Germany, Eurozone | featured news

Stocks fell and the spread between Spanish and German bonds hit a record wide, as the prospect of fresh elections heightened concerns about the likelihood of Greece exiting the euro zone.

The euro zone may raise the combined lending power of its bailout funds to close to 700 billion euros from 500 billion in a trade-off between German opposition to committing more money and calming markets, euro zone officials said.

Greece must surrender control of its budget policy to outside institutions if it cannot implement reforms attached to euro zone rescue measures, the German economy minister was quoted as saying on Sunday.

Germany and France clashed on Wednesday over whether the ECB should take bolder steps to stem the euro zone debt crisis, with Chancellor Angela Merkel issuing one of her starkest warnings yet against fiddling with the central bank's strict inflation-fighting mandate.

The leaders of Germany and France, the eurozone's two biggest economies, say they have reached agreement on strengthening Europe's shaky banking sector.

Stocks rose on Thursday after U.S. economic data came in stronger than forecast and Germany's lower house approved new powers for the euro zone's crisis fund.