Draft conclusions from a meeting of European Union finance ministers showed member states were willing to agree measures to keep their economies competitive, a core demand of Germany's. That may in turn secure German backing for a strengthening of the European Financial Stability Facility, the temporary euro zone bailout mechanism set up in May.

But there remains concern in financial markets that failure to agree a stronger, more flexible EFSF as part of the package could reignite the sovereign debt pressures that forced Greece and Ireland into EU bailouts.

"There is work still to be done but we took good steps today in terms of clarifying the positions of member states and in terms of navigating the way forward for the adoption of the legislative package," Olli Rehn, the European commissioner for economic and monetary affairs, told reporters after the meeting.

While there were signs of progress — including a decision that the European Stability Mechanism, which will replace the EFSF from 2013, will have a lending capacity of 500 billion euros ($675 billion) — time remains short to clinch a deal.

EU leaders are scheduled to sign off on the package at a summit in Brussels on March 24-25, but several meetings will have to be held between now and then to agree all the elements.

There are already plans for an extra summit of euro zone leaders on March 11, and euro zone finance ministers will meet again on March 14 and possibly March 21 to work on details.

Finland said on Tuesday it would also hold a meeting of 14 EU leaders — all from the center-right European People's Party, the biggest bloc in the European Parliament — in Helsinki on March 4 to try to forge common ground.

Finland has to dissolve its parliament on March 15 in order to hold a Parliament election on April 17. As a result, the last chance it has to sign off on the comprehensive package is the March 11 summit. If any changes were to be made between then and the end of March, unanimity on the deal could be lost.

"Effectively the deal has to be agreed on March 11 and then finalized with no changes on March 24-25, otherwise it is very difficult for Finland," a Finnish official said.

In a sign of the edginess still prevalent in bond markets, yields on the sovereign debt of weaker euro zone economies rose on Tuesday, reflecting increased risk.

The core concern remains that the EFSF, because of guarantees to maintain its triple-A credit rating, has an effective lending capacity of only about 250 billion euros, not its nominal 440 billion, and therefore has insufficient funds if it needed to bail out both Portugal and Spain.

The fact EU ministers agreed that the ESM, the permanent mechanism to be active from 2013, will have an effective capacity of 500 billion euros did not calm markets.

"No one's going to take great comfort from that because it doesn't address things like the restructuring or the buybacks that will ultimately lead to a restructuring of Greek and Irish debt," said Charles Diebel, head market strategist at Lloyds.

"It's almost like they felt they had to say something — they're trying to show the world they're still making progress."

As well as a stronger EFSF and the ESM, the package involves overhauling euro zone budget rules and improving economic policy coordination and is expected to include an agreement on bolstering competitiveness across the euro zone — a proposal put forward by France and Germany on Feb. 4.

While many euro zone member states were frustrated both by the way France and Germany presented their "competitiveness pact" and by its substance, there now appears to be an emerging consensus on some of the proposals contained in it.

The Franco-German measures included limits on debt levels written into national laws, higher retirement ages based on demographics, the abolition of index-linked wage increases and a common corporate tax base.

Very similar proposals were put forward by the European Commission last month and EU finance ministers indicated on Tuesday that they could back the Commission's line, essentially adopting some of the Franco-German pact in the process.

While not explicitly backing the introduction of debt limits in national constitutions, the draft conclusions of Tuesday's meeting said the ministers agreed that ensuring debt sustainability was of the utmost importance.

The ministers are also likely to back the Franco-German call for higher retirement ages.

"The council highlights that fiscal consolidation should be accompanied by reforms aimed at ensuring sustainable and adequate pension systems, notably by increasing the effective retirement age and by better aligning retirement age and/or pension benefits to changes in life expectancy," the draft said.

The euro zone now has less than 40 days to clinch agreement among its 17 member states on a comprehensive package. Failure to do so, which remains a possibility, could unleash renewed market unrest, an outcome officials are concerned about.

"We can expect another round of market turmoil in late March and April if the summit outcome is not convincing," a senior European official said last week, noting that Portugal has a heavy debt repayment deadline in April.