Barack Obama seeks action over Greek debt crisis

Barack Obama has stepped into the Greek debt crisis amid warnings that the stricken nation could become a country-sized version of Lehman Brothers.

The US President spoke to German Chancellor Angela Merkel last night to urge her to find a swift resolution to the turmoil that is threatening the global economic recovery.

The White House said the two leaders discussed "the importance of resolute action by Greece and timely support from the IMF and Europe."

To date the US has largely stayed on the sidelines, leaving European leaders to find a solution. However, the continuing slide in the value of the euro against the dollar is worrying Wall Street because it makes US exports more expensive.

As the markets took a breather from the gyrations of the last two days, former Greek economy minister Dr Yannos Papantoniou said Europe needed to act "at very high speed" to avoid catastrophe. He told the BBC that Greece must be prevented from becoming "the Lehman Brothers of the sovereign debt crisis."

Greece is thought to need around 45 billion in loans from eurozone countries and the IMF to avoid a disastrous default on its national debts. A deal is expected in the next few days.

In return for the loans Greece will have to accept severe austerity measures possibly including a rise in VAT, a cut in wages and bonuses to state employees and a rise of at least 10 per cent on fuel, tobacco and alcohol taxes.

The euro recovered slightly against the dollar and the pound as hopes of an agreement rose. Yesterday the euro tumbled to a one-year low of $1.3113.