She also said it was positive that plans for a European fiscal pact are progressing.

The fiscal pact - and the breaching of it - isn't the problem.

The danger is that the politicians breathe a sigh of relief and pretend that their fiscal pact agreed in Brussels this month is a comprehensive remedy.

Uncertainty over the fiscal pact came amid continued fears over the crisis.

Asian markets started the week on a positive note as investors cheered the new European fiscal pact aimed at fixing the region's debt crisis.

The pledge to enforce more budgetary discipline may increase the risk of recession: the fiscal pact is an austerity pact that will prove deflationary, argue critics.

Monti also said the ECB may become "more relaxed" after a deal is reached on the fiscal pact.

Ms Merkel insisted that talks on the fiscal pact agreed at the December 9 summit were progressing.

It is now more important than ever that a consensual political commitment is made to a courageous fiscal pact, including tax increases.

Twenty-five countries have already...signed the fiscal pact," targeting Greece and France, who also had election at the same time.