Eurozone deal may see extra summit

Yet another summit of EU leaders may be needed next weekend to complete plans for a comprehensive economic rescue package, officials in Brussels said today.

Tomorrow’s one-hour gathering of the 27 leaders, followed by a much longer session of the 17 leaders of the eurozone countries, will go ahead as planned, although this afternoon it was announced that a meeting of EU finance ministers (Ecofin) has been cancelled.

Markets reacted badly to the news, assuming a failure to agree a long-term deal, but officials said the move was procedural, with the finance ministers now likely to meet later in the week, instead of before the main talks.

That meeting might be followed by another summit to complete any agreement reached at tomorrow’s talks.

A statement from the Polish EU presidency said: “Work on the comprehensive package of measures to curb the sovereign debt crisis will be continued at the meeting of heads of state and governments of the EU on October 26 in Brussels.

“Further work at the level of ministers of finance will be conducted based on the outcome of the meeting. The aim is to adopt all necessary elements and details concerning the package, as promptly as possible.”

Meanwhile, frantic behind-the-scenes talks were going on in a bid to put in place provisional accords on all three key issues which EU leaders need to agree at the next phase of meetings.

A provisional agreement is already in place on the recapitalisation of Europe’s most exposed banks to the tune of about €100bn – although financial experts say at least half as much again will be needed to convince markets that they are well insulated against further economic shocks.

On the second plank, nothing is agreed on how to leverage an existing €440bn bailout fund into something above a one trillion euro fund, to demonstrate a capacity to respond to any more Greek-style meltdowns.

And a decision is still awaited on a demand that price investors – banks - absorb at least a 50% write-off of their loans to Greece, which all agree will never be able to repay its lenders in full.

Last weekend EU leaders set tomorrow as the absolute deadline for a deal, but with finance ministers meeting later this week and the prospect of another weekend summit, the timetable is being stretched in a bid to ensure that a package is in place which will restore the euro’s credibility and stability.