European officials are stepping up contingency planning for a possible Greek exit from the euro zone, even as Europe's leaders struggled to overcome differences on how to resolve the currency bloc's crisis at a summit meeting, The Wall Street Journal reported. Emerging from Wednesday night's informal European Union summit, Italian Prime Minister Mario Monti said most leaders had backed issuing common debt, or euro-zone bonds, to help support troubled members. But Germany and others opposed them and demanded Greece do more.

Worries that Greece might default on its debts or even leave Europe’s currency union have deepened since May 6, when Greeks voted in shocking numbers for a left-wing party willing to tear up Greece’s $170 billion international bailout agreement, the International Herald Tribune reported. These days, even though 80 percent of Greeks say they want to stay with the euro, talk of “drachmageddon” can be heard in conversations all around Athens — in executive suites, at mom-and-pop shops and even in nightclubs.

Europe’s banks, sitting on $1.19 trillion of debt to Spain, Portugal, Italy and Ireland, are facing a wave of losses if Greece abandons the euro, Bloomberg reported. While lenders have increased capital buffers, written down Greek bonds and used central-bank loans to help refinance units in southern Europe, they remain vulnerable to the contagion that might follow a withdrawal, investors say. Even with more than two years of preparation, banks still are at risk of deposit flight and rising defaults in other indebted euro nations.

The Spanish government will provide about €9 billion ($11.4 billion) to cover Bankia SA's provisioning needs, Finance Minister Luis de Guindos said on Wednesday, in the latest sign that Spain's economic deterioration is forcing authorities to inject more public funds to bail out ailing banks, The Wall Street Journal reported.

Bigger companies may be enjoying low borrowing costs thanks to low central bank rates but for smaller ones the outlook is decidedly murkier, the Financial Times reported. Although the extent varies significantly from country to country, Europe is the worst- affected region, and a looming credit crunch for small and medium-sized enterprises (SME) could impact economic growth significantly, bankers warn. “The decline of SME lending is a challenge that is just getting bigger and bigger,” says Christopher Drennen, a senior banker at BNP Paribas.

Germany dismissed a French-led call for euro zone governments to issue common bonds, a day before a European Union summit which investors are looking to for new measures to counter the bloc’s debt crisis, the Vancouver Sun reported. After a torrid week, stock markets rallied on optimism that the Wednesday summit would produce measures to foster growth and ward off the threat of contagion should Greece exit the euro.

A five-year survival scheme for Eircom approved by the High Court Tuesday will see it and related companies exit the State's biggest-ever examinership on June 11th, the Irish Times reported. Mr Justice Peter Kelly said today he was satisfied to confirm the scheme advocated by Michael McAteer - the examiner to Eircom Ltd, Meteor Mobile Communications and Irish Telecommunications Investments Ltd - and endorsed by most of its creditors.

Skyways Express AB and its subsidiary City Airline AB Tuesday canceled all flights with immediate effect and said it will file for bankruptcy during the day as its owner said it could no longer finance the Swedish regional airline, Dow Jones reported. The small carriers are part of a Nordic airline group created by Ukrainian entrepreneur Igor Kolomoisky through his investment company Mansvell Enterprises Ltd. which has collapsed this year as high fuel prices and sluggish growth have played havoc with Europe's airline sector.

The specter of funding problems is once again haunting Europe's banks. Even after the European Central Bank pumped more than €1 trillion ($1.278 trillion) of cheap three-year loans into hundreds of banks, the Continent's financial system remains vulnerable to the prospect that stampedes of customers could yank their deposits from institutions perceived as shaky, The Wall Street Journal reported. That threat was shoved into the spotlight last week when customers withdrew more than €700 million from Greek banks in a single day.

There has been no official announcement. No terms or conditions have been disclosed. But Greece’s banking system is being propped up by an estimated €100bn or so of emergency liquidity provided by the country’s central bank – approved secretly by the European Central Bank in Frankfurt. If Greece were to leave the eurozone, the immediate cause might be an ECB decision to pull the plug. Extensive use of “emergency liquidity assistance” (ELA) to help banks in the weakest economies has been one of the less-noticed features of the eurozone crisis.