Italy and France have agreed to call an emergency meeting of G7 finance ministers to discuss the debt crisis.
The announcement was made by Italian Prime Minister Silvio Berlusconi, after he held talks with French President Nicolas Sarkozy.
Mr Berlusconi said the meeting would be held 'in a few days' and could pave the way for a summit of G8 leaders, if the finance ministers agreed a plan of action.
There were more falls on global stock markets today amid growing concern about the European debt crisis and faltering growth in the United States.
A bigger-than-expected rise in US payrolls helped to limit losses.
London's FTSE closed down 2.71% to 5,246.99 points, while in Frankfurt the DAX dropped 2.78% to 6,236.16 points.
In Paris, the CAC slid 1.26% to 3,278.56 points to chalk up a record tenth consecutive daily loss.
Dublin's ISEQ index closed down 1.5% at 2,506 points.
In New York, the main markets experienced a volatile day of trading, but the Dow Jones closed up 0.5% to stand at 11,444.68.
The broader S&P 500 shed 0.06% to 1,199.34, while the Nasdaq Composite fell 0.94% to 2,532.41.
This evening, US President Barack Obama hailed a positive jobs report but said more US job growth is needed and predicted the situation will improve over time.
Commenting on a Labour Department report that 154,000 jobs were created in July and the jobless rate ticked down slightly to 9.1%, Obama said, ‘We've got to do better than that’.
‘We are going to get through this. Things will get better. And we're going to get there together,’ he said.
Mr Obama said the US economy has faced a tumultuous year and noted markets around the globe have had a bumpy ride.
He cited divisive US debt talks, the Japan earthquake and tsunami, revolts in Arab countries and the European debt crisis as factors contributing to slack growth.
Mr Obama spoke separately to President Sarkozy and Chancellor Merkel about the latest developments in the euro zone crisis.
Markets dissapointed
Earlier, EU Economic & Monetary Affairs Commissioner Olli Rehn admitted financial markets have been disappointed by last month's EU agreement aimed at tackling the eurozone debt crisis.
In a press conference in Brussels, Mr Rehn said there had been 'difficulties in communicating' what was a complex agreement.
But Mr Rehn said markets had unrealistic expectations that all of the measures involved would be implemented straight away.
He said EU officials were working 'night and day' to finalise the eurozone plan.
The Commissioner also called for Europe's rescue fund - the €440bn European Financial Stability Facility - to be increased and its scope widened.
'To be effective, the EFSF needs to be credible and respected by the markets. Thus it will need to be continuously assessed,' he said.
He said he believed that Italy and Spain would not need a bailout.
Pressure on Italy and Spain in the bond markets, he said, was not justified by economic fundamentals.
On bond markets today, the interest rate demanded by investors to lend money to Italy for ten years rose to a new record high of 6.4%, before falling back slightly.
The move puts further pressure on Europe's third largest economy to allay fears about its ability to finance a €1.8 trillion national debt.
Italy pledged to speed up austerity measures and social reforms in return for European Central Bank help with funding.
French President Nicolas Sarkozy was holding separate discussions with German Chancellor Angela Merkel and Spanish Prime Minister José Luis Zapatero today.
A spokeswoman said President Sarkozy was following the market situation minute-by-minute while on holiday.
The running total for the week to date is $2.5 trillion wiped off the value of global stock markets.
S&P says Irish economy 'prosperous'
Meanwhile, credit rating agency Standard & Poor's has left its assessment of Ireland unchanged, saying it believed the Irish economy was 'prosperous and open'.
S&P said the outlook for its BBB+ rating was stable, meaning it is unlikely to change in the short-term. Another rating agency, Moody's, last month downgraded Ireland's debt to junk status.
S&P said that the Government had shown the commitment and capacity to stabilise the public finances after the banking crisis and the widening of the budget deficit.
It warned, however, that prospects for growth over the next couple of years would be held back by high levels of public and private debt.
S&P said domestic demand would continue to fall until 2013.
S&P estimated that lower interest rates as a result of the recent EU agreement would save Ireland around €900m.
It also predicted that Ireland could go back into the bond markets in late 2013, and that market interest rates on Irish debt would fall to around 6% by then.
It said it did not expect the restructuring of the banking system to lead to any further costs to the State.
