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Europeans Move to Head Off Spread of Debt Crisis

BRUSSELS — Leaders from the euro zone countries signed off on a support package for Greece on Friday night and pledged to take steps to stanch a spreading debt crisis before markets opened on Monday morning.

During a late-night meeting at European Union headquarters, the leaders described the debt crisis as “systemic,” but President Nicolas Sarkozy of France insisted that the bloc could defend the euro by directly attacking speculators.

Speaking at a news conference, Mr. Sarkozy vowed to “confront speculators mercilessly” and warned them that they would soon “know once and for all what lies in store for them.”

The leaders said they would create a so-called European stabilization mechanism, but Mr. Sarkozy declined to give details of the plan on the basis that doing so could undermine its effectiveness.

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President Nicolas Sarkozy of France, speaking in Brussels, vowed to attack speculators.Credit...Michel Euler/Associated Press

He said that all 27 European Union finance ministers would hold an emergency meeting on Sunday afternoon to draft the plan to quell gyrating markets ahead of Monday.

Leaders of the 16 nations that use the euro currency also formally agreed to provide 80 billion euros in a joint package with the International Monetary Fund totaling 110 billion euros, or $140 billion, and said that the first disbursement would be made before Greek payments came due on May 19.

The leaders agreed to steps to improve national balance sheets across the euro area.

“Each one of us is ready, depending on the situation of his country, to take the necessary measures to accelerate consolidation and to ensure the sustainability of public finances,” the leaders said in a statement issued early on Saturday morning.

The European Union’s budget rules were drafted to stop governments from reckless spending that would undermine the broader economy, by limiting deficits to 3 percent of gross domestic product.

But even big countries like Germany and France have broken those rules without serious consequences.

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The German chancellor, Angela Merkel, center, prepared to cast her ballot as the German Parliament debated and approved the aid to Greece on Friday. Credit...Gero Breloer/Associated Press

The crisis was set off when news surfaced that Greece had been concealing the true state of its finances and after European leaders took two months to draft an aid package, worth $140 billion over three years, for the beleaguered country.

That aid package has so far failed to contain the Greek crisis, while stocks worldwide have plunged on fears about the weakness of other European economies and the prospect that contagion could drive the global economy back into recession.

Some European officials said Friday that they wanted to find a way to encourage the European central bank’s governing council to agree to more radical measures, like the outright purchase of government bonds of Greece and perhaps other countries, to help address the crisis.

But that would be something certain members of the council would probably resist on the ground that it could compromise the central bank’s independence.

This week, Jean-Claude Trichet, the bank’s president, gave no hints of any measures that might be taken to arrest the sovereign debt crisis.

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Jean-Claude Trichet, president of the European Central Bank, met Europe's leaders on Friday. Credit...Jock Fistick/Bloomberg News

Ahead of the meeting, finance ministers and central bank governors of the Group of 7 — which includes the United States, Britain, Japan and Canada as well as three euro zone members, Germany, France and Italy — held a conference call to address growing concerns that a failure to effectively contain the Greek financial crisis could cause it to spread quickly to other European countries and beyond, roiling world markets.

Officials in Washington said the call, which lasted more than an hour, was hastily scheduled after the steep market drop on Thursday. Dominique Strauss-Kahn, the managing director of the International Monetary Fund, took part in the call, in which the Treasury secretary, Timothy F. Geithner, and the Federal Reserve chairman, Ben S. Bernanke, represented the United States.

In addition, President Obama spoke to Chancellor Angela Merkel of Germany on Friday for the third time in four weeks. “We agreed on the importance of a strong policy response by the affected countries and a strong financial response from the international community,” the president said afterward.

The action in Brussels came after nations in the euro zone gave their assent to the Greek rescue — from larger members like Germany, France and Italy to struggling Portugal, which faces concerns about its own debt.

In Germany, after one of its most heated debates in years, the Parliament voted to approve its part of the emergency package arranged by the International Monetary Fund and the European Union.

Ms. Merkel, one of the few European leaders to impose strict conditions on Greece before agreeing to any rescue package, won a comfortable majority in the lower house, the Bundestag, with 391 of the 622 legislators voting in favor. The Bundesrat, or upper house, passed the law by a clear majority.

James Kanter reported from Brussels and Judy Dempsey from Berlin. Sewell Chan contributed reporting from Washington.

A version of this article appears in print on  , Section B, Page 1 of the New York edition with the headline: Europe Approves Rescue for Debt-Ridden Greece. Order Reprints | Today’s Paper | Subscribe

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