Angela Merkel and Nicolas Sarkozy at a press conference in the Elysée Palace, February 04, 2010

Germany is reported to be considering a plan with its Eurozone partners to provide Greece and other debt-laden members of the with loan guarantees in an attempt to calm fears of a government default and prevent a widening of the credit woes.

The Wall Street Journal says the plan would be undertaken within the EU framework but led by Germany, one of the people said. German Finance Minister Wolfgang Schäuble has discussed the idea in recent days with European Central Bank President Jean-Claude Trichet, according to the person. Schäuble told officials in Berlin on Monday that he had concluded there "was no alternative" to a rescue plan, according to a person familiar with his comments. Meanwhile, in New York, US shares rose on the news with the Dow Jones Industrial Average gaining more than 200 points to cross back over the 10,000 level.

Just under 50% of all Greek debt is set to mature between now and the end of 2014 and its financing needs amount to some €55bn this year, of which about half falls due between now and the end of May, including €17bn in amortisations of long-term debt.

Eurozone banks have still toxic debt on their balance sheets and apart from the direct impact of a Greek default, there would be serious concerns of a domino effect on the other members of the infamous PIGS grouping.

The Journal says German banks are major lenders in Greece, for example, collectively carrying about $43bn in Greek debt on their books, including loans to private individuals and companies, according to Bank for International Settlements data for the third quarter of 2009. Among EU countries, only France's banks, with $75bn, carry a larger share of Greece's $303bn in debt to foreign banks.

In addition, some of Germany's public-sector banks, known as Landesbanken, have issued insurance-like contracts on Greek debt, known as credit-default swaps. The total exposure of the the country's eight Landesbanken is unclear.

Spain's Treasury plans to issue €76.8bn  in net debt in 2010, down 34% from a year earlier, as the government withdraws crisis borrowing and attempts to reassure markets its debt plan is under control.

"[The] Tesoro Publico is open to additional foreign-currency issuance,''Treasury chief Soledad Nuñez told investors in London at the start of a two-day roadshow to promote Spain's 2010 debt plan. Last week, Spain raised its 2009 public deficit to 11.4% of GDP (gross domestic product ) from 9.5%.

The “i” in the PIGS acronym stands for Ireland and not Italy, where higher private savings and better management of public finances put it “in a significantly stronger position” than Portugal, Ireland, Greece and Spain, Italian bank UniCredit SpA said in a report last week.

“When talking about PIGS, the ‘i’ stands for Ireland, not Italy,” UniCredit economists said. Italy,“as investors have already recognized, is a different species, with problems of its own (anemic growth).”

The nicknames PIGS and PIIGS, the latter including both Ireland and Italy, have become popular as investors dump assets in the Eurozone’s smaller economies on worries that they will have trouble cutting their budget deficits. “The correct spelling is PIGS, not PIIGS,” economists at the Milan-based bank including lead economist, Marco Annunziata, wrote in the report.

Any country that appears to have sovereign debt problems is being hammered by the market, Simon Derrick from Bank of New York Mellon told CNBC Tuesday. James Barty from Arrowgrass Capital Partners and David Bloom from HSBC joined the discussion: