European Central Bank council member Ewald Nowotny suggested thebank may compromise and allow a temporary Greek default asofficials scramble to fix a sovereign debt crisis that's spreadingto Italy and Spain before a leaders' summit in two days.

As Spanish financing costs surged at a 4.45 billion euro ($6.31billion) treasury bill auction today, policy makers are trying toease a split that's pushed interest rates on Spanish and Italian10-year debt above 6 percent for the first time since the eurodebuted 12 years ago. The ECB has until now argued that any Greekdefault could spark a new financial crisis, derailing a German pushto make investors help foot the bill for a second bailout of thecountry.

“Nowotny is well known as someone who talks a lot,” said NickKounis, head of macroeconomic research at ABN Amro Bank NV inAmsterdam. “He might be revealing that there's a little bit moreflexibility than what was perhaps assumed. On the other hand, wehave to be a bit careful with Nowotny. I'd be cautious.”