"The Greek government is courageous and is breaking with the past. We would be ready to intervene if the Greeks ask us to," EU President Herman van Rompuy told interviewers from Le Monde, the Frankfurter Allgemeine Zeitung, El Pais and De Standaard.

"This aid plan will only be credible once it is put into operation," he said, two weeks after European leaders agreed to secure EU and IMF funding for Greece if it is unable to borrow at a low enough rate on the open market.

Germany also said that the EU-IMF rescue scheme could be activated quickly, but government spokesman Michael Offer again stressed that Greece could solve its problem by focusing on budget cutbacks.

French President Nicolas Sarkozy said that the EU was ready to activate its rescue scheme "at any time to come to Greece's aid" in remarks after talks with Italian Prime Minister Silvio Berlusconi.

Analysts said that the way the crisis has evolved, and culmination in a rescue, could have profound implications for the credibility of the European Central Bank and by ricochet for the fundamental nature of the eurozone it underpins.

Meanwhile, the deadly squeeze on Greek borrowing costs eased slightly from a record high point above 7.5 percent on Thursday, which Greek newspapers described as "Black Thursday".

The pro-government newspaper Ta Nea said: "Black Thursday on the markets and pressure for an approach to the IMF (International Monetary Fund)."

The paper said in a headline: "Lifebelt from (ECB head) Trichet against the tsunami of the spreads," in a reference to a big increase in the gap between how much Germany pays to borrow funds and the rate Greece must now offer.

The liberal newspaper Kathimerini said: "The situation is particularly critical, the government must weigh up making use of the EU-IMF support mechanism."

The EU-IMF scheme has been highly contentious from the outset, and so far vague on detail, mainly because of reticence by Germany to bail Greece out.

Van Rompuy said: "Discussions are under way to fix the technical modalities and make the mechanism concrete. The meeting of eurozone finance ministers in mid-April will be able to resolve any outstanding problems."

Greek Finance Minister George Papaconstantinou also spoke along this line, remarking that the market borrowing rates "do not reflect the real situation of the economy or the efforts and results already obtained by the Greek government."

He said: "But with time, I believe that the markets and our European partners will take account of these results."

Market analysts took the view earlier on Friday that the end game of the crisis was near, but disagreed over whether an EU-IMF rescue or part debt default were the most likely outcomes.

The rate demanded by investment funds to buy Greek government 10-year debt fell to 7.204 percent, having surged above 7.50 percent on Thursday to reach the highest level since Athens adopted the euro in 2001.

Greece has to find around 11.5 billion euros by next month to cover its debts, and markets remain sceptical over whether it will be able to achieve massive budget cutbacks imposed by the EU.

The remarks from Van Rompuy, Berlin and Paris signal that the European Union and eurozone bodies are now opting for a rescue as the least-bad next step.

Germany is reticent about such help for several reasons to do with safeguarding the credibility and stability of the entire eurozone, and therefore of monetary conditions in Germany.

Analysts are already debating if a rescue could mark a decisive step in a crisis which has turned the eurozone from a convergence project based on tough rules towards towards a co-operative compromise in which the weak can count on help from the strong.

UniCredit chief economist Marco Annunziata warned that the ECB had suffered by "becoming embroiled in political discussions that sometimes defy logic," and said the bank was at threat of "further damaging its credibility."

Many observers said they felt that the ECB had made two surprising U-turns, notably on the bank's opposition to IMF support.

Barclays Capital economist Thorsten Polleit told AFP that "there is of course political pressure now, and Greece may be a precedent."

ING senior economist Carsten Brzeski also said that the head of the ECB Jean-Claude Trichet "had a few weak moments and did not really succeed in convincingly explaining the ECB's U-turn."

German business daily Handelsblatt commented that "the ECB is demonstrating that it is following political aims rather than the stability culture of its founders."

A Bundesbank note quoted by the Financial Times on Thursday dubbed the IMF an "Inflation Maximizing Fund."

Handelsblatt editor-in-chief Gabor Steingart said on Friday that "Trichet wants to save Greece ... but above all he wants to avoid a row with politicians.

"Yesterday he kissed inflation and for the spirit of the (German central bank) Bundesbank, this was the kiss of death."

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