Finance ministers of the Group of Seven leading industrialised powers have held emergency talks on the eurozone debt crisis and the weakness of European banks.

But the group made no joint statement after the teleconference and took no immediate action.

The US Treasury said in a statement that the G7 discussed "progress towards a financial and fiscal union in Europe" and agreed to monitor developments closely.

Japanese Finance Minister Jun Azumi said the G7 finance chiefs agreed to work together to deal with the problems facing Spain and Greece, but he gave no details.

Spain has meanwhile said that credit markets are closing to the eurozone's fourth biggest economy.

Speaking about the impact of his country’s banking crisis on government borrowing, Spain’s Treasury Minister Cristobal Montoro said that at current rates, financial markets were effectively shut to them.

Spain is beset by bank debts triggered by the bursting of a real estate bubble in 2008, aggravated by overspending by its autonomous regions.

Mr Montoro said Spanish banks should be recapitalised through European mechanisms, departing from the previous government line that Spain could raise the money on its own and prompting the Madrid stock market to rise.

But his comments on Spain's borrowing sent the euro down after it earlier hit a one-week high against the dollar on hopes that the G7 conference call might hasten action.

Germany said yesterday it is up to Spain to decide if it needs financial aid, after media reports that Berlin had pressed Madrid to request aid.

Germany's stance would effectively rule out Spain's desire for eurozone rescue funds to lend money directly to recapitalise Spanish banks without Madrid accepting a bailout programme.

Financial markets are also worried that a Greek election on 17 June could lead Athens to leave the single currency.