Strong production in Germany could not make up for a slump across the rest of the euro zone in March with declining output at factories falling and signaling an oncoming recession may not be as mild as policymakers hope. Industrial production in the 17 countries sharing the euro fell 0.3 percent in March from February, the EU's statistics office Eurostat said on Monday. Economists polled by Reuters had expected a 0.4 percent increase overall.

German solar-power company Sovello GmbH filed for insolvency and will attempt to restructure in the process, Bloomberg reported. Sovello, based in Bitterfeld-Wolfen, cannot pay its debts and has asked the Dessau insolvency court to be allowed to restructure under its management, the company said in a statement on its website today. Attorney Bernd Depping has been appointed as preliminary administrator, the company said. “We have checked alternative scenarios to regain solvency,” Chief Executive Officer Reiner Beutel said in the statement.

Political deadlock in Greece on Monday stoked a renewed sense of crisis about the fate of the European economy as new data confirmed a downturn in one of the world’s major trading blocs, The Washington Post reported. The immediate focus was on the inability of Greek politicians to form a new government after divided elections last week — raising the possibility that the country may yet reject a recent international bailout agreement and leave the euro currency union.

Eurozone central bankers have talked publicly for the first time of managing a possible Greek exit from Europe’s monetary union as stalemate in Athens talks on a coalition government raises the prospect that Greece will renege on the terms of its international bailout, the Financial Times reported. The comments by members of the European Central Bank’s governing council indicate that the risk of eurozone fragmentation is being taken increasingly seriously by the region’s policymakers.

Germany is facing a unique dilemma as many euro-zone counterparts debate how much fiscal belt-tightening their citizens can withstand to restore sound public finances: how much inflation it can stomach to help its southern neighbors, The Wall Street Journal reported. On Friday, Germany's central bank rejected speculation that it is softening its anti-inflation rigor, as its leader tried to keep a largely economic debate about restoring growth in Southern Europe from damaging the Bundesbank's cherished reputation in Europe's largest economy.

Spain's clean-up plan for its troubled banks lacks some of the key ingredients that helped other governments restore faith in their financial sectors, restructuring experts said, pointing to a potential need for heavier state intervention, Reuters reported. Madrid told lenders on Friday to put aside even more funds against potential losses from dubious property loans, but limited its role in the rescue to providing high-interest financing for the weakest banks.

KBC Bank Ireland will receive further capital from its Belgian parent this year as loan losses will fall but remain high, chief executive John Reynolds has said, the Irish Times reported. The Irish bank received €75 million from KBC Bank in the first quarter of this year as arrears rose on the Irish residential mortgage portfolio of €13 billion. This was the first cash injection by the Irish bank’s parent since 2008. KBC converted almost €300 million of subordinated debt loaned to the Irish unit into capital earlier this year.

Britain's closely watched austerity program is facing a difficult stretch in which its effectiveness and political viability will be tested, two years after the country became one of the first in Europe to announce tough debt-tackling measures in the wake of the financial crisis, The Wall Street Journal reported. That is because the majority of cuts are yet to come in a program that is due to run another five years.

Spain will be offered more time to hit the budget deficit targets it agreed with the EU but only if Madrid meets new conditions, including an independent audit of the restructuring plan for its troubled banks, the Financial Times reported. The European Commission, the EU’s executive branch, has insisted on the extra conditions – which include ensuring more fiscal control over Spain’s profligate regional governments – before allowing Madrid to delay its 2013 deficit target by a year.

French President-elect Francois Hollande and German Chancellor Angela Merkel have each been prescribing the same salve — growth — to ease Europe’s economic ills. But the medicines vary sharply on either side of the Rhine, The Washington Post reported. And though European leaders will meet later this month to try to work out their differences, the 17 countries that share the euro currency remain far from abandoning the debt-funding spending cuts that Germany has long championed. Hollande’s version of growth involves spending more money to stimulate jobs and economic recovery.