The EU Commissioner for Economic Affairs, Olli Rehn, has said he still hopes to help Ireland find a solution to the issue of the bank debt.

This is despite the apparent setback to the Government's hopes due to the nature of the Spanish bank rescue.

Mr Rehn was speaking in Strasbourg at the end of a turbulent day when markets first rallied in response to the weekend announcement of a possible bail out for Spanish banks.

But then they slipped back over renewed anxiety about the state of the Spanish economy.

Olli Rehn was responding to a question by Fine Gael MEP Gay Mitchell during a hearing before the European Parliament's economic affairs committee.

Mr Rehn said the European Commission was committed to finding a solution to Ireland's debt burden issue. But the issue has been stalled with an elusive technical paper by the Troika still unpublished.

The Government had hoped that a deal whereby the permanent rescue fund, the ESM, would recapitalise Spanish banks directly without placing a further burden on the sovereign, could provide a template for something similar for the Anglo Irish promissory notes.

But the signals are that when it comes, a formal bailout of Spanish banks will count towards the country's debt.

However, given the decidedly short-lived relief on the markets and the continued rise of Spanish and Italian borrowing costs, the authorities may already have to rethink how they handle the spanish banking debt.

Meanwhile, EU officials are reported to have looked at worst case scenario contingency planning should Greece exit the euro after next Sunday's elections, with theoretical plans for a limit to ATM withdrawals and capital controls.