European Union (EU) finance ministers agreed early Monday on an unprecedented rescue mechanism worth up to 750 billion euros (956 billion U.S. dollars) to prevent spread of the Greek debt crisis and rebuild confidence in financial markets. 

At a news conference following the extraordinary meeting, European Economic and Monetary Affairs Commissioner Olli Rehn said that finance ministers decided to create a European Financial Stabilization mechanism to preserve financial stability in Europe.

Under the three-year Special Purpose Vehicle, the largest bulk of the 750 billion euros, or 440 billion euros (560 billion U.S. dollars), would come from bilateral loans from the 16 eurozone countries, said a statement issued after the meeting.

The European Commission would raise 60 billion euros (76.5 billion U.S. dollars) from financial markets on behalf of the EU, which means the borrowing would be guaranteed by all 27 EU governments.

The 60 billion euros, covering eurozone countries, will be added "without prejudice" to the existing 50-billion-euro (64-billion-dollar) facility providing financial assistance for non-eurozone countries, the statement said.

The International Monetary Fund (IMF) is expected to provide at least half of the EU contribution, or 250 billion euros (318.6 billion U.S. dollars).

Rehn said the mechanism, mainly based on the European Commission's proposal, was "not only about Greece, but also about the euro area as a whole" and showed EU's determination to "defend the euro whatever it takes."

Meanwhile, finance ministers pledged to ensure fiscal sustainability and enhance economic growth, and strengthen financial regulation and supervision, in particular on derivative markets and rating agencies, which have been strongly criticized by EU for getting the Greek crisis worse.

The rescue mechanism is the second significant step taken by the eurozone countries to contain the spread of Greek debt crisis and support a declining euro.

On Friday, leaders of the 16 eurozone countries finalized a 110-billion-euro (146-billion-U.S. dollar) aid package to Greece, which was activated by finance ministers on May 2.

The eurozone countries pledged to provide debt-hit Greece with 80 billion euros (101.6 billion U.S. dollars) in loans over three years, while the IMF will contribute another 30 billion (38.1 billion dollars).

However, investors think the rescue package may not suffice to help Greece, which is burdened by debt of nearly 300 billion euros (396 billion U.S. dollars). The euro fell to a 14-month low last week as financial markets feared that Spain and Portugal might follow Greece into crisis.