Leaders of the powerful G7 nations raced on Sunday for a joint response to spiralling tension over the eurozone debt crisis and downgrade of the US credit rating ahead of the opening of markets on Monday. After stock markets suffered their worst falls since 2008 last week, vacationing leaders scrambled in a flurry of phone calls from London to Paris to Washington to salvage confidence before the clock strikes in New Zealand, the first market to open in Asia. Finance ministers and central banks from the G7 nations -- Britain, Canada, France, Germany, Italy, Japan and the United States -- are to hold a telephone conference call and possibly issue a joint statement on Sunday, Jiji Press said in Tokyo. Officials remained tight-lipped, however, on plans to stave off a global meltdown, with the European Central Bank (ECB) notably refusing to confirm reports of a Sunday evening telephone conference call between European central banks. At stake is whether the Frankfurt bank will step into the market to buy back debt piled up by Italy, the eurozone\'s third largest economy and latest potential victim of the rumbling euro crisis, also threatening Spain. It last week saw its borrowing costs spiral to record highs due to a loss of investor confidence over its debt mountain -- 120 percent of its GDP -- as well as poor economic growth prospects and political tension. Buckling to ECB demands to first step up reforms and slice its deficit, Prime Minister Silvio Berlusconi this weekend said lawmakers would be called back early to rush through austerity measures, including a constitutional amendment to force governments to keep balanced budgets. ECB intervention would reassure sceptical markets, unconvinced that \"politicians have a strategy for dealing with Italy and Spain,\" said Will Hedden, a trader at IG Index. In London, the Centre for Economics and Business Research last week commented: \"Realisitically, Italy is bound to default, but Spain may just get away without having to do so.\" As the US ratings downgrade by Standard & Poor\'s late Friday added to the week of drama, in which trillions of euros were wiped off the value of stocks, the holidaying leaders of Britain and France, Prime Minister David Cameron and President Nicolas Sarkozy discussed the crises at length by phone. \"Both agreed the importance of working together, monitoring the situation closely and keeping in contact over the coming days,\" a Downing Street spokesman said. Barely two weeks after a special summit held to offer a definitive fix to Europe\'s rumbling debt crisis, the panic biting the single currency is whipping eurozone leaders back into action as markets hone in on government debt rather than banks. Europe\'s economic affairs commissioner Olli Rehn said Friday that input from G7 and G20 partners will be of \"critical importance\" in efforts to resolve spiralling chaos. Seeking to soothe tension after contagion even began to threaten France on the bond market, the EU\'s Rehn rushed back to Brussels and announced he will propose new, common \"Euro-bonds\" next month. Until now taboo, these would allow eurozone governments to raise funds needed to run their countries based on guarantees from the entire 17-country bloc of 332 million people. The Commission, the ECB and the European Financial Stability Facility (EFSF) are each \"working night and day to put flesh on the bones\" of an agreement struck at the eurozone\'s July 21 summit. Under the July accord, leaders of the 17 nations sharing the currency agreed a second bailout for Greece in just over a year, this time with a one-off participation by the private sector. But they also fleshed out a euro crisis response, agreeing to beef up the size of a rescue pot -- the 440-billion-euro ($625 billion) EFSF -- as well as its powers. The new muscle would enable the EFSF to step in to help troubled banks and buy back debt on secondary markets, a first step to building something akin to a European version of the International Monetary Fund. \"Such a comprehensive, detailed and technically complex agreement requires time to implement,\" Rehn said Friday. \"It would have been fantastic if the agreement had been fully operational on 22 July,\" Rehn said. \"But this was of course impossible\". If national parliaments ratify the changes as swiftly as hoped, the euro\'s new financial armour should be in place \"by early September.\" \"This is the necessary -- and legitimate -- price to pay for living in democracies,\" Rehn said. But parliaments in some northern nations, where taxpayers are loathe to pay bills for the likes of Greece, may balk at moves to ramp up the rescue pot in size or scope.