France's Nicolas Sarkozy will meet German Chancellor Angela Merkel in Berlin on January 9 for talks that are likely to centre on new rules to enforce budget discipline across the European Union.
The two leaders are anxious to flesh out a plan agreed at a December summit by all EU members except Britain for a new treaty to forge closer fiscal integration, as Europe battles to stem a sovereign debt crisis in the eurozone.
The French president's office announced the upcoming meeting but gave no further details.
Finance ministers from the EU's 27 members will meet on January 23 before their leaders hold a summit a week later.
They will be under intense pressure to find a definitive solution to the crisis which threatens the very survival of the single currency, 10 years after it came into circulation.
Italy's prime minister, Mario Monti, who is still battling to shore up confidence in the Italian economy, will also meet the French and German leaders this month as well as British Prime Minister David Cameron.
All European Union leaders except Mr Cameron agreed at an emergency summit on December 9 to draft a new treaty that would implement tougher rules on budget discipline, including automatic sanctions for deficit offenders.
However, a new treaty could take some time to finalise.
Adding to the pressure, credit rating agencies are scrutinising countries in the 17-nation currency bloc for possible sovereign downgrades, which would immediately push up government borrowing costs and weigh on efforts to bring public finances under control.
Calls are mounting for the European Central Bank to take more definitive action to stem the crisis by stepping up its purchases of government debt, a move beyond the current limits of its mandate which France has strongly backed in the past but Germany has so far opposed.
Meanwhile, European stocks rose yesterday following the Stoxx Europe 600 Index's first annual loss since 2008, after manufacturing in Germany and China beat forecasts. French bonds fell before debt sales this week.
The Stoxx 600 added 1pc in New York, with Germany's DAX Index climbing 2.9pc for its biggest gain since December 20. Brazil's Bovespa index rallied 0.8pc. US, UK and Irish markets were closed yesterday for the New Year's holiday.
The MSCI Asia Pacific excluding Japan Index slipped 0.1pc. French 10-year bonds fell for a fourth day, pushing yields nine basis points higher to 3.23pc. Gold also climbed.
"On the first day of the year, a lot of investors, having cleaned their portfolios, have liquidity to invest," said Arnaud Scarpaci, a fund manager at Agilis Gestion SA in Paris.
"Germany can be seen as a safe haven because it has stronger growth than other countries. People are investing in industries with a lot of visibility, such as utilities."
France's CAC-40 Index climbed 1.4pc and benchmark indexes in Portugal and Italy increased at least 1.6pc.
Indexes of equities and commodities had their worst annual returns since the US financial crisis in 2008 amid concern Europe's government debt crisis will weigh on global growth.
The yield on two-year French notes rose five basis points to 0.86pc as the nation prepares to sell as much as €8.9bn of bills tomorrow and €8bn of bonds maturing in 2021, 2023, 2035 and 2041 on January 5.
German bonds declined for the first time in five days, pushing 10-year yields up seven basis points to 1.9pc. The country will auction €5bn of bonds due in 2022 on January 4.
Italian 10-year bond yields fell 21 basis points to 6.9pc, narrowing their spread with the benchmark German bunds to 499 basis points from 528 basis points last week.
The euro fell against 13 of 16 major currencies tracked by Bloomberg. It declined 0.3pc to 99.41 yen, after earlier falling to 98.66 yen, the lowest since December 2000.
Mexican stocks also advanced yesterday. Equity markets in China, Russia, Malaysia, South Africa and Thailand were also closed for the holidays. (Reuters)