German Chancellor Angela Merkel led European leaders on Tuesday in an effort to play down the threat of the troubled Italian banking sector triggering a bank crisis in the region. 
"Altogether I do not see any critical development," Merkel said at a press conference in Berlin. 
Italian Prime Minister Matteo Renzi has launched talks with Brussels over his plans to pump billions of euros into his nation's banking sector to shore up confidence in the banks, which have bad loans totalling 360 billion euros (397 billion dollars) on their books, dpa reported. 
However, Brussels has been resisting Rome's planned financial measures saying that the banks and not public funds should be used to help with bank recapitalization. 
Speaking in Brussels on Tuesday, Italian Finance Minister Pier Carlo Padoan said: "Any possible intervention or actions by the state will be completely in line with the rules."