But final decisions were deferred until a second summit on October 26 and sharp differences remain over the size of losses private holders of Greek government bonds will have to accept.

French President Nicolas Sarkozy backed down in the face of implacable German opposition to his desire to use unlimited European Central Bank (ECB) funds to fight the crisis. Instead, the euro zone may turn to emerging economies such as China and Brazil for help in underpinning its sickly bond market.

"Further work is still needed and that is why we will take the decisions in the follow-up euro zone summit," European Council President Herman Van Rompuy said after chairing 12 hours of talks.

He indicated that Italy, the euro zone state now in the markets' firing line, had been told to come up with a more convincing plan this week to implement structural economic reforms to raise its growth potential.

Italian Prime Minister Silvio Berlusconi said he expected to call a cabinet meeting on October 24 to discuss measures to boost growth, as Italy came under mounting pressure from European partners to step up reforms to restore market confidence.