Oct. 12 (Bloomberg) -- European Central Bank President Jean-Claude Trichet pressed the leaders of the 15 euro nations to use public funds to recapitalize their banks, Spanish Prime Minister Jose Luis Rodriguez Zapatero said.

``It was the president of the European Central Bank who urged governments to take measures to help in financing and in some cases recapitalizing financial institutions,'' Zapatero said at a press conference in Paris today. ``We don't need to do this at the moment but it we do need to we will.''

Zapatero was speaking after government leaders agreed to guarantee bank borrowing and give each other permission to shore up banks by buying preferred shares. Governments are trying to head off a financial rout as their economies face recession.

``It would be good if markets understood this message of confidence not because of some mega announcement but because of the strength of the measures on the table,'' Zapatero added.

Spain will guarantee new bank debt of up to five years maturity until the end of next year as part of the coordinated measures agreed upon today, Zapatero said.

The Spanish government announced Oct. 7 it will spend up to 50 billion euros buying up bank assets in a bid to boost the flow of credit to companies and consumers. The country faces its first recession in 15 years as the global credit shortage and a domestic housing slump crush consumer confidence, the European Commission says.

On Oct. 10 in Washington, finance officials from the G-7 -- the U.S., Japan, Canada, with Europe represented by Britain, France, Germany and Italy -- signalled a determination to intervene without announcing concrete steps.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

Last Updated: October 12, 2008 16:10 EDT