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Spain is ready to request a euro zone bailout for its public finances as early as next weekend but Germany has signaled that it should hold off, European officials said on Monday. The latest twist in the euro zone's three-year-old sovereign debt crisis comes as financial markets and some other European partners are pressuring Madrid to seek a rescue program that would trigger European Central Bank buying of its bonds.

Tens of thousands of Spaniards and Portuguese rallied in the streets of their countries' capitals Saturday to protest enduring deep economic pain from austerity cuts.

Spain's debt level and borrowing needs are set to rise next year, piling pressure on the government to apply for international aid, as it pours funds in to cash-strapped regions and an ailing banking system, its budget showed on Saturday.

Euro zone economic sentiment defied expectations of stabilization and again fell sharply in September, underlining the economic gloom brought on by the sovereign debt crisis as the euro zone sinks into a recession.

Chancellor Angela Merkel said on Tuesday that Europe could only hope to come out of its crisis stronger and compete in a globalised world if its members pressed ahead with painful reforms and moved to more responsible budget policies.

Euro zone states are preparing to allow the bloc's permanent bailout fund to leverage its capital in the same way as its predecessor so it can reach a capacity of more than 2 trillion euros and rescue big countries if necessary, Der Spiegel said on Sunday.

The German chancellor says it's a "good day for Germany and a good day for Europe". Better than that, it's been a good week. First, the European Central Bank delivered on its pledge to do more - possibly quite a lot more - to hold the euro together. Now the German constitutional court has ruled in favour the new European bailout fund, the ESM.

The Swiss economy has long appeared to be surprisingly resilient to the economic downturn across Europe, but the latest statistics released Tuesday showed that Switzerland is slowing down together with the rest of Europe. After a strong first quarter, the economy contracted in the second because of falling exports to the euro zone, the Alpine country's biggest trade partner. Compared with a year earlier, the Swiss economy still managed to expand at a 0.5% pace, but it contracted 0.1% from the first quarter.

The Spanish economy is falling deeper into recession and depositors are pulling their money out of the banks, figures published on Tuesday showed, while the country's most economically important region, Catalonia, said it needed a major rescue from Madrid.

Angela Merkel tried to calm a growing storm over euro zone crisis strategy on Sunday after the Bundesbank likened ECB bond-buying plans to a dangerous drug and a conservative ally of the German leader said Greece should leave the currency bloc by next year.