The leaders of Greece, France and Germany are holding a telephone conference Wednesday to discuss how to contain a debt crisis.

Greece was the first country in the European Union to seek an international bailout, led by stronger European economies like Germany and France.

There are now fears that the international aid, combined with austerity measures in Greece, will not be enough to pull the Athens government out of the crisis and avoid default on its debts. As a result, two French banks that are owed large amounts of Greek debt had their credit ratings downgraded Wednesday by the international rating agency Moody's.

The European debt problems have not been limited to Greece. In Italy, the third largest economy among the 17 nations that use the euro currency, the government won approval from Parliament Wednesday to move ahead with an austerity program designed to help fend off a financial crisis.

Italian Prime Minister Silvio Berlusconi's $74 billion austerity plan is a mix of spending cuts, tax hikes and changes to retirement plans aimed at achieving a balanced budget by 2013.

World financial markets have been hit hard because of fears of a Greek default and broader economic problems in parts of Europe. Financial experts fear a domino effect if the Greek economy fails.

Stock markets regained some ground on Wednesday, in part because of new reports of support for European bond markets from China and other major newly developed powerful economies.