MercoPress. South Atlantic News Agency

European Central Bank expected to buy Italian and Spanish bonds

President Nicolas Sarkozy and German Chancellor Angela Merkel united in support of the Euro

The European Central Bank has said it will buy Euro zone bonds, following emergency talks on the debt crisis. ECB did not say which bonds it would buy but analysts expect them to be from Italy and Spain.

Global stock markets plunged last week because of the twin debt crises in the Euro zone and the US.

Shares on Asian markets fell early on Monday, despite assurances by the G7 group of rich countries that they would move to strengthen financial stability.

Before the markets opened, the G7 issued a statement saying it was “determined to react in a co-ordinated manner”.

There have been fears that unless leaders can announce a decisive plan of action, shares on global markets could plunge even further.

In a statement following an emergency telephone conference, the ECB welcomed the “decisive and swift” action taken by the governments in Rome and Madrid to cut their budget deficit. Italy is the biggest economy to be hit by the Euro zone crisis.

Earlier, the leaders of France and Germany also hailed the action taken by Italy and Spain - the third- and fourth-biggest Euro zone economies.

“In particular, they stress the importance that parliamentary approval will be obtained swiftly by the end of September in their two countries,” said the statement from French President Nicolas Sarkozy and German Chancellor Angela Merkel.

The two leaders also reiterated their commitment to introducing measures to protect the Euro which was agreed at a summit in July.

Monday is the first day major markets are open following the decision by credit rating agency Standard & Poor's to downgrade America's top-notch AAA credit rating to AA+.

S&P managing director John Chambers was quoted as saying on Sunday that there was a one in three chance of a further downgrade within two years.