Europe Debt, Europe Debt Crisis | featured news

European leaders are holding an emergency summit on Greece's debt crisis, trying to prevent a meltdown for the euro and a global economic slump.

The world economy should expand steadily this year and next thanks mainly to prospering emerging powers, a Reuters poll showed, but fiscal troubles lurking in Europe and potentially the United States risk blowing this view apart.

Cutting Greece's debt will not solve the country's problems, ECB policymaker Jens Weidmann was quoted as saying on Sunday, adding Athens needed to raise its productivity instead.

The Italian austerity budget worth nearly 48 billion euros was approved by the upper house of parliament on Thursday, overcoming its first parliamentary hurdle.

Fitch Ratings on Wednesday downgraded Greece deeper into junk territory, citing the absence of a new and fully funded financing program for the country.

Prime Minister Silvio Berlusconi tried on Tuesday to calm fears that Italy could be swept into a full-scale financial crisis and the opposition pledged to smooth the passage through parliament of tough debt-cutting measures.

European Council President Herman Van Rompuy has called an emergency meeting of top officials dealing with the euro zone debt crisis for Monday morning, reelecting concern that the crisis could spread to Italy, the region's third largest economy.

The International Monetary Fund's executive board on Friday said it approved a disbursement of about 3.2 billion euros to help Greece pay debts due this month.

Nearly one-third of 91 European banks undergoing the latest round of public stress tests could need external support to be brought up to scratch, Moody's said.

A credit agency warning that Greece could face default if it follows an international plan designed to help the country cope with its massive debts caused Asian markets to stall Tuesday.