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Spanish prime minister Mariano Rajoy has defended his government's attempts to shore up the country's troubled financial sector, blaming the previous Socialist administration for failing to deal with the problem in 2009.
During a parliamentary debate on the offer of a loan of up to 100 billion euro (£80 billion) from the 17 eurozone countries, Mr Rajoy blamed then-governing Socialists for refusing to acknowledge Spain's banks were vulnerable over a property boom that went bust.
Christine Lagarde, the head of the International Monetary Fund, has said the global economy is struggling and with progress being severely tested, adding there are signs it is losing ground and that the risks are rising.
She said Europe needs a comprehensive strategy to break a dangerous cycle of mounting tensions that keeps it stuck in crisis mode.
Financial sector reforms are essential she said, adding: "We stand at a crossroads. "Policymakers need to lay out a clear road map for how to finish the job - not just looking to the next five or 10 years, but looking to the next weeks and months ahead"
The IMF's head also called for European financial integration saying: ""Let me be clear: the heart of European bank repair lies in Europe. That means more Europe, not less."
Five years since the start of the financial crisis, further action to reform the global financial system is still badly needed, which means strengthening crisis management tools and the overall architecture of the system, she said.
The European Central Bank says Spain could formally request aid for its troubled banks "soon". Asked if the request could come tomorrow, ECB Vice President Vítor Constâncio said: "Everything is possible."
The US President says it's important not to "scold" Europe or tell European leaders what to do. Barack Obama says engaging in too much austerity too quickly can make it harder to pay off debts.
Obama: "The challenges they face [Europe] are solvable. Right now the focus has to be on strengthening the banking system... They [Europe] will have to look at how to achieve growth while trying to carry out structural reforms - that may take years to accomplish...
If they are just cutting and cutting and cutting and unemployment goes up and up and up and people stop spending money - ironically that can make it harder for them to carry out reforms over the long term.
If Europe goes into recession that means we're selling fewer goods and fewer services and that slows our recovery."
US President Barack Obama: "Greek people need to realise that if they leave the Eurozone their hardships would be worse... European leaders are in discussion over strengthening the banking system - and are moving in the right direction.
US President Barack Obama: "The solutions to these [financial] problems are hard, but there are solutions. The decisions required are tough but Europe has the capacity to make them. They have America's support...
The sooner they act and the more decisive their actions the sooner markets will regain confidence."
US President Barack Obama says Europe faces the threat of renewed recession - which is a concern to the US economy.
Latest ITV News reports
It is understood finance ministers from across the Eurozone will hold a telephone conference to discuss a bailout for Spanish banks.
Angela Merkel said Europe was ready to act to ensure stability in the euro zone as Spain's credit rating was cut by three notches.