The European Union warned the debt crisis is now striking at the heart of the eurozone and the central bank threw out lifelines on Thursday, but stocks plunged on fears of another recession.Financial markets are alarmed about debt strains in the United States even though the debt ceiling has been raised and in the eurozone, along with the overall drag these add to already faltering growth.European and US stocks plunged more than 3.0 percent after the European Central Bank statements, and after European Commission President Jose Manuel Barroso raised the alarm to a new pitch, saying \"we are no longer managing a crisis just in the euro-area periphery.\" But the extent and range of ECB help was unclear, particularly regarding acute market pressure on Italy, the third-biggest eurozone economy, and on Spain, the fourth. Spain risked a bond issue to raise 3.0-4.0 billion euros but again had to pay investors much increased interest rates, and late in the day it said an issue would not be held on August 18. Barroso, having warned of market scepticism about \"the systemic capacity of the euro area to respond\" to the crisis, urged all EU leaders urgently to revisit their rescue defences. Created in the last 18 months, these were ramped up just two weeks ago to help Greece a second time and contain contagion.CMC markets economist Michael Hewson said: \"Disappointing economic data on both sides of the Atlantic, as well as surging Italian and Spanish bond yields, has seen risk appetite plummet as pessimism about global recovery starts to take hold with a vengeance.\" Barroso\'s alarm call was followed by action and vague statements by the ECB, which was under market pressure to provide extra help by resuming purchases of government bonds. This was needed to avert \"the biggest banking crisis since 1931\", in the words of one analyst. The ECB said it would return to six-month loan facilities to help some cash starved segments of the eurozone banking system, and its president Jean-Claude Trichet signalled it would resume its bond-buying programme.But analysts said it was unclear the debt of which governments was being targeted via the secondary market, although market sources reported that the central bank was now in evidence as a buyer.At Spanish broker Ahorro Corporacion, analyst Nuria Garcia said that Trichet had given \"a very ambiguous message\" and it was not clear if the ECB would buy \"bonds of countries that are in the firing line like Spain and Italy.\"Yields and risk premiums on Italian and Spanish bonds initially fell but later bounced back up to near record highs. Shares in Milan closed down 5.16 percent and Madrid sank 3.89 percent. The ECB, holding its key rate at 1.5 percent, also signalled concern about possible inflationary pressures while suggesting that growth might be trending on the weaker side of expectations.In Italy, Prime Minister Silvio Berlusconi said his government would come up with a wide-ranging pact for growth by September, following talks with employers and trade unions. A joint statement after their talks calling for liberalisation, privatisation and labour reforms, said: \"The situation is grave. It must be confronted ... without excuses or shortcuts.\" New measures would be in addition to a crisis budget package of 47.9 billion euros ($68.6 billion) adopted last month to ward of market pressure.Spanish Prime Minister Jose Luis Rodriguez Zapatero returned from his holiday to fight the crisis, but has not announced any new measures.Global stock markets have fallen heavily recently, with investors seeking the flight of safety to gold, the yen, Swiss franc and German bonds.Events in Europe and disappointing US economic data are contributing to \"the fear that the economy is heading for a double-dip recession,\" said Peter Cardillo of Rockwell Global Capital.Briefing.com said: \"European banking stocks are under pressure as contagion fears work their way into Italy, the third largest economy in the eurozone.\"In the United States, attention is focused on weak growth and the deficit despite the last-minute raising of the debt ceiling which immediately pushed debt above 100 percent of gross domestic product.Thursday unemployment data was unencouraging and jobs data on Friday was expected to cast more gloom over growth.