A quick recapitalisation of European banks is necessary to steady markets and avert the economy from falling into another recession, IMF Europe Director, Antonio Borges, said late on Wednesday. The price tag for such a move was estimated in the range between €100bn and €200bn, he said.

According to the IMF report, the eurozone debt crisis and its effects are disseminating across core banks and nations and make it impossible to rule out a further economic recession.

The report cautioned that stronger economies should steer clear of compelling radical budget cuts at the expense of growth.

The IMF offered its help through the possible implementation of a financing tool that allows it to buy bonds, particularly Spanish and Italian ones, in private markets to assist in curbing the bloc's debt crisis.

“Any investment we would make in Spain or Italy would be based on full confidence that these countries are on the right track, that they are solvent and that they are taking all the measures they should, Borges told a news conference.