European Central Bank have stepped in to stem an accelerating sell-off of euro zone government bonds on Wednesday, after the United States called for more decisive action to halt a spreading sovereign debt crisis.European shares and the bonds of weaker euro zone countries recovered initially on the move on the day Italian Prime Minister-designate Mario Monti was to name a national unity government to implement long delayed structural economic reforms.'They're heavily in on Italy and Spain, 2-10 years,' one trader said of the central bank intervention. Yields on Italian government bonds fell just below the 7 percent danger level, widely seen as unaffordable in the long term.But ECB policy makers continue to reject growing international calls to intervene decisively as Europe's lender of last resort, stressing it is up to governments to resolve the debt crisis through austerity measures and reforms.Shares and the euro have tumbled over the last week as bond market contagion spread to AAA-rated France, the euro zone's second economy and a mainstay of the currency bloc's rescue fund. The risk premium investors charge for holding French debt rather than benchmark German 10-year bounds hit another euro lifetime high above 190 basic points on Tuesday.President Barack Obama turned up the heat on Europe to act more boldly to extinguish the spreading bushfire.'Until we put in place a concrete plan and structure that sends a clear signal to the markets that Europe is standing behind the euro and will do what it takes, we are going to continue to see the kinds of market turmoil we saw,' he said on a visit to Australia.But there was no sign that Wednesday's bond-buying signaled a change in the ECB's policy of limited, stop-go purchases to stabilize markets temporarily while maintaining pressure on governments.Obama said that whilst there had been progress in putting together unity governments in Italy and Greece, Europe still faced a 'problem of political will.''We're going to continue to advise European leaders on what options we think would meet the threshold where markets would settle down. It is going to require some tough decisions on their part,' he said.European Commission President Jose Manuel Barroso told the European Parliament the euro zone faced a systemic crisis and fragmenting the European Union was no solution.He appeared to be referring to calls, notably from French President Nicolas Sarkozy, for a two-speed Europe with a much more integrated euro zone moving ahead of a looser confederation of non-euro members.'We are indeed now facing a truly systemic crisis that requires an even stronger commitment from all and that may require additional and very important measures,' Barroso said.'We will not make the euro stronger through the fragmentation of the European Union.'In Greece, technocrat Prime Minister Lucas Papademos, a former ECB vice-president, was set to win a big confidence vote in parliament for his interim government despite the refusal of the main conservative leader to sign up to more austerity.New Democracy party chief Antonis Samaras gave Papademos only arms-length backing, refusing to bow to EU demands for a written commitment to the bailout program and calling for elections in three months to restore social peace.With Papademos' national unity coalition already split, rebuilding Greece's shattered finances to avert default will be a daunting task as Europe battles to prevent its debt woes from dragging down the world economy.
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