BRUSSELS (AP) - Under pressure to deliver shock treatment to the ailing euro, European finance ministers failed to come up with a plan for European countries to spend within their means. Such a plan is needed before Europe's central bank and the International Monetary Fund consider stepping in to stem an escalating threat to the global economy.
The ministers delayed action on major financial issues - such as the concept of a closer fiscal union that would guarantee more budgetary discipline - until their bosses meet next week in Brussels.
Stock markets fell Wednesday as a top EU official conceded that the future of the euro now rests heavily on the meeting of European heads of state on Dec. 9. Stock markets had risen this week on hopes that intense bond market pressure would finally force the eurozone into quicker and more robust action.
"We are now entering the critical period of 10 days to complete and conclude the crisis response of the European Union," EU Monetary Affairs Commissioner Olli Rehn said, adding: "There is no one single silver bullet that will get us out of this crisis."
At a meeting Tuesday night, finance ministers for the 17 countries that use the euro handed Greece a promised euro8 billion ($10.7 billion) rescue loan to fend off its immediate cash crisis and promised to increase the firepower of a fund to help bail out ailing eurozone countries.
But they failed to increase the firepower of a European bailout fund to euro1 trillion ($1.3 trillion), as they had hoped to do.
"It will be very difficult to reach something in the region of a trillion. Maybe half of that," said Dutch Finance Minister Jan Kees de Jager.
Klaus Regling, head of the bailout fund, tried to be upbeat, saying the ministers had committed to increasing its size from its current euro440 billion ($587 billion) but refusing to give a specific size. He assured reporters it was more than big enough to deal with Europe's immediate debt problems.
"To be clear, we do not expect investors to commit large amounts of money during the next few days or weeks," Regling said. "Leverage is a process over time."
The ministers did agree to use the bailout fund to offer financial protection of 20-30 percent to investors who buy new bonds from troubled eurozone nations.
"We made important progress on a number of fronts," eurozone chief Jean-Claude Juncker insisted late Tuesday. "This shows our complete determination to do whatever it takes to safeguard the financial stability of the euro."
Wednesday's meeting in Brussels has brought in the 10 non-euro finance ministers from the 27-nation EU, who have been pressing hard for a swift solution for fear that their economies will suffer.
Sweden's Anders Borg said there was no more time to waste and that the markets don't provide "any honeymoons" for any countries that stray from fiscal austerity. He stressed that Spain and Italy need to "take out all the skeletons" from their financial closets and implement budgetary belt tightening measures.
Many economists say the 17 nations that use the euro have little choice but to back proposals for much closer coordination of their spending and budget policies.
Though such a change would reduce their ability to run budget deficits, it could potentially pave the way for much more aggressive support from the European Central Bank.
"If the eurozone is to survive, there needs to be more fiscal union," said Eswar Prasad, an economics professor at Cornell University in the state of New York.
For struggling economies, this might be the necessary price of survival. With such discipline in place, the ECB could then agree to make major purchases of government bonds from Europe's troubled countries. Doing so could help lower their borrowing costs and enable them to finance their debts.
For now, the ECB has been reluctant to take such a frontline role, arguing that it's up to governments to sort out their fiscal mess. It's voiced worries that a big bond-buying program could allow economically reckless countries off the hook for painful spending cuts and tax increases.
But a tighter fiscal union could reassure the ECB and lead it to act more forcefully, said Jacob Funk Kirkegaard, a fellow at the Peterson Institute for International Economics.
The alternative could be a default by Greece, or even Italy, and a break-up of the eurozone. That could spark chaos, forcing some or all the countries to return to their own individual currencies.
A default could also cause lending to seize up worldwide. Some European banks holding large amounts of government debt would likely collapse. As credit dried up, other banks around the world would probably hoard cash. The credit crunch could push European countries into a deep recession.
A European downturn would also slow the flow of exports to Europe from the United States and Asia and weaken their economies. U.S. stock markets would likely fall, reducing household wealth and consumer spending and further choking growth.
Many economists say the threat of default means the International Monetary Fund might end up contributing to a bailout fund. An IMF spokesman denied Tuesday that the international lending group is consulting with the Italian or Spanish governments.
But the IMF could work with institutions like the ECB, Cornell's Prasad said. Funneling money through the IMF would be more politically palatable for the ECB than directly aiding individual countries.
Still, the IMF has only about $390 billion available to lend. That wouldn't be anywhere near enough to rescue Italy, which has $1.2 trillion in debt.
"In the short term, there is only the ECB," Kirkegaard said.
Associated Press writers contributing to this report included Angela Charlton in Paris, Melissa Eddy and Juergen Baetz in Berlin, Raf Casert and Greg Keller in Brussels and Christopher S. Rugaber in Washington.