US President Barack Obama on Tuesday asked Spain for “resolute action” to stem its widening deficit, in order to regain market confidence in the eurozone and avoid a spill-over effect from Greece.

“President Obama and Spanish President Jose Luis Rodriguez Zapatero … discussed the importance of Spain taking resolute action as part of Europe’s effort to strengthen its economy and build market confidence,” the White House said in a statement.

Washington is backing austerity measures in Spain and other European countries “because of a fear that anything might stem the recovery that we believe is taking place,” Mr Obama’s spokesman, Robert Gibbs, told journalists in Washington.

Mr Obama’s phone call to Madrid was part of the “ongoing consultations with close allies” on the troubles affecting the eurozone, he added.

The US president has been working the phones in recent days to EU leaders struggling to defend the eurozone from growing market speculation on its ailing southern economies.

His extensive talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy are believed to be one of the catalysts behind the €750 billion bailout agreed over the weekend by the leaders of the eurozone.

Mr Zapatero is due to present on Wednesday (12 May) spending cuts of €5 billion this year and a further €10 billion in 2011, in a bid to stem the public deficit, which is currently at 9.8 percent of the GDP.