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Finance Minister Jim Flaherty meets the Globe and Mail's editorial board on April 27, 2012.Roger Hallett/The Globe and Mail

Finance Minister Jim Flaherty says he is very concerned about the deteriorating situation in Europe and will intervene with economic stimulus if it becomes necessary.

The minister told reporters in Toronto that the government is in a strong position to act as it did in 2009 to stimulate the Canadian economy because it has relatively small debt and a shrinking deficit.

Mr. Flaherty says he will discuss the worsening economic climate with his Group of Seven colleagues Tuesday morning, but made it clear he considers the situation serious.

Global markets have fallen sharply in the past few days as news coming out of Europe worsened, with Spain joining Greece on the crisis watch list.

On Monday, Portugal's finance minister said foreign bailout creditors were providing another batch of the country's $96-billion (U.S.) rescue package after concluding the government is abiding by the terms of the loan.

Mr. Flaherty says Canada would be hurt by a financial crisis spreading out of Europe or a downturn in the U.S. economy.