Germany, France reach accord on euro debt crisis before the European summit

French President Nicolas Sarkozy's office said that along with German Chancellor Angela Merkel he had overcome differences over how to combat the continent's spreading debt contagion and agreed on a common position ahead of an emergency European summit.

The leaders of the two largest economies in the eurozone held last-ditch talks for seven hours in Berlin on Wednesday ahead of today's summit to be held in Brussels, Sarkozy's office said.

There has been pressure on the two countries to come up with a solution to Greece's debt problems and also to stop the crisis spreading to other eurozone countries such as Spain or Italy.

Sarkozy's office said in a statement early this morning, that the two leaders "reached agreement on a common Franco-German position," without giving any details on what stand both countries would adopt.

Merkel's spokesman, Steffen Seibert, also confirmed on the agreement but refused to divulge any details. He further added that the leaders also discussed at length the crisis situation with Jean-Claude Trichet, president of the European Central Bank and also telephonically with EU President Herman Van Rompuy.

With France and Germany having adopted a common stance, hopes soared in the markets that Greece will possibly be bailed out with a fresh loan.

Before the announcement, Germany had downplayed calls from France and Brussels for  anything impressive materialising from today's emergency summit.

Earlier, the IMF had urged EU to take action "urgently" to prevent a eurozone meltdown, in view of the region's divided leaders position on Greece's debt crisis before the forthcoming summit.

IMF had warned that any spillover from the troubles in the region's weakest economies, especially Greece, would have unpredictable consequences on the core European economies, mainly France and Germany and would damage not only the region, but the global economy.