Greece 'integral' to euro zone, say European leaders

It follows a telephone call between Greek Prime Minister George Papandreou, French President Nicolas Sarkozy and German Chancellor Angela Merkel.

Greece also reiterated its commitment towards meeting all the deficit reductions plans it agreed to in exchange for its two bailouts, amid mounting concerns that Greece will default on its debt.

The Euro zone leaders’ comments are aimed at calming markets that have seen turbulent trading in recent weeks over fears surrounding Greece's finances, which have also increased speculation that Greece may have to leave the 17-nation single currency zone.

Greek government spokesman Elias Mossialos said: "In the face of the extensive rumours of the last few days, it was stressed by all that Greece is an integral part of the Euro zone."

Merkel and Sarkozy also issued a joint statement: "Putting into place commitments of the (bailout) programme is essential for the Greek economy to return to a path of lasting and balanced growth."

The European Union and the International Monetary Fund agreed in May of last year to give Greece €110 billion ($151bn; £96bn) in emergency loans, which it is still receiving in tranches.

It was then agreed in July of this year that Greece would gain a second bailout fund of €109 billion but this still has to be ratified by the parliaments of a number of Euro zone member states.

Greece is set to receive the next loan from its initial bailout later this month, but it will only be cleared to receive it if inspectors from the European Union, European Central Bank and International Monetary Fund agree that it is keeping up with its spending cut targets.

There are some fears that they may rule that Greece has fallen behind. Without this month's loan, Greece will not be able to meet its debt payments by the middle of next month.

A spokesman for Merkel said: "[Greece sticking to its targets] is the precondition for the payment of future tranches of the program."

The talks between Merkel, Papandreou and Sarkozy came after EU president Jose Manuel Barroso said he would urge the Euro zone nations to issue joint bonds as a means to tackle the debt crisis.

Under so-called eurobonds, member states would be able to borrow money collectively and allow certain more indebted nations like Greece and Portugal to borrow more cheaply.

However, Germany has repeatedly expressed its opposition to the idea as given its position as the strongest Euro zone economy, it can attract buyers to existing government bonds at lower interest rates, losing out on the deal.

Also on Wednesday, credit rating agency Moody's downgraded two French banks after reviewing their exposure to Greek debt.

Credit Agricole was cut from Aa1 to Aa2 and Societe Generale from Aa2 to Aa3, while a third bank, BNP Paribas, was kept on review for a possible downgrade.