Euro, Europe Debt Crisis | featured news

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.

European Union officials pushed on Saturday to accelerate moves to stem the bloc's long debt crisis as Italian premier Mario Monti warned that economic suffering was fuelling divisive nationalism on the continent.

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.

Spanish jobless claims rose at the slowest pace in six years in August, the country's labor ministry said, a sign that surging unemployment in the euro zone's fourth-largest economy is leveling off.

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.