Euro zone finance ministers are working on ironing out wrinkles in the 750 billion euro ($925 billion) plan they hatched a week ago to calm markets and stem fears of serial Greek-style debt crises in the currency area.

After talks in Brussels late on Monday, German Finance Minister Wolfgang Schaeuble and others played down what some officials described as Franco-German differences over the way the anti-contagion mechanism would be deployed.

It was more about technical things than differences, the German minister said on Tuesday, without elaborating.

Jean-Claude Juncker, Luxembourg prime minister and chairman of the talks, also said outstanding issues were technical and that ministers hoped to resolve them on Friday when they would return to Brussels to discuss longer-term policy matters.

The package agreed at emergency talks a week ago comprises standby funds and loan guarantees that euro zone governments could tap if shut out of credit markets as Greece was.

It was produced after markets fearful of debt default turned their attention, after the rescue of Greece, to other euro zone members such as Portugal and Spain, which in return for that safety net have agreed to pursue extra austerity measures.

While financial markets rallied on news of the package on Monday last week, triggering a drop in the cost they charge to refinance sovereign debt in countries including Spain and Portugal, the euro is under renewed pressure.

Its exchange rate versus the dollar has fallen about 7 percent in the past month and some 14 percent this year. In Tuesday trading it struggled to move away from four-year lows hit the previous day, trading at $1.2402 at 0911 GMT.

LONGER TERM

The finance ministers also broached reform of economic governance and fiscal reform at the pan-European level for the longer term, and voiced support for what Juncker called courageous new austerity steps by Madrid and Lisbon.

They agreed to consider in the coming days and weeks proposals the European Commission produced last week at their request. It suggested broad macroeconomic outlines of national budgets be discussed in advance at European level and speedier penalty procedures for countries that breach EU budget rules.

It is important to reinforce confidence on the market, that's why we are discussing fiscal consolidation, said Economic and Monetary Affairs Commissioner Olli Rehn.

It is essential now that we show we are serious about fiscal consolidation. I could sense broad support for the Commission proposals (on economic surveillance).

Schaeuble said it was time to look beyond crisis containment to concrete decisions on debt-control rules for the future.

It must be made clear that policymakers set the rules, not the markets, he said. The 16-country euro zone needed to cut deficits, discuss how to improve economic growth and find ways to strengthen the EU Stability and Growth Pact's fiscal rules.

It's quite clear that 3 percent in 2013 is not very ambitious, said Swedish Finance Minister Anders Borg. We need to strengthen our consolidation measures in the short term.

The bailout of Greece was a first for the euro zone, where contagion fears and now concerns that growth will be hit by austerity measures have been blamed for the dip in the euro.

Some economists say, however, a weaker euro could help the area's exports and thus offset some of the toll exacted by government spending cuts and tax increases.

Luxembourg's Juncker said he was less worried about the euro's level than the pace at which the rate was changing.

He told a news conference the euro was credible and would continue to benefit from the price stability the currency bloc has enjoyed for the 11 years since its launch.

German Chancellor Angela Merkel said on Sunday that the 750 billion euro market stabilization package had bought the euro zone time to address a deeper problem: a yawning gap between its strongest and weakest economies.

French Economy Minister Christine Lagarde has said Germany should do more for Europe by boosting its domestic consumption.

Euro zone gross domestic product contracted more than 4 percent last year, compared to 2.4 percent in the United States. The European Commission sees GDP rising just 0.9 percent in 2010 compared to a U.S. GDP gain of 2.8 percent.

(Additional reporting by Sudip Kar-Gupta, Gavin Jones, Brian Rohan, Marcin Grajewski; Writing by Brian Love; Editing by Jon Boyle and Sonya Hepinstall)

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