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Corporate storm clouds gathered over Spain again as two major European companies joined the ranks of those saying they were taking steps to reduce exposure to the recession-hit country.

Europe's biggest economies endured another torrid month in July as businesses battled slumping demand, according to surveys on Friday that gave scant hope the region will emerge any time soon from a malaise induced by a paralyzing debt crisis.

Unemployment in the 17-country euro currency bloc hit another record in May as the crippling financial crisis pushed the continent toward the brink of recession, official figures showed Monday.

Cyprus, the fifth euro zone country to seek emergency funding from Europe, may need a bailout of up to 10 billion euros — over half the size of its economy — officials said.

Spain's banks would need 51-62 billion euros ($64-78 billion) in extra capital to weather a serious downturn in the economy, less than a 100-billion-euro aid package offered by the euro zone, independent audits showed on Thursday.

Germany may be Europe’s most powerful economy. But its prosperity is so uneven that Poles just across the border see it differently: as a place where housing is a bargain... The uneasiness here helps to explain the unwillingness voiced by German Chancellor Angela Merkel about proposals that would require her country to dip further into its treasury to help address the rest of Europe’s economic problems.

Spain, the latest combat zone in Europe's long-running debt wars, urged the euro zone to set up a new fiscal authority to manage the bloc's finances and send a clear signal to markets that the single currency project is irreversible.

German, US and UK yields fell to all-time lows after Spanish Economy Minister Luis de Guindos said the future of the euro is at stake, driving demand for the safest government securities.

Germany dismissed a French-led call for euro zone nations to issue common bonds, a day before a European Union leaders' summit which investors are looking to for new measures to counter the bloc's debt crisis.

As the prospect of Greece leaving the euro becomes more real by the day, economists are trying to figure out what would happen next, to the economy and to the markets.