European Union finance ministers tried to broaden efforts to contain the region's debt crisis on Tuesday and Spanish public sector workers protested over government cutbacks.
Spanish unions said about 75 percent of the country's 2.3 million public employees stayed away from work to protest cuts that will lower wages by five percent this year and freeze them at that level in 2011.
The weakened euro enjoyed some reprieve, but financial markets kept euro zone governments under intense pressure to show good on debt control efforts, with the premium investors demand to hold sovereign bonds rising for France and Italy, and to a euro-lifetime high for Spain.
"There is market uncertainty due to uncertainty about fiscal policy. The cure must be responsible fiscal policy," Sweden's finance minister, Anders Borg, said.
"The countries that have contributed most uncertainty should be the ones that are most ambitious when it comes to solving those problems and probably it will be Spain and Portugal."
Spain and Portugal, struggling to dispel market concerns that they may suffer Greek-like debt repayment troubles, announced further austerity measures in mid-May in return for the protection of a vast anti-contagion plan.
Finance ministers from the 16 countries that use the euro met late into the evening on Monday to finalise the operational aspects of the plan, which they say could allow access to up to $750 billion if needed to rescue struggling economies.
On Tuesday, they were joined in Luxembourg by ministers from the rest of the 27-member European Union to discuss extra belt-tightening in the pipeline not only in Spain and Portugal but in less debt-stressed countries like Germany.
They were also set to grant the EU statistics agency more power to verify national budget reports after the experience of years of grossly understated Greek figures that were at the root of the current crisis.
REBUILDING CONFIDENCE
Greece became the first country in 11 years of monetary union to require financial rescue and governments have been struggling for months to prevent other countries being shut out in similar fashion from nervous debt-funding markets.
"The main issue is indeed to restore and reinforce confidence in the European economy," said European Monetary Affairs Commissioner Olli Rehn.
The one-day strike and protest in Spain served as a test of opposition to government plans to shave another 15 billion euros from the budget this year and next as it tries to reduce the deficit to 9.3 percent of gross domestic product this year, from 11.2 percent in 2009, and to 6 percent in 2011.
Official turnout figures were expected later in the day for a strike that came a day before the government presents a draft of a labour-reform package to unions and business.
As Europe veers towards greater frugality, the region got words of support overnight from the heads of the International Monetary Fund, Dominique Strauss-Kahn, and the U.S. Federal Reserve, Ben Bernanke.
Bernanke said the anti-contagion package amounted to "a lot of money" and enough to protect Greece, Portugal and Spain from volatile credit markets for a number of years, even if markets were yet to show they felt fully reassured.
"European leadership is strongly committed to doing whatever is necessary to preserve the euro, preserve the euro zone, preserve the European project, and avoid financial problems that would certainly arise," Bernanke said.
While the euro zone's crisis has shaken global markets, the currency zone is not the only place suffering from a surge in debt as the world emerges from the recession of 2009, with the United States and Japan also deep in the red, and similar problems closer to home too.
Outside the euro zone, British Prime Minister David Cameron said the scale of the country's budget problems was even worse than he had anticipated and that Greece stood as a warning of the damage lost credibility could do.
Also outside the euro, Hungary's new centre-right government was due to unveil fiscal plans after alarming the markets last week by suggesting the country could face a Greek-like crisis.
