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European leaders push for $163 billion in spending to spur economic growth

ROME — The leaders of France, Germany, Italy and Spain have agreed to push for a growth package worth up to $163 billion at a European Union summit next week that's intended to kick-start the economy and safeguard the currency bloc.

French President Francois Hollande, German Chancellor Angela Merkel, Spanish Prime Minister Mariano Rajoy and Italian Premier Mario Monti, playing host, provided few details beyond agreement on pursuing a financial transaction tax — something Germany has championed.

Economists said the size of the growth package would be modest, about 1 percent of the euro alliance's gross domestic product. But they said it marked a recognition by Merkel that more government spending would be needed.

"It is at least a step in the right direction," said Ted Truman, a former international economics adviser at the Federal Reserve and at the Treasury Department in the Obama administration. "The tone has changed, in part because the German economy has not been doing as well recently."

Monti is trying to build a bridge between Merkel's insistence on fiscal discipline and recently elected Hollande's focus on growth. Monti has warned of severe consequences for the 17 countries that use the euro and the world economy if next week's summit fails.