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Eurozone set to leverage bailout fund

BERLIN -- The 17-nation eurozone is set to shore up its bailout fund to contain the debt turmoil that threatens to engulf more countries across Europe, and German lawmakers said Monday the plan could boost the fund's lending capacity to more than 1 trillion euro, or $1.39 trillion.

A document obtained by The Associated Press shows the currency zone wants to boost the 440-billion euro, or $600-billion, bailout fund by offering sovereign bond buyers insurance against possible losses and by attracting capital from private investors and sovereign wealth funds.

Eurozone governments hope that the enhanced European Financial Stability Fund, or EFSF, will be able to protect countries such as Italy and Spain from being engulfed in the debt crisis. To do that, however, it needs to be bigger or see its lending powers magnified.

Leading German opposition lawmakers, who were briefed on the plan earlier Monday by Chancellor Angela Merkel, said the fund's lending capacity will be boosted beyond 1 trillion euro.

But the draft document by the eurozone working group -- which Germany's government was sharing with key lawmakers Monday -- did not provide a headline figure for the bailout fund.

Also on Monday, Italian Premier Silvio Berlusconi lashed out at his German and French counterparts who demanded Italy introduce tough new measures to spur economic growth, chiding them for trying to "give lessons" to Rome and insisting Italy's economy was stable.

Berlusconi's pointedly critical statement came as he nevertheless summoned his cabinet for an emergency meeting to discuss growth measures the European Union has demanded so Italy doesn't get further dragged into Europe's debt crisis. The 17-nation eurozone has already been forced to bail out three of its weakest members -- Greece, Ireland and Portugal -- but could not handle a possible bailout of Italy, the eurozone's third-largest economy.

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