The euro hit a 10-month low against the U.S. dollar Wednesday as leading credit ratings agency Fitch Ratings downgraded Portugal's debt, turning up the volume on investor fears that Europe's currency union has no way to shore up members with troubled economies.
EU Commission President Jose Manuel Barroso called on European governments to end dithering over what to do and agree on a detailed plan of financial help for Greece. He said their response at a two-day meeting would be a test of "their commitment to European and monetary union."
But Germany has blocked efforts by European nations to come up with a bailout program, saying Greece isn't asking for help, isn't on the verge of bankruptcy and should turn to the IMF if it reaches a point where it can't borrow from markets. France and some EU officials were opposed to IMF involvement.
European diplomats said frantic negotiations Wednesday could see both France and Germany soften their views and find a solution that includes the IMF and European Union sharing the burden of a financial rescue. Speaking on condition of anonymity, they said Spain's Jose Luis Rodriguez Zapatero is heading efforts to get the 16 eurozone nations to meet separately today on the crisis surrounding Greece, along with the meeting by all 27 EU member governments.
Eurozone leaders have only met once for a summit before at the height of the banking crisis in 2008. "He is pushing hard for this and we think it is going to happen," said the diplomat.
EU President Herman Van Rompuy is also asking for a eurozone summit, said another EU official. He met French President Nicolas Sarkozy in Paris on Wednesday, Sarkozy's office said.
Greece's debt crisis has undermined the euro by showing that the rules supporting it have not prevented governments from overspending and running up large deficits and debt loads. Athens' woes have led to fears other eurozone countries with troubled finances, such as Portugal and Spain, will also come under pressure from the bond market and find themselves unable to borrow at acceptable costs.
Investors doubts that Greece will pay its debts are leading markets to demand higher interest rates when Athens sells government bonds - rates the government says it can't go on paying.
Worries the crisis is exposing fundamental weaknesses in the euro weighed on its exchange rate, which was down 1 percent to $1.3347. It had earlier fallen to $1.3335, its lowest since May.
"The time has come to make a decision," said Jean Pisani-Ferry, an economist at the Bruegel think tank. "The eurozone doesn't have a crisis management regime ... Now it has to be done."
Germany remains reluctant to put its taxpayers' money on the line to plug debt problems Greece caused with years of overspending and faking budget figures. A senior government official in Berlin said, "For us, there is no decision at this summit on aid to Greece."
He said aid "comes into question only as a last resort" when Greece has exhausted all efforts to raise money from bond markets.
The German government wants the IMF to be "significantly involved" in any bailout because it believes that it could face a legal challenge from the country's constitutional court unless it can prove that that any European or German aid is the last option left to Greece.
The European Commission's Barroso tried to sway them, saying a bailout program would be "a safety net to be used only in case all other means to avoid the crisis have been exhausted" that would protect the financial stability of the currency.
There are now "concerns" about the eurozone's stability, the EU's economy commissioner Olli Rehn said Wednesday. Eurozone nations pledge last month to help Greece if the currency's stability was in doubt, but didn't say how they would do that.
The Greek government says it isn't looking for money but a detailed plan that would "exert influence" on markets and lower crippling interest rates that are undermining Greek efforts to shave billions of euros from its budget this year.
Spanish officials said individual loans from eurozone governments would be the most likely bailout option. They said it was "increasingly clear" that the IMF will be involved in some way in a Greek rescue, in cooperation with EU nations.
Greek Prime Minister George Papandreou warned he would go to the IMF if the EU can't come up with anything. That would be a serious blow for the eurozone, showing that it can neither prevent a crisis or rescue a member country that risks default.
But his main aim appears to be to put pressure on markets to get Greece's borrowing rates down, saying the country is being forced to use the billions of euros it is saving from a tough austerity program to pay extra debt costs.
Germany is not sympathetic, with officials saying Greece can't simply seek a bailout because it doesn't like the high costs markets are charging it because they see it as a bad risk.