World leaders searched Sunday for answers to a global debt crisis, hoping to head off a massacre on markets spooked by an unprecedented US rating downgrade and Europe's swelling malaise.

France and Germany called for full implementation of measures agreed at a eurozone summit in July to safeguard the single currency as markets braced for fresh turmoil this week.

"President (Nicolas) Sarkozy and Chancellor (Angela) Merkel reiterate their commitment to fully implement the decisions taken by the heads of state and government of the euro area and the EU institutions on July 21," a joint statement said.

"In particular, they stress the importance that parliamentary approval will be obtained swiftly by the end of September in their two countries," it added.

Officials from the Group of 20 and Group of 7 economies held emergency conference calls, leaders of major powers worked the phones and European Central Bank (ECB) governors readied for the opening of New Zealand financial markets, the first to trade in Asia.

In a sign of a possible storm ahead, the Israeli market fell seven percent Sunday and major Gulf markets also tumbled as investors digested Standard & Poor's historic cut in the the US rating to AA+ from the top notch triple-A.

In Washington, the US Treasury said Secretary Timothy Geithner will not step down despite opposition calls for him to leave because of the downgrade.

"Until the stock markets open (Monday) the extent of earthquake caused by the downgrade of the US debt rating will not be known," Spanish newspaper El Pais said.

"But everything points to a black Monday which may intensify the attacks on the euro."

News of the US downgrade hit on Friday after Western markets ended a week with some of their worst losses since 2008.

Fears of a global meltdown, which some see as potentially worse than the 2008 collapse, sent vacationing leaders into a flurry of phone calls between Berlin, London, Paris and Washington to stem the tide.

Officials from G7 nations -- Britain, Canada, France, Germany, Italy, Japan and the United States -- confirmed a need for ministerial talks on market stability, Japan's Kyodo News agency said, quoting unnamed sources.

In Rome, Dow Jones Newswires said ECB governors were holding a video conference, with the controversial purchase of Italian and Spanish bonds likely to be a key topic of discussion, but an ECB spokeswoman refused to comment.

Officials have been totally tight-lipped on ECB moves as markets watch to see if it will buy bonds issued by Italy, the latest potential victim of a euro crisis that also threatens Spain.

Italy, the eurozone's third largest economy, saw its borrowing costs hit record highs last week amid falling confidence over its massive debt -- equal to 120 percent of total annual output -- along with poor growth prospects and political tensions.

Italian Prime Minister Silvio Berlusconi vowed lawmakers would return early to push through additional austerity measures including a constitutional amendment to force governments to keep balanced budgets.

EU economic affairs commissioner Olli Rehn welcomed the move, saying: "It is important that Italy tries to restore confidence to the markets."

Spain announced new reforms to bring in an additional 4.9 billion euros ($7.0 billion) and help curb its public deficit.

But Finance Minister Elena Salgado pointed again to the ECB, demanding it "do its job in supporting stability in the debt markets."

Some analysts blame ECB chief Jean-Claude Trichet's failure to back Spanish and Italian government bonds last week for contributing to turmoil on the stock and debt markets.

The bank insists that governments must themselves take bold steps to restore market confidence.

The ECB is the eurozone's last line of defence because investors no longer believe that "politicians have a strategy for dealing with Italy and Spain," noted Will Hedden, a trader at IG Index.

"The central bank is the only institution that can act quickly, and without a budget constraint," Goldman Sachs analyst Francesco Garzarelli added.

The latest twists come just two weeks after a special summit sealed an agreement meant to tame the spreading crisis, which EU commission head Jose Manuel Barroso warned now threatened major eurozone economies.

Rushing back to Brussels, the EU's Rehn offered to propose new, common "Eurobonds" next month, hoping to backstop weaker eurozone countries and so ease the pressure.

Such bonds would raise funds based on guarantees from the entire 17-nation bloc of 332 million people.

The EU's executive Commission, the ECB and the European Financial Stability Facility (EFSF) are "working night and day to put flesh on the bones" of an agreement struck at the July 21 summit, Rehn said.

The summit agreed to modify a crisis rescue pot -- the 440-billion-euro ($625 billion) EFSF -- so it could help troubled banks and buy government bonds, a first step to something like a European version of the International Monetary Fund.

If national parliaments ratify the changes as swiftly as hoped, the euro's new emergency financial framework could be in place in September.

But parliaments in some northern nations, where taxpayers are loathe to pay bills for the likes of Greece, may balk at approving more EFSF funds.

"The European reaction has been neither quick or concerted and confirms the institutional weaknesses behind the common currency," El Pais said.