BRUSSELS: EU leaders on Thursday go into the first of three summits before Christmas on strengthening the bloc's foundations, with France saying an end to the crippling eurozone debt crisis is "very close."
Struggling Spain, a major part of the crisis, was meanwhile moving up the agenda after reports Madrid would finally ask for help, a crucial first test for the eurozone's new rescue fund, the European Stability Mechanism (ESM).
Invoking the ESM would in turn allow the European Central Bank to intervene on the financial markets, pushing down borrowing costs for Madrid as it tries to balance its strained public finances and fight soaring unemployment.
The net effect would be to set in motion the measures agreed at a June summit to bolster the bloc with a new rescue system plus tighter economic and fiscal policy coordination -- issues to be discussed further at the meeting.
Diplomatic sources said the Spanish aid request could come at the summit but more likely afterwards, perhaps at a November 12 eurozone finance ministers meeting.
French President Francois Hollande said meanwhile that "on the exit from the eurozone crisis, we are close, very close ... because we took the right decisions at the summit of June 28-29 and because it is now our duty to apply them rapidly."
Hollande, speaking in an interview with six newspapers, said the EU had to ensure that countries which had made painful efforts to reform their finances were rewarded with lower interest rates, a reference to Greece and Spain.
He also stressed the need to make progress toward a single European bank regulator by the year-end deadline agreed in June and toward greater shared decision-making.
Market pressure on the eurozone has eased in the run-up to the summit, with Spanish borrowing costs in particular falling sharply and the euro firming, but EU leaders still face the prospect of recession and rising jobless queues.
The downturn makes for difficult politics, with popular feeling running strongly against austerity measures taken across Europe and calls for a switch to pro-growth measures increasing.
International Monetary Fund managing director Christine Lagarde said Tuesday that those eurozone countries not under pressure on the money markets should adopt a "more supple" stance on austerity.
The IMF head has also notably suggested that Greece could get more time to meet the terms of its latest EU-IMF bailout accord, comments which did not go down well in Berlin which takes a hardline on rescue conditions.
With the possibility of a Spain aid request waiting in the wings, EU leaders will be looking at the controversial plan for the single European bank regulator, a first step to allow the ESM to directly help ailing lenders.
The eurozone states largely support the proposal, although serious differences remain over timing and reach of the new supervisor, as well as how their non-euro peers are included in its provisions.
Berlin wants the provision, agreed to in June, to go slower and to be less ambitious than some, including France, would like.
Britain in turn opposes any measure that could harm the interests of the City of London, one of the world's biggest financial markets, but EU diplomats say the British are largely content to let the eurozone go ahead providing they do not suffer as a result.
In a positive pre-summit sign from the EU's economic powerhouse and paymaster Germany, Chancellor Angela Merkel praised both Athens and Madrid for agreeing to painful austerity measures and reforms.
Merkel, whose electorate is reluctant to help any more ailing EU economies, said progress in southern European states had been "slower than we might have liked" but that nonetheless "something has changed in their way of thinking."
The leaders will overall discuss proposals to reinforce economic and monetary union drawn up by EU president Herman Van Rompuy, with input from European Central Bank chief Mario Draghi, Eurogroup head Jean-Claude Juncker and European Commission chief Jose Manuel Barroso.
Van Rompuy has suggested that reforms might include a pooling of debt, by the strong and weak alike, so that the risk is shared by all eurozone members when they issue common bonds to raise funds.
Germany remains dead set against this idea, fearing this would give weaker eurozone states a free ride in the markets at its expense.
