Europe crisis: Hopes of Sunday 'Big Bang' deal frayed

A decision - scheduled for Sunday - on whether to boost the eurozone's €440bn rescue fund has been delayed due to fresh disagreement between France and Germany about how to address the debt crisis.

French President Nicolas Sarkozy and German Chancellor Angela Merkel were due to meet at the European Council summit this weekend to discuss their "ambitious and comprehensive response" to the crisis.

However, EU officials later said resolutions would be finally adopted at a second meeting "no later than Wednesday".

The Telegraph reports on insider claims Sunday's summit of European leaders came close to being cancelled altogether, with Sarkozy having to beg Merkel not to pull the plug during what it said were "frantic" telephone calls.

The deadlock relates to discussions over ways to expand the European Financial Stability Fund (EFSF).

France has demanded that the European Central Bank (ECB) is used to back the bail-out fund, but German finance minister Wolfgang Schäuble said there should be "no doubt" that Germany rejects this call.

Germany is pushing for a system to boost the EFSF's €440bn capital to €2trn via a complex system of underwriting a proportion of distressed bonds.

Expanding the EFSF is one of three solutions to the European debt crisis set to be discussed at Sunday's summit. There are also plans to recapitalise the banks and to strengthen economic integration in Europe.