A Reuters poll showed that 44 out of 51 economists surveyed expect debt-burdened Portugal will need a European-led bailout similar to those granted to Greece and Ireland last year, but most think Spain will avoid such a rescue.

Addressing a French Economy Ministry conference, Greek Prime Minister George Papandreou said jointly issued euro bonds could help overcome the single currency area's sovereign debt crisis. Germany and France, the two biggest economies in the 17-nation euro zone, have so far firmly opposed such an initiative.

"There is growing support for the issuance of euro bonds as a financial instrument that can help Europe achieve its objectives," Papandreou said of proposals by Eurogroup Chairman Jean-Claude Juncker and Italian Economy Minister Giulio Tremonti.

"Euro bonds will help reduce growing tensions in the sovereign markets," he said, adding: "Euro bonds are not a substitute for this necessary adjustment we are making in countries, including my own."

Berlin and Paris have argued that issuing euro bonds at a common interest rate would raise their own borrowing costs and remove a key market incentive for fiscal discipline in countries with high debts and deficits. But French President Nicolas Sarkozy may be warming to the idea.

His office released a report to the president by two French lawmakers on Thursday calling for the creation of a "European Treasury" that would issue euro bonds on behalf of those governments that respected the European Union's fiscal rules.

A presidential aide said Paris would send the report by European Parliament member Constance Le Grip and French national lawmaker Henri Plagnol as a contribution to an EU working group on the reform of European economic governance.

Highlighting rising borrowing costs across the euro zone, the yield on France's top-rated 10-year bonds rose almost 50 basis points from the previous auction sale when Paris sold almost 9 billion euros in bonds on Thursday.

The risk premium investors charge for holding Portuguese bonds rather than benchmark 10-year German Bunds rose to 15 basis points to 405, with traders anticipating more debt issuance by Lisbon but nothing announced.

The focus of Europe's debt crisis has shifted to Spain and Portugal after bailouts last year that rescued Greece and Ireland but left them facing years of austerity.

The Reuters poll of analysts from research consultancies, wealth managers and banks operating in Europe found 44 out of 51 expect Portugal to need a bailout but only seven anticipate one in Spain, the euro zone's fourth largest economy.

Highly-indebted Italy and Belgium are also creeping onto investors' radar and concerns persist that Greece and some other euro zone weaklings may have to restructure their debts despite being rescued.

Papandreou said there was room at EU level to stimulate the economy, and markets would only calm down if they were convinced the EU was capable of returning to sustainable growth.

European paymaster Germany opposes borrowing at an EU level and says countries must work their way back to competitiveness by reducing deficits and through structural economic reforms.

French Prime Minister Francois Fillon, addressing the same conference, said the crisis was not one of the euro, which remained a strong currency.

Europe sometimes gave the impression of lagging the markets and lacking a long-term economic plan, and the EU needed "a minimum convergence in fiscal matters," he said. France already plans to pursue convergence in taxation policy with Germany.

British finance minister George Osborne, whose country has not joined the single currency, told reporters: "We need the euro to succeed ... I would urge my euro zone colleagues to get on with sorting out the crisis mechanism. There are some member states that have to convince the markets in the coming months."

Spain got a boost this week when a visiting Chinese vice premier said Beijing was ready to buy Spanish government bonds.

El Pais said on Thursday that Vice Premier Li Keqiang had indicated his country was willing to buy about 6 billion euros of Spain's debt, a sum the daily said China would also spend on Greek and Portuguese paper combined.

The Spanish and Chinese governments declined to comment, but vice commerce minister Gao Hucheng said China had been raising its EU sovereign debt holdings since the financial crisis began.

French business daily La Tribune estimated on Wednesday that China held 7.3 percent of the total 8.861 trillion euros in outstanding euro zone public debt last June, based on extrapolations from Chinese currency reserve figures.