Spain has tumbled into recession as Greece installs a crisis government to tackle its crippling debt and top EU leaders prepare for crisis talks.
European leaders are planning a video conference for later on Thursday, initially to discuss an upcoming G8 meeting of industrialised countries but also to consider Greece and other eurozone countries.
In Athens, a caretaker government took office to organise the country's second elections in six weeks after an inconclusive May 6 vote jolted the eurozone.
British premier David Cameron was to confer via video conference with German Chancellor Angela Merkel, new French President Francois Hollande, Italian Prime Minister Mario Monti and top EU officials.
The meeting was originally called to discuss a G8 meeting in the United States at the weekend, but Cameron's office said the eurozone was likely to come up as well.
On Thursday, Cameron renewed his call for eurozone leaders to take decisive action or face the break up of the single currency over the Greek debt crisis.
Britain is not a eurozone member but the bloc is a key trading partner and fallout from the debt crisis is having a serious effect on the entire 27-member European Union.
"Either Europe has a committed, stable, successful eurozone ... or we are in uncharted territory which carries huge risks for everybody," Cameron said.
Those risks were underscored in Madrid, where the national statistics institute (INE) said that the fourth biggest eurozone economy had contracted by 0.3 per cent in the first quarter of 2012.
That was the same decline seen in the last three months of 2011 and confirmed that Spain was officially in recession, defined as two straight quarters of economic contraction.
The Spanish government paid higher rates to place three- and four-year bonds with wary investors, while a state-controlled bank, Bankia, was reportedly hit by heavy withdrawals by clients.
Weaker domestic demand had hampered business activity as Spain struggled with austerity measures aimed at cleaning up its finances, the INE said in a statement.