Europe Debt Crisis | featured news

As it tries to play Russia off against Europe to salvage its economy, Cyprus has embarked on a high-stakes poker game that could see almost everyone lose.

The European Central Bank is prepared to cut off funding to Cyprus and let the Mediterranean island succumb to financial meltdown if it has to, confident it has unlimited firepower to protect the rest of the euro zone.

Lawmakers in Cyprus were poised Tuesday to reject a bailout plan that would have rescued the country’s banks but forced savers to chip in for the cost, sending the tiny island nation into a tailspin over its economic future.

Homeowners have told of how sales of their properties are on hold and businesses have called for clarity amid banking uncertainty in Cyprus. The country is braced for an emergency session of its parliament, and a planned vote, regarding a 10bn euro ($13bn; £9bn) financial rescue.

U.S. stocks fell as an unprecedented Cyprus bank-deposit tax sparked renewed fears about Europe's debt crisis.

Italy's new parliament met on Friday for the first time since last month's inconclusive election with no sign of a deal to end the stalemate and yield a government able to address the deep problems in the euro zone's third-largest economy.

Thousands of workers protested in Brussels on Thursday to demand that EU leaders gathering for a summit bring an end to austerity measures and instead focus on boosting growth and reducing unemployment.

Europe has spent hundreds of billions of euros rescuing its banks but may have lost an entire generation of young people in the process, the president of the European Parliament said.

European finance ministers are gathering to discuss a long-delayed bailout for Cyprus amid demands from creditor nations that the island nation commit to privatizations and greater transparency in its financial sector. France's Pierre Moscovici said ahead of the meeting of the 17-nation eurozone's finance ministers Monday the talks will specifically include the issue of anti-money-laundering policies and their implementation.

The data is likely to put pressure on the European Central Bank to cut interest rates at its next meeting.