The ministers hope the long-term reforms, which are due to be finalised at a summit in October, will win back market confidence and help tackle the crisis threatening the euro.

German vote

Earlier on Friday, Germany's parliament approved a law allowing the government to contribute to a $940bn emergency debt package, mainly aimed at Greece, despite broad public opposition to the move.

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A clear majority of politicians in the lower house backed the bill but, in a sign of the domestic pressure piling on Angela Merkel, the country's chancellor, 10 members of her own centre-right coalition either voted against it or abstained.

The bill will allow Berlin to contribute about $183bn in guarantees to the international package.

Germany, which is providing the largest chunks of bailout funds for Greece and the eurozone, is keen on harsher long-term punishments for countries that break current European debt rules.

The sanctions it has suggested include stripping EU governments of voting rights or development funds, ejecting them from the euro currency and declaring state's bankrupt.

However, Van Rompuy indicated that while he supported reform he was opposed to such strong measures, since such changes to EU treaties would require each country to amend its national law.

This would represent a painful and lengthy process that could be rejected by national parliaments or voters.

"We must work as far as possible within the framework of the current treaties," he said, because it "allows us to work far more rapidly."

Christine Lagarde, the French finance minister, echoed him, saying "we considered today what is deliverable quickly".

European stock markets partly recovered earlier losses on Friday followin the German parliament's decsion.

The FTSE 100 index of leading British shares closed down 0.2 per cent, Germany's DAX fell 0.7 per cent and the CAC-40 in France ended just 0.1 per cent lower.