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."
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.
"We are ready to back the use of euro-area instruments" - Did Merkel just hint at a breakthrough for the banks?