"In the short term, they've (European leaders) got to stabilise their financial system, and part of that is taking clear action as soon as possible to inject capital into weak banks," Obama said at a press conference here.
"Just as important, leaders can lay out a framework and a vision for a stronger eurozone, including deeper collaboration on budgets and banking policy," he added.
"Getting there is going to take some time, but showing the political commitment to share the benefits and responsibilities of a(n) integrated Europe will be a strong step," Obama said.
The Eurozone crisis deepened further as Fitch Ratings yesterday cut Spain's sovereign credit rating by three notches to 'BBB'.
As US fights back from the deepest economic crisis since the Great Depression, Obama said Europe is a main concern.
"Right now one concern is Europe, which faces a threat of renewed recession as countries deal with a financial crisis. Obviously this matters to us because Europe is our largest economic trading partner," Obama said in his White House news conference.
"If there's less demand for our products in places like Paris or Madrid, it could mean less business for manufacturers in places like Pittsburgh or Milwaukee," he said.
He noted that European leaders understand the challenges that they are facing and the urgency to act on this issue. He added that he has been in frequent contact with them over the past several weeks.
Obama said that there are specific steps European leaders can take right now to prevent the situation there from getting worse.
The US President said after losing jobs for 25 months in a row, American businesses have now created jobs for 27 months in a row -- 4.3 million new jobs in all.
"The fact is, job growth in this recovery has been stronger than in the one following the last recession a decade ago, but the hole we have to fill is much deeper and the global aftershocks are much greater.
"And that's why we've got to keep on pressing with actions that further strengthen the economy," Obama said.
"With respect to Greece, which has important elections next weekend, we've said that it is in everybody's interests for Greece to remain in the eurozone while respecting its commitments to reform," he said.
"We recognise the sacrifices that the Greek people have made, and European leaders understand the need to provide support if the Greek people choose to remain in the eurozone.
"But the Greek people also need to recognise that their hardships will likely be worse if they choose to exit from the Eurozone," he said.
Over the longer term, even as European countries with large debt burdens carry out necessary fiscal reforms, they've also got to promote economic growth and job creation, he noted.
Obama added that as some countries have discovered, it's a lot harder to rein in deficits and debt if the economy isn't growing.
"So it's a positive thing that the conversation has moved in that direction, and leaders like Angela Merkel and Francois Hollande are working to put in place a growth agenda alongside responsible fiscal plans," he said.
The US President said the solutions to Europe's problems are hard.
"The bottom line is the solutions to these problems are hard, but there are solutions. The decisions required are tough, but Europe has the capacity to make them.
"And they have America's support," Obama said.
"Their success is good for us, and the sooner that they act and the more decisive and concrete their actions, the sooner people and markets will regain some confidence, and the cheaper the costs of cleanup will be down the road," he said.
Obama also made a passing reference to the weakening of economies in Asia.