Europe's divided leaders grope for summit breakthrough European leaders came under intense pressure on Thursday night to embark on a "big leap forward" towards political union and rescue for the euro, while groping for milder bailout formulas that would relieve the pressure on Spain and Italy and help to reduce their cost of borrowing. At a two-day EU summit in Brussels, leaders were more stridently at odds than ever before in the 30-month crisis, but with the stakes also arguably at their highest, frantic moves were being made behind the scenes to avoid serious acrimony. Mario Monti, the beleaguered Italian prime minister who has been plaintively asking Germany to shift from its refusal to accept liability for others' debt, was expected to deliver a plan later calling for help in reducing the cost of borrowing. Publicly and privately, senior German officials maintained a tough line, insisting there were instruments available to help, such as two eurozone bailout funds. Italy would have to request aid and accept the same tough terms borne by others who have been rescued. Monti used the run-up to the summit to warn of disaster if his pleas went unheard, while Mariano Rajoy, the Spanish prime minister, declared that Madrid's borrowing costs were at the brink of what was affordable despite the benchmark 10-year yield falling below 7%. One option, said to be mooted by the Germans, was to use the temporary bailout fund - the European Financial Stability Facility - to absorb excessive Italian and Spanish borrowing costs. More arcane schemes using the fund as an insurance instrument were being mooted while other schemes included using the bailout funds to buy up Italian or Spanish bonds, or have the ECB act similarly in the secondary markets - since the bank is not allowed to finance eurozone governments directly. The summit quickly endorsed an EU growth and jobs pact, more of a symbolic exercise in shifting the emphasis from austerity, and then grappled with a "road-map" for a 10-year march towards a eurozone political federation, embracing pooled banking, debt and fiscal policies and powers. Despite signs the leaders were seeking a short-term fix, while wrangling over the longer-term masterplan for a eurozone political union, no decisions were expected until later today at a separate summit for the 17 eurozone countries. With the stakes arguably at their highest since the currency and sovereign debt crisis erupted in Greece almost three years ago, the leaders appeared more divided than ever despite the attempts to find a formula that might calm the markets. After talks between the two key leaders, Angela Merkel of Germany and Francois Hollande of France on Wednesday, it was clear from the remarks of senior German officials there was no meeting of minds, meaning that Paris and Berlin were seriously split at a summit for the first time in the crisis. "No sign of any warming between Berlin and Paris," said a senior EU official. "Unless France and Germany can soon agree on a grand bargain, disaster may loom," said Charles Grant, director of the Centre for European Reform. While France was more favourable towards the blueprint for a eurozone federation, senior German officials were strongly critical. The summit was expected to give Herman Van Rompuy, president of the European council, a mandate to refine the scheme by the end of the year. The first stage in the integrationist leap would be to establish a banking union, probably putting eurozone banks under the supervisory authority of the ECB. While officials said this was a huge, complex and detailed undertaking the Germans insisted there could be no common European guarantees for savers' deposits or funds to wind up bad banks until a functioning European supervisory and regulatory system was working well. Britain is adamant it will have no part in banking union and David Cameron indicated he is prepared to wield a veto again to protect the City of London by fighting off any changes that would change the EU's single market. The prime minister used last night's dinner to demand "safeguards" though he believes it is in Britain's interests for eurozone leaders to follow what he and George Osborne call the "remorseless logic" of monetary union and take decisive steps towards fiscal union. The prime minister, who blocked eurozone leaders from embedding their fiscal compact in EU treaties last December, indicated he may wield the veto for a second time. "We are saying to the eurozone countries they do need to do more things together to strengthen the currency and make sense of their currency," Cameron said as he arrived in Brussels. Britain's dilemma is brought into sharp focus by banking union, which it supports but fears could change the single market. Britain is pleased the paper says that an integrated financial framework needs to be done in a way that preserves the "unity and integrity of the single market." But it has concerns that about plans to create a single European banking supervision system. While this would operate at an EU and a national level, the paper says the "European level would have ultimate responsibility." Britain will insist that two key elements of such a union - a single regulator and the mutualisation of risks in which banks stand behind one another - must be limited to the eurozone. One UK official said: "We support the steps to move towards banking union. We see that as intrinsically linked with the concept of a single currency. As a consequence of that we would not be part of some of the steps envisaged in that report such as mutualising risk, standing behind one and another's banks and we would not be behind moves to centralise the supervision of banks and financial institutions. The official added: "There are some quite far-reaching proposals in that report. It sets out a new framework for the governance of economic and monetary union. But it is a relatively short paper given the number of issues it covers.