Governments around the world sought to calm markets after fears about Greece's debt crisis went global, with investors seeing it as an omen of turmoil in other European economies.

Group of Seven finance ministers discussed the debt crisis in a conference call on Friday after Federal Reserve officials expressed concern and the White House said President Barack Obama was watching developments closely.

Euro zone leaders were scheduled to meet for a special summit late on Friday to put their political stamp of approval on the EU-IMF deal to release 110 billion euros over three years to help Greece overcome its debt and deficit crisis.

The German parliament on Friday approved its big share of the bailout. Italy's cabinet has given initial approval, and the Dutch parliament gave its effective approval on Friday.

Five German academics have filed a legal challenge to the package, however, reflecting widespread domestic opposition to the measure.

Chancellor Angela Merkel talked of a battle between governments and markets. EU monetary affairs chief Olli Rehn compared Greek insolvency to the financial crisis 18 months ago.

Little did authorities of the United States know in September 2008 what the bankruptcy of investment bank Lehman Brothers would lead to, Rehn wrote in a Finnish magazine.

The consequence was that the world's financial system was paralyzed in a way that led to the biggest global recession since the 1930s. Consequences from Greece's insolvency would be similar if not worse.

French Prime Minister Francois Fillon said the action to save Greece would defeat and put an end to speculation which has been unleashed against this country, adding there was no reason for markets to take aim at indebted Spain and Portugal.

The European Central Bank was to hold a conference call with commercial banks on Friday to gather opinions on the state of money markets. Euribor bank-to-bank lending rates reached their highest level in almost four months.

World stocks held near a three-month low on Friday despite strong U.S. jobs data and the euro traded close to a one-year trough, weighed down by persistent fears over the Greek crisis.

The market volatility might prompt China to move more slowly than expected to let the yuan appreciate, forex strategists said.

NO ALTERNATIVE TO EURO

German Finance Minister Wolfgang Schaeuble told parliament aid to Greece would uphold Germany's postwar legacy of serving peace, 65 years after its darkest chapter in World War Two.

The joint European currency, the joint European economic area were right, he said. There is no comparable alternative to them in the 21st Century in the age of globalization. That is why we must defend the joint European currency.

The Greek parliament backed an austerity plan on Thursday, but selling accelerated across markets overnight after the European Central Bank said it had not considered buying government bonds to ease Greece's debt crisis. Some investors had hoped it would be more active in calming markets.

European investment-grade corporate credit default swaps hit their widest levels in over a year, and there was a rise in the premium that investors demand to buy peripheral euro government bonds rather than benchmark Bunds.

The panic trading that started today again is fading slightly but things remain quite vulnerable, said Patrick Jacq, euro zone interest rate strategist at BNP Paribas.

CREDIBILITY OR SLOW DEATH?

Greece's 30 billion euro ($40 billion) austerity bill imposes years of hard measures in return for the joint rescue by the European Union and the International Monetary Fund.

After violent protests in Athens, one Greek newspaper praised the parliament vote as the politics of credibility. But another daily called the plan a slow death contract.

If it turns out that the economy is not able to withstand the measures, if growth falls much more than forecast there could be social unrest, forcing the government to consider alternative moves in its asset-liability management, said RBS economist Silvio Beruzzo.

This may include restructuring.

ECB chief Jean-Claude Trichet dismissed the prospect of any euro zone debt default.

Default is, for me, out of the question, he said.

(Additional reporting by Noah Barkin in Athens, Gernot Heller in Berlin, Tim Heritage in Brussels, George Matlock in London, Pedro Nicolaci da Costa in Richmond, Virginia; writing by Andrew Roche; editing by Sonya Hepinstall)