Countries that stay outside a European banking union should be given safeguards against being sidelined, one of Europe's top bank regulators said on Wednesday, in remarks that will add to the momentum from Sweden and others pushing to alter the scheme, Reuters reported. Last month the European Commission proposed that the European Central Bank take charge of supervising all banks in the euro zone in a gradual process starting in January, as a first step towards creating a banking union under which euro zone countries would eventually jointly back their banks.

Spain’s debt rating was cut to one level above junk by Standard & Poor’s, which cited mounting economic and political risks as the government considers a second bailout, Bloomberg reported. The negative outlook on the long-term rating reflects our view of the significant risks to Spain’s economic growth and budgetary performance, and the lack of a clear direction in euro-zone policy,” S&P said.

Europe's car market will not really recover without EU-led coordination of capacity cuts, Fiat and Chrysler Chief Executive Sergio Marchionne said, in an apparent back-track on comments he made at the Paris auto show last month, Reuters reported. Marchionne, who also heads European automakers association ACEA, has repeatedly called for Europe-wide action on closing plants and cutting jobs, but has faced stiff opposition from rival carmakers that are also members of the industry group.

Deiulemar Shipping, a major Italian dry freight group, has been declared bankrupt owing more than 500 million euros, an Italian court and the company said on Wednesday, the latest casualty of a worsening freight market crisis. The slump, one of the worst ever faced by the sector, has sunk a number of dry bulk firms including Britain's oldest, Stephenson Clarke Shipping Ltd. "Deiulemar Shipping was declared bankrupt by the court of Torre Annunziata this week," said Astolfo Di Amato, the lawyer representing Deiulemar Shipping.

The IMF has warned that unless the eurozone resolves its capital crisis, European banks’ balance sheets will contract severely, further damaging growth and pushing unemployment beyond already record highs in the region, the Financial Times reported. In its global financial stability report, the IMF concluded that capital flight from the eurozone’s periphery to the bloc’s core, driven by fears of a break-up of the currency union, had sparked “extreme fragmentation” of the euro area’s funding markets.

German Chancellor Angela Merkel, making her first visit to Athens since Europe's debt crisis began in late 2009, on Tuesday said she saw "light at the end of the tunnel" for Greece as the debt-stricken country battles through a painful austerity program aimed at restoring its fiscal health, The Wall Street Journal reported. Ms.

Executives at Italy's Banco Popolare SC were hoping this week to highlight their strength, as well as the resilience of the European banking system, by selling a batch of so-called senior unsecured bonds for the first time in 18 months, The Wall Street Journal reported. Instead, Popolare, Italy's fifth-largest commercial bank by market value, got a reminder of how fragile the Continent's financial system remains, even after the European Central Bank's extraordinary series of rescue efforts.

Family members of bankrupt businessman Seán Quinn’s family have claimed a receiver appointed over their personal assets by the former Anglo Irish Bank is not independent but biased towards the bank on grounds including that several of his staff worked at a senior level for the bank before and since its nationalisation, the Irish Timesreported.

Polish builder Polimex is likely to return to profit next year as it targets asset spin-offs and a new deal with creditors as ways to save the troubled company, its chief executive Robert Oppenheim was quoted as saying on Tuesday, Reuters reported. "Income from disinvestment and a share issue will ensure business resources, which together with operational restructuring will make Polimex a company again booking positive results and operating cash flows starting from 2013," the CEO told daily Parkiet in an interview.

European finance ministers hailed Greece’s determination to cut the budget and reshape its recession-wracked economy, raising the chances that aid will keep flowing to stop the country from careening out of the euro, Bloomberg reported. European officials paired the encouragement with a demand that Greece commit to a list of 89 policy steps before an Oct. 18-19 leaders’ summit, and left open whether the next 31 billion-euro ($40 billion) loan installment would be paid out in one go or dribbled out in smaller pieces.