Euro, Euro Zone | featured news

Spain’s conservative prime minister, Mariano Rajoy, is not known as a gambling man. But as Europe’s debt crisis stretches on, he is playing a tense game of chicken with the financial markets, betting that Spain can balance its books with homegrown austerity while putting off — maybe forever — a humiliating bailout from the European Union.

German Chancellor Angela Merkel will make her first visit to Greece next week since the euro zone debt crisis erupted, in a show of support for Athens after it said it will run out of money at the end of November without fresh international aid.

The euro zone's economic woes accelerated last month and China's slowdown looked likely to extend to a seventh quarter, surveys on Wednesday showed, while the United States proved the bright spot with better-than-expected news on services and jobs.

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.

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.

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.