Ratings agency Moody's warned on Monday that the chances of a default by Greece was "virtually 100%" and could undermine confidence in other countries in the eurozone.
The warning came as the cost of borrowing for Italy and Spain rose amid fears that Slovakia could lead a revolt against the EU's Greek bailout agreement.
All eurozone parliaments must offer their support for the deal, which includes a measure to reduce Greece's debts using a "voluntary" writedown of loans to European banks.
Markets jumped last week after the deal was agreed by European leaders, but criticism of the measures as insufficient and concerns over the need for each parliament to offer support has made investors increasingly nervous.
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Source: Reuters
BRUSSELS (Reuters) - European Union leaders are poised to hold an emergency summit after finance ministers acknowledged for the first time that some form of Greek default may be needed to cut Athens' debts and stop contagion to Italy and Spain.
"There will be an extra summit this Friday," a senior euro zone diplomat told Reuters, suggesting policymakers have been seized with a new sense of urgency after markets started targeting Italian assets.
A French government source said Paris was in favor, although the timing was not yet fixed, and in Spain, European Council President Herman Van Rompuy said he had not ruled out a meeting.
Earlier, Germany's finance minister had said a second Greek rescue package could wait until September after euro zone finance ministers effectively accepted that private creditor involvement meant a selective debt default was likely, despite the European Central Bank's vehement opposition to such a move.
"We have managed to break the knot, a very difficult knot," Dutch Finance Minister Jan Kees de Jager told reporters.
Asked about whether a selective default was now likely, he replied: "It is not excluded any more. Obviously the European Central Bank has stated in the statement that it did stick to its position, but the 17 (euro zone) ministers did not exclude it any more so we have more options, a broader scope."
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