High borrowing costs for Spain and Italy have eased a little on market hopes for policy initiatives at the Brussels summit on 28-29 June. If it falls short, both countries may be pushed closer to eventually needing bailouts.
Today's meeting will search for ways to achieve fiscal and banking union in the eurozone and, more urgently, it may also be the occasion for Spain to formally request assistance of up to €100 billion for its ailing banks.
Merkel is expected to resist pressure from Italian Prime Minister Mario Monti, French President François Hollande and Spanish Prime Minister Mariano Rajoy for less stringent eurozone fiscal policies or the issuance of common eurozone bonds.
While Spain's needs are most pressing - its medium term borrowing costs hit a euro era high at auction on Thursday - the political stakes may be higher for Italy's unelected prime minister.
With his popularity sinking, the parties that back Monti in parliament are increasingly reluctant to support his reform proposals at home, but demand he get results in the European arena to ease the pressure on Italy's recession-bound economy.
"Friday's summit is important for Monti in symbolic terms because it shows Italians that he is centre-stage," said James Walston, politics professor at the American University in Rome.
Though hugely popular when he came to office in November, Monti's approval rating has halved as tax rises and pension cuts exacerbated an already severe recession, and his labour reform estranged both unions and the business establishment.
But for the markets, Monti remains the man most likely to tackle Italy's debt mountain and uncompetitiveness. If he comes under serious threat, Italy could quickly supplant Spain as the eurozone's main flashpoint.
Selecting the next eurogroup president?
AFP reported that Hollande will use the Rome mini-summit to "test the ground" for French Finance Minister Pierre Moscovici's nomination as Eurogroup president to succeed Jean-Claude Juncker of Luxembourg, who is stepping down at the end of this month.
German Finance Minister Wolfgang Schäuble has also been mentioned as a possible candidate. A spokeswoman for the Federal Ministry of Finance told EurActiv Germany that Schäuble was still available for the post but noted that the minister has also said he would not mind if Juncker stayed on.
Der Spiegel reported that Estonian Finance Minister Jürgen Ligi could be another choice, crediting him with having enough political clout to push through unpopular cuts at home. Ligi as president of the Eurogroup would be a signal to Greece and other troubled countries that a full return from a deep downturn is possible.
