European Union finance ministers on Friday started laying out new, tougher rules for their public finances in the hopes of winning back market confidence and preventing a repeat of the debt crisis that is threatening the euro.

Some nations are pushing for penalties and punishments — from stripping countries of voting powers to ejecting them from the euro zone — for repeated debt offenders. The aim is to avoid an EU bailout for another country, as happened with Greece, by tightening checks sooner.

Europe's stock markets, however, remained cautious. They continued to slide Friday despite the approval by Germany's lower house of parliament for a 750 billion euro ($937 billion) "shock and awe" package of cash and state guarantees to protect euro zone countries from bankruptcy.

Germany's 16 states also voted in favor of the package in the country's upper house and Germany's promise to contribute up to 147.6 billion euros in loan guarantees will be finalized after President Horst Koehler signs the bill — expected to be a formality.

German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that the country had to make the rescue package a reality "because markets will only trust when it is actually in effect."

The approval failed to assure markets. The FTSE 100 index of leading British shares was down 2 percent while Germany's DAX tumbled 2.3 percent and the CAC-40 in France dropped 2.5 percent.

The euro was also trading close to a four-year low against the dollar. It has shed some 18 percent of its value since December.

As they arrived in Brussels for a late meeting, European Union finance ministers called for stronger government action to cut debt and stressed the need for credible budget rules.

Their Friday meeting is just the start of EU reforms that will be decided in October.

Germany has pushed hard for aid to debt-laden European countries to be coupled with requirements to bring down deficits. That seeks to compensate for fears that the financial backstop effectively removes the pressure on indebted euro nations to cut debt fast.

German Finance Minister Wolfgang Schaeuble says he wants to make life far harder for euro zone governments that break widely ignored rules limiting debt and deficit.

He suggests making a 3 percent deficit limit legally binding and adding sanctions to deter countries from running up debt — such as losing voting rights at the EU, losing EU funds or ultimately being ejected from the euro.

France says it supports the German proposal. French Finance Minister Christine Lagarde said the German program was "very interesting and really going in the right direction."

Spain and Portugal have been pressed into making more spending cuts and EU officials have warned that other euro zone countries with large deficits — such as Ireland — may have to do the same.

Sweden's finance minister Anders Borg — whose nation does not use the euro — called for "stronger commitments from countries with high debt" and "stronger sanctions" at an earlier stage.

Another country outside the euro, Britain, has already signaled discontent with some proposals for all 27 EU nations to coordinate budgets before governments send detailed spending plans to national parliaments.

British treasury chief George Osborne said he had "many allies" among EU countries who agreed that parliaments "have to be the first people told about the important tax and spending decisions that countries like Britain have to take."

He said he will set out new budget cuts on Monday, saying he was "very conscious" that Britain has the EU's largest budget deficit.