half," US President Barack Obama said during a bilateral meeting with Calderon. "The world is very concerned about the slowing of growth that has taken place."
"Now is a time as we've discussed to make sure that all of us do what's necessary to stabilize the world financial system, to avoid protectionism," he said.
All the world's biggest economies must do their part in boosting the flagging global economy, said German Chancellor Angela Merkel, who met later to discuss Europe with Obama.
"Everyone here at the world economic conference still has to do their homework," she said.
A planned meeting between Obama, Merkel and the leaders of France, Italy, Britain, Spain and the European Union to discuss the economic crisis in Europe, scheduled to take place late Monday after the G20 dinner on the global economy, was cancelled after the dinner ran late, European and US sources said.
There might be the opportunity for meetings on the issue Tuesday, a White House official said.
The Mexican presidency of the G20 has set economic stabilization, financial system strengthening, international financial architecture reform, food security and green growth as its top priorities.
Ahead of the summit, Obama met with Russian President Vladimir Putin for the first time since Putin returned to that office earlier this year.
They issued a joint call for a ceasefire to end the violence in Syria, saying they had found some common ground in "candid" discussions. But the pair appeared tense as they delivered remarks following their longer-than-expected two-hour meeting.
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