Europe Debt, Euro Zone | featured news

Italy and Spain, battling searing market pressure in the euro zone's widening debt crisis, blocked agreement on measures to promote growth at a European Union summit on Thursday to demand urgent action to bring down their borrowing costs.

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.

Greece's new government is to ask lenders for two more years to hit fiscal targets, responding to huge public pressure for a softening of an international bailout but setting up a showdown with its euro zone partners.

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 lurched closer to becoming the largest euro zone country yet to be shut out of credit markets when it had to pay a euro era record price to sell short-term debt on Tuesday.

Italy put forward a proposal at a G20 summit in Mexico on Tuesday for the euro zone's rescue funds to start buying the debt of distressed European countries, and the idea is expected to be discussed at a meeting of leaders in Rome on Friday.

Euro zone paymaster Germany, relieved at a narrow election victory for Greece's pro-bailout parties, signaled on Monday it may be willing to grant Athens more time to meet its fiscal targets to avert a catastrophic euro exit.

European leaders faced increasing pressure on Thursday to respond to the euro crisis, as Spanish bond yields hit a level that has triggered full bailouts of other nations.

European finance officials have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing euro zone capital controls as a worst-case scenario should Athens decide to leave the euro.

Spain could decide this month to ask for a bailout for its troubled banking sector, a step that would make it the fourth country in the 17-member eurozone to seek help since the EU debt crisis broke out....