Europe Debt Crisis, Euro Zone | featured news

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.

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.

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

Even as the euro zone periphery starts to spy some glimmers of hope, concern is mounting that Germany is drifting apart from other countries at the core of the single currency bloc, notably France.

Standard & Poor's ratings agency on Tuesday upgraded Greece's credit grade by 6 notches, yanking the debt-heavy country out of default but still keeping its devalued bonds in junk status.

Greek pension funds will not take part in a debt buy-back that is a key part of the country's international bailout, Greek Prime Minister Antonis Samaras said in a newspaper interview.

Germany's chancellor says she understands the frustration felt by many Germans over the repeated bailout programs for Greece.

The euro zone economy is on course for its weakest quarter since the dark days of early 2009, according to business surveys that showed companies toiling against shrinking order books in November.

Pockets of violence broke out as public demonstrations and strikes over rising unemployment and austerity measures took place in many parts of Europe Wednesday. Spanish and Portuguese workers staged a coordinated general strike across the Iberian Peninsula, shutting transport, grounding flights and closing schools to protest against spending cuts and tax hikes.

Over the course of five days, the Greek government -- led by the understated conservative Prime Minister Antonis Samaras -- overcame two high hurdles in a dash to qualify for the austerity program set out by the so-called troika, made up of the European Central Bank, the International Monetary Fund and the European Commission.