Spain’s surging bad loans are spurring doubt on whether the government can persuade investors that it can clean up the country’s banks without further damaging public finances, Bloomberg reported. Non-performing loans as a proportion of total lending jumped to 7.91 percent in January, the highest level since 1994, from less than 1 percent in 2007, according to Bank of Spain data. The regulator is set to publish data for February today.

While French President Nicholas Sarkozy paints Socialist challenger Francois Hollande as a threat to the stable euro and France's fiscal discipline, such as it is, economic reality will set a similar course for whomever wins the presidency, Reuters reported in an analysis. The political rhetoric has aimed to magnify the gap between their economic programmes, but it broadly boils down to a timing difference; conservative Sarkozy has committed to balancing the budget in 2016, while Hollande, who leads polls by as much as 10 percentage points for the May 6 runoff, has set a 2017 deadline.

The former Anglo Irish Bank may ask the Supreme Court later this week for a speedy hearing of its proposed appeal against a significant ruling permitting bankrupt businessman Seán Quinn’s family to make claims of illegal conduct by the bank in their action aimed at avoiding liability for €2.34 billion loans to companies in the Quinn Group, the Irish Times reported. The bank may also seek a stay on the family’s proceedings pending the outcome of any Supreme Court appeal.

Aquascutum, the venerable British fashion brand that has been worn by Winston Churchill and Margaret Thatcher, has been placed into administration, The Washington Post reported on an Associated Press story. Administrator Geoff Rowley of FRP Advisory said Tuesday he hopes to find a buyer. The decision to put the brand into administration follows a change of ownership at Jaeger, another longtime British brand that had been united with Aquascutum under the ownership of entrepreneur Harold Tillman.

Italian prosecutors have widened a probe into the family group that controls troubled insurer Fondiaria-SAI, sources said on Tuesday, in a move that could complicate plans to rescue Fondiaria through a merger with peer Unipol, Reuters reported. Milan prosecutor Luigi Orsi launched a probe last year into alleged market irregularities carried out by Salvatore Ligresti, the patriarch of the family controlling Fondiaria.

Fierce debate is growing in Europe over whether austerity or growth offers the best strategy to overcome the continent's sovereign debt crisis. As if it were that simple. As the euro zone hovers on the brink of its second recession in three years, the battle launched in academic journals, blogs and the financial press has spread to the hustings in France, Greece and soon in EU economic powerhouse Germany too, Reuters reported in an analysis.

Spanish debt risk climbed to a record for a second day and signalled a 37 percent chance the nation will default as its borrowing costs surged to levels that prompted its neighbors to seek bailouts, Bloomberg reported. Spain is due to sell new debt Tuesday before European officials travel to Washington later this week to seek a bigger war chest to battle the financial crisis. The nation’s 10-year bond yield soared to 6.15 percent, the highest since Dec. 1 and approaching the 7 percent level that foresaw the international rescues of Greece, Ireland and Portugal.

European banks are bracing for a wave of ratings downgrades in coming weeks that could intensify pressure on the fragile industry and further undercut recent efforts to defuse the Continent's long-running financial crisis, The Wall Street Journal reported. Under pressure from banks, Moody's Investors Service said Friday that it is delaying until early May its highly anticipated decision on whether to downgrade the credit ratings of 114 banks in 16 European countries.

President Cristina Kirchner, in a move that marks a watershed in expanding the state's grip on the economy, said she will send a bill to Congress to nationalize Argentina's largest oil-and-gas company, YPF SA, The Wall Street Journal reported. The move fired up a battle with the company's Spanish controlling shareholder and the Madrid government. Under the proposal, which declares the petroleum industry of "national public interest," Argentina's federal and provincial governments would take 51% of the company, now majority owned by Repsol YPF SA of Spain.

The European Central Bank's double dose of cheap three-year funding has been a success, ECB Governing Council member Ewald Nowotny said on Monday, declining to comment on whether the ECB should resume buying bonds of troubled euro zone member states, Reuters reported. He said he saw no immediate need for another offering of long-term funding for banks.