Euro zone ready to help Greece if needed: Sarkozy

French President Nicolas Sarkozy said the euro region is ready to rescue Greece should the government struggle to fund its budget deficit, arguing that the country is “under attack” from so-called speculators.

“I want to be very clear: If it were necessary, the states of the euro zone will fulfil their commitments,” Sarkozy said in Paris on Sunday after meeting Greek Prime Minister George Papandreou. “There can be no doubt in this regard.” While Greece doesn’t need assistance now, “we have measures...we are ready,” he said.

The euro strengthened and Greek stocks and bonds climbed. Sarkozy’s comments were among the strongest by a European Union (EU) leader, to signal the bloc would bail out Greece as they try to warn investors against betting on declines in euro and Greek bonds. Papandreou’s government last week passed further austerity measures and sold 5 billion euros ($6.8 billion) of debt.

“Speculators and the markets should know that solidarity means something and that, if there’s a problem, we are there,” said Sarkozy. “The sooner we say that and the more firmly we say that, the more rapidly we settle the problem.”

The euro gained 0.5 per cent to $1.3696 in early morning trade in Paris, paring its losses over the past three months to 7 per cent. The MSCI Asia Pacific Index advanced 1.9 per cent to a six-week high.

The spread between the yield on Greek 10-year bonds and their German counterparts fell to the lowest in three weeks on March 3.

Papandreou, who meets President Barack Obama in Washington on Tuesday, said he wants a “normalisation” in Greek market interest rates after the deficit-cutting steps.

Greece faces more than 20 billion euros in debt redemptions in April and May.

Sarkozy wouldn’t say what steps EU would take and German Chancellor Angela Merkel, who runs Europe’s largest economy, has so far refused to give the green light to any aid package. Merkel had said after meeting Papandreou on March 5 that the question of a bailout “‘absolutely doesn’t arise.” Her coalition partner, Guido Westerwelle, said he will not sign a “blank check” for Greece.