Euro-area manufacturing output contracted more than initially estimated in December, adding to signs a recession in the currency bloc may extend into this year as leaders struggle to tackle the sovereign-debt crisis, Bloomberg News reported today. A gauge of manufacturing in the 17-nation euro area fell to 46.1 from 46.2 in November, London-based Markit Economics said today. That’s below an initial estimate of 46.3 on Dec. 14. A reading below 50 indicates contraction. The gauge has been below 50 for 17 months.

Local governments across Spain, facing a steep drop in revenue and largely unable to borrow from banks or financial markets, have been paying suppliers of goods and services months behind schedule, the Wall Street Journal reported on Saturday. By the end of October, regional governments had accumulated bills in 2012 for providers, interest payments and other obligations totaling €13.7 billion ($18.1 billion), more than 1 percent of Spain's gross domestic product, a government report found.

The government of Socialist President François Hollande on Sunday said that it would consider other ways of imposing a top income-tax rate of 75 percent on high-wealth individuals after the country's top constitutional authority scrapped the plan, the Wall Street Journal reported today. The constitutional watchdog did not reject the principle of a more-stringent tax regime, but rather the way it would have been applied.

A year ago, many people seriously doubted whether the euro would still exist, but now the debate is more about how long it will take for the euro zone economy to recover and what must be changed to avoid future crises, the New York Times reported today. "At the moment the crisis seems to have calmed down somewhat," Jens Weidmann, president of the Bundesbank, the German central bank, said yesterday. “But the underlying causes have by no means been eliminated.” But consider some of the doomsday situations that did not occur in 2012.

Despite the economic gloom that has enshrouded it since the onset of the global financial crisis, Spain has at least one industrial bright spot: The country and its skilled, if underemployed, work force have once again become a beacon for European carmakers, the New York Times reported today.

Irish home values rose at the fastest pace in more than six years in November as the country recovered from Europe's worst real estate crash, Bloomberg News reported today. Residential property prices rose 1.1 percent from the previous month, the most since September 2006, the Central Statistics Office said in a statement today. Values fell 5.7 percent from a year earlier and are 49 percent below their 2007 peak, the statement showed. Read more.

Investors in Spain's embattled Bankia can take some comfort from the prior experience of shareholders at Ireland's largest retail bank, Allied Irish Banks, according to an Reuters analysis yesterday. Bankia now has a negative equity value of 4.2 billion euros ($5.6 billion), according to Spain's bank rescue vehicle. But the previous treatment of AIB's shareholders suggests Spain is likely to be successful in convincing the European Union to allow Bankia's existing shareholders to retain a tiny stake in the recapitalised, and newly valuable bank.

Global mergers and acquisitions rose to the highest level in four years this quarter, as a surge in U.S. deals provided ground for optimism and salvaged what had been the worst year for takeovers since the financial crisis, Bloomberg News reported today. Companies worldwide have announced $691.9 billion in purchases in the final three months of the year, the most since the third quarter of 2008, according to data compiled by Bloomberg.

Troubled steelmaker Lucchini, Italy's second-largest producer, has requested to be placed under receivership procedures to save it from bankruptcy, Reuters reported on Saturday. The measure, which involve the appointment of an administrator chosen by the government, aims at saving large insolvent companies. "The board hope it will be possible to find a solution for the company's crisis which can value the efforts so far borne by the firm," the steelmaker said in a statement on Dec. 21.

Lending by U.K. banks to companies fell sharply in November, underscoring the fragility of the British economy and raising doubts about the prospects of the Bank of England and U.K. Treasury's flagship program to boost the credit supply, the Wall Street Journal reported today. Figures from the British Bankers' Association today showed lending to companies outside the financial sector fell by £3.1 billion ($5.0 billion) in November, the steepest drop since June.