FRANKFURT, Germany — The European Central Bank held an emergency telephone conference Sunday on how to fend off financial collapse in Italy while officials from rich and developing countries looked for ways to stabilize markets when they reopen after the U.S credit-rating downgrade.

The intense activity on an August weekend underscored how heavy levels of government debt on both sides of the Atlantic have rattled financial markets — and sharpened fears that the global recovery from the 2007-2009 financial crisis could be derailed.

A eurozone official told The Associated Press that central bank officials were to discuss possible purchases of Italian government bonds — a risky move but one that could help drive down bond interest yields that are threatening the heavily indebted country's finances.

The official declined to be identified without authorization to discuss the meeting. A spokeswoman for the ECB declined to comment.

European officials are trying to keep Italy from being dragged into the same kind of interest-rate death spiral that forced Greece, Ireland and Portugal to seek international bailout loans after they could no longer borrow at affordable rates.

On Sunday, officials from the world's 20 leading economies also discussed the stability of financial markets after the historic U.S. credit downgrade Friday rattled investors already worried about European debt crises.

European leaders agreed at a summit July 21 to equip their €440 billion (around $620 billion) bailout fund with the powers to buy government bonds in the secondary market and help bailout banks. But the changes will not take effect until national parliaments get back from vacation and ratify them next month.

Responding to market pressure, Italian Prime Minister Silvio Berlusconi on Friday promised to balance the country's budget by 2013, a year early, and to bring forward other reforms such as including an amendment in the constitution requiring the government to balance its budget.

German Chancellor Angela Merkel and French President Nicolas Sarkozy praised reform efforts by Italy and Spain, but also urged "complete and speedy implementation."

Deputies from the Group of 20 talked by telephone about proposals to minimize market shocks, South Korea's central bank said.

Japan's Kyodo News agency reported Sunday that G-7 deputy finance ministers had agreed on a conference call among the higher-level ministers, who are likely to discuss the U.S. downgrade as well as the eurozone sovereign debt concerns.

The G-7 includes Britain, Canada, France, Germany, Italy, Japan and the U.S., while the G-20 includes those countries as well as large, emerging economies such as China, Brazil, Russia and India.

ECB President Jean-Claude Trichet said last week that the bank was reviving its bond-buying program after leaving it dormant for four months. The head of Belgium's central bank said it bought Irish and Portuguese bonds, but not those from Spain and Italy, implying those countries had to do more to fix their finances first.

Italy's bond yields have risen from under 4 percent late last year to over 6 percent on Friday, a potentially serious burden for the government's finances.

The government has debt equivalent to 120 percent of economic output, the second highest in the eurozone behind Greece, and weak prospects for economic growth that would help pay debt.

Sunday's phone conference comes just hours before the opening of financial markets in Asia, after Friday's downgrade of the U.S. credit rating from AAA to AA plus by ratings agency Standard & Poor's has led to fears of more stock market plunges.

Last week already saw markets around the world deep in the red amid fears the global economy may be weakening and the uncertainty created by Europe's debt crisis.

In a sign of early fallout, Middle East markets tumbled Sunday on the first day of business after the downgrade.

Middle East markets, open Sunday through Thursday, were the first to react to the downgrade. Egypt's benchmark EGX30 index fell more than 4 percent, and other Gulf markets also were sharply lower.

Israel's Tel Aviv Stock Exchange delayed the start of the week's first session after pre-market trade showed the benchmark index dropping more than 6 percent because of concerns over the U.S. debt rating cut. Exchange spokeswoman Idit Yaaron said the start was pushed back by 45 minutes "so market players will have time to react logically and not under pressure."

Israel's benchmark TA-25 index plunged 7 percent to close at 1,074 points.

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U.S. markets and others reopen Monday but have had rough patches recently. The Dow Jones industrial average dropped 512 points Thursday, its worst performance since the financial crisis of 2008, and regained only a fraction of that drop Friday.

Many economists see the world's big central banks as the last line of defense at this moment in the crisis, after policymakers in Europe and the U.S. have failed to agree on the kind of shock-and-awe moves that many investors demand.

Investors have also been calling on the U.S. Federal Reserve to start pumping money into the American economy again to help underpin the slowing economic recovery.

Mari Yamaguchi reported from Tokyo. Kelly Olsen in Seoul, South Korea; Adam Schreck in Dubai; and Christopher Bodeen in Beijing contributed to this report.