European Commission President Jose Barroso sought more firepower for the euro region’s rescue fund and rapped the “undisciplined communication” that has propelled Italy and Spain deeper into the debt crisis. Barroso urged European leaders to review “all elements” of the 440 billion-euro ($626 billion) European Financial Stability Facility and the 500 billion-euro European Stability Mechanism that will replace it in mid-2013. “Markets remain to be convinced that we are taking the appropriate steps to resolve the crisis,” Barroso told the leaders in a letter released today in Brussels. Speculative attacks on Italy and Spain “reflect a growing skepticism among investors about the systemic capacity of the euro area to respond to the evolving crisis.” Spanish and Italian bonds rose for a second day on speculation that the European Central Bank today might indicate a willingness to step back into the market to buy debt of fiscally ailing countries. “We are no longer managing a crisis just in the euro-area periphery,” Barroso said. “Euro-area financial stability must be safeguarded.” Barroso’s call for a review of the two rescue funds “can well include the size,” commission spokeswoman Karolina Kottova told reporters. Barroso urged the governments to quickly ratify a July 21 accord to empower the EFSF to lend pre-emptively, buy bonds in the secondary market and engage in bank recapitalizations. National approval must “avoid introducing excessive constraints in terms of either additional conditionality or collateralization of EFSF lending,” Barroso wrote. To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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