FRANKFURT (MNI) - The speed and path of the European Central Bank's exit from non-standard liquidity measures will depend on financial market developments and the economy, European Central Bank President Jean-Claude Trichet said Tuesday.

Evidence suggests that the bank's enhanced credit support policies helped ensure the effectiveness of the cuts in ECB policy rates, Trichet said, according to remarks prepared for delivery at Northwestern University's Kellogg School of Management in Evanston, Illinois.

As Federal Reserve policymakers convened their two-day Federal Open Market Committee meeting, intensified worries about debt burdens in Southern Europe roiled financial markets worldwide and made it even less likely that the FOMC will dare to signal a shift toward tighter U.S. monetary policy.

By Emma Charlton

BRUSSELS (MNI) - Fears that the Greek government's woes in the financial markets could spread to other Eurozone countries mounted on Tuesday as European policymakers emphasised the need to expedite discussions on aid for the southern European country and ratings agency Standard & Poors downgraded its ratings of both Greek and Portuguese sovereign debt.

Market analysts said the debt crisis was entering a critical phase, with more certainty on the timing, amount and conditions of the aid package now needed to shore up the situation.

FRANKFURT (MNI) - The Greek crisis is the fault of the single currency system, which fails to allow the troubled southern European country to devalue its exchange rate, the president of the Czech Republic, Vaclav Klaus said in an interview pre-released Tuesday.

As regards to economic growth and stability, the Eurozone has been dead for a long time, but given the large amount of political capital invested in the union, its politicians will never let it collapse formally, the Czech president told Germany's Frankfurter Allgemeine Zeitung.

By Steven K. Beckner

(MNI) - Federal Reserve Chairman Ben Bernanke issued strong warnings Tuesday on the need to reduce the federal budget deficit in a speech to President Obama's National Commission on Fiscal Responsibility and Reform.

Bernanke, speaking ahead of a two-day meeting of the Fed's policymaking Federal Open Market Committee, told the Commission there will be "great damage" to the economy if the federal government does not get its finances on a "sustainable long-run trajectory."

FRANKFURT (MNI) - The present time marks the beginning of the end of the economic crisis, European Central Bank Governing Council Member Ewald Nowotny said Tuesday.

Current data also show an economic recovery worldwide, yet one that moves at varying speeds, with the US and Asia returning more rapidly to growth than Europe, Nowotny observed. Still, he cautioned that growth is not yet sufficient to induce a recovery on the labor market, according to a summary of remarks to be given today at Princeton University, provided by the Austrian National Bank, which he leads.

FRANKFURT (MNI) - The European Central Bank on Tuesday called for bids on its 91-day long-term refinancing operation at a minimum rate of 1.00%.

Bids for tomorrow's operation are due by 07:30 GMT on Tuesday.

BRUSSELS (MNI) - Work on an EMU/IMF aid package and programme for Greece is going well and should be finished by early May, a spokesperson for the EU's executive arm, the European Commission said on Tuesday.

Representatives from the European Central Bank, the European Commission and the International Monetary Fund are in Athens thrashing out the terms of an aid deal for Greece which is worth up to E45 billion this year.