Reuters reported that Italy held preliminary talks with the International Monetary Fund (IMF) over a possible financial aid likely co-funded by national European Central Banks, as Italy needs support to cope with the escalating debt crisis; however, no decisions were made until now according to several sources.

The sources also said that no formal request for IMF is expected before the Italian Prime Minister, Mario Monti, presents his budget to the cabinet on December 5.

A source familiar with the talks between Italy and IMF said that discussions were accelerated after Germany stressed that the European Central Bank is not allowed to directly involve in providing the nation with a financial aid.

The source said that discussions are currently around a 400 billion euro ($530.6 billion) contingency package. Italy has not filed a request but things are building in that direction.

The Bank of Italy and the Italian Treasury denied any requests for financial aid.

In Spain, sources close to the ruling People's Party said that Spain is seeking for international aid; however, the new Premier hasn't formed his government yet, but is expected to outline his economic plan on December 8.

People's Party officials denied the talks.

An IMF spokesman said in a statement that: The IMF wishes to reaffirm that there are no discussions with the Italian nor Spanish authorities on any form of IMF financing.