Italy is working on an Alitalia rescue plan that would see the state taking a stake of around 15 percent in the carrier along with separate investments by state-owned firms such as Ferrovie dello Stato and a foreign player, Il Sole 24 Ore said on Sunday. Once a symbol of Italy’s post-war economic boom that has recently struggled to compete with low-cost carriers and high speed trains, Alitalia was put under special administration last year after workers rejected a rescue plan, Reuters reported.

Brussels has written to Italy’s populist government warning of “serious” concerns that the country’s draft budget plan will break eurozone spending rules — a development that is likely to fuel fears of a full-blown showdown between Rome and the EU later this month, the Financial Times reported. In a letter to Giovanni Tria, Italy’s finance minister, the EU’s two commissioners in charge of budgetary rules urged Rome to take heed of rules requiring Italy to shrink its budget deficit next year.

A rebound in German industrial orders has yet to feed through to production, with output from the country’s factory sector once again lagging behind expectations, the Financial Times reported. Industrial production dropped 0.3 per cent in August from the previous month according to statistics agency Destatis, after a 1.3 per cent month-on-month decline in July. Economists polled by Reuters had expected a 0.4 per cent increase for August. July’s production was also worse than previously thought. Data had originally pointed to a decline of 1.1 per cent for the month.

Just as Iceland looks back at a decade of recovery since its financial and economic collapse, the north Atlantic island is once again grappling with an existential challenge for one of its key industries, Bloomberg News reported. Tourism and the foreign cash it provides was instrumental in digging the 340,000-person nation out of its deep hole. Now, the industry is cooling fast and problems are mounting for its airlines after years of rapid expansion. Rewind to 10 years ago, and a similar tale could be told about the nation’s banks.

Senior European Union officials believe Italy risks facing a massive debt restructuring task - and one that would hit its own citizens hardest - unless it backs down in its unprecedented challenge to Brussels' budget rules. Italy's 2.3 trillion euro national debt dwarfs that of Greece and the euro zone bailout fund would not be able to cope with the costs of supporting its government in a crisis, the International New York Times reported on a Reuters story. Any such crisis could threaten the euro itself, seen by many as the EU's greatest achievement.

A trio of funds backed by $3 trillion in global assets reckon the recent sell-off in Italian bonds is overdone. UBS Wealth Management is buying into the weakness in the nation’s debt, along with Allianz Global Investors and Nomura Asset Management, Bloomberg News reported. The surge in Italian bond yields is a reflection of a market in fear, which will be forgotten noise in a few months for Allianz. “The move is completely crazy,” said Kacper Brzezniak, a portfolio manager at Allianz, whose firm overseas 524 billion euros ($605 billion) in assets globally.

Burdened by the highest ratio of bad loans in Europe, Greek banks have no shortage of challenges. And that was before Greece -- the continent’s most indebted state -- decided to end its bailout program in August without requesting a follow-up lifeline backed by European creditors, Bloomberg News reported. If doubts about the state of their balance sheets aren’t addressed, concerns about the fate of Greek banks could spiral out of control.

Shares in peer-to-peer lender Funding Circle traded as much as 24 per cent below their initial public offering price on their first day of trading, in a blow to aspirational fintech companies hoping to float, the Financial Times reported. At their low of the day, the company’s shares hit 334.5p, down from the IPO price of 440p. During conditional dealings on Tuesday, ahead of their official London Stock Exchange debut, the shares had been trading at a steep discount to the offer price, closing down 17 per cent at 364p, according to data from Refinitiv.

The recent clash between Italy’s populist government and the European Union over its ballooning budget deficit has created an attractive buying opportunity for shorter duration Italian sovereign debt, according to UBS Group AG, Bloomberg News reported. The bank initiated an overweight position in two-year government bonds versus cash as there is “only a very low probability that Italy will default within the next two years,” according to a note from Mark Haefele, chief investment officer at UBS Global Wealth Management.

The global financial crisis left lasting scars on the world economy, including slower growth, higher government debt and even lower fertility rates, the International Monetary Fund said. A decade after Lehman Brothers filed for bankruptcy in 2008, output in more than 60 percent of the world’s economies remains below where it would have been if the crisis hadn’t occurred, the fund said in a report Wednesday. The drop was steepest in the 24 countries that experienced financial crises, the Fund said in an analytical chapter accompanying its latest World Economic Outlook, Bloomberg News reported.