G-8 leaders: Keep Greece in eurozone

CAMP DAVID, Md. -- World leaders backed keeping Greece in the eurozone Saturday and vowed to take all steps necessary to combat financial turmoil while revitalizing a global economy increasingly threatened by Europe's debt crisis.

A summit of the G-8 leading industrialized nations came down solidly in favor of a push to balance European austerity -- an approach long driven by German Chancellor Angela Merkel -- with a dose of U.S.-style stimulus seen as vital to healing ailing eurozone economies.

"We commit to take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses, recognizing that the right measures are not the same for each of us," leaders said in a bold statement issued at their meeting at the Camp David presidential retreat in Maryland.

The message sent by the summit hosted by President Barack Obama reflected his own concerns that the eurozone contagion, which threatens the future of Europe's 17-country single currency bloc, could hurt the fragile U.S. recovery and his own re-election chances in November.

In their final economic communique, the Group of 8 leaders welcomed discussions in Europe to broaden the focus to more pro-growth remedies and said: "We reaffirm our interest in Greece remaining in the eurozone while respecting its commitments."

It was unusual for the often-bland G-8 communique to single out a relatively small nation. But fears that a political stalemate in Greece would lead to its departure from Europe's monetary union at unknown costs to the financial system and global economic stability have spooked markets.

Spain, too, has roiled markets by revealing huge bad loans in its banking system as it struggles to rein in its budget while facing recession.

"It is significant that a group as weighty as the G-8 backs Greece and reinforces the idea that Europe needs a strong union. It strengthens its hand," said Marc Chandler, currency strategist at Brown Brothers Harriman.

In another move to shore up shaky global growth, the G-8 leaders said they would monitor oil markets closely and stand ready to seek an increase in supplies if needed. Though crude oil prices have declined by 10 percent over the past month, the threat of sanctions on Iran loom next month.

The G-8 said the global economic recovery shows promising signs but "significant headwinds persist."

The G-8 leaders also raised pressure on Iran over its nuclear program, which they suspect has military objectives, by committing to a common approach. They pledged to implement sanctions fully against Tehran and indicated they would act together to lower oil prices if needed.