The euro's tough new German-penned economic rulebook will be immediately tested by spiralling budget deficits in the Netherlands and Spain, raising the prospect of swingeing fines on the two countries, it emerged at an EU summit, The Guardian reported. As eurozone leaders finally launched a second, €130bn (£108bn) bailout of Greece, EU chiefs, with the exception of David Cameron and the Czech prime minister, prepared to sign the new rulebook – the fiscal pact – on Friday morning. The rules are the main part of an attempt to get the eurozone's soaring debt levels under control.

Manufacturers reported further growth in February and, despite a slight slowdown, the sector's recovery is reducing the need for more stimulus from the central bank as the economy is slowly moving out of the danger zone, Reuters reported. Some Bank of England policymakers, including Governor Mervyn King, this week played down the likelihood of another cash boost, and news that the sluggish housing market is gaining a touch of momentum bolstered views that February's 50 billion pound cash injection may have been the last.

The European Central Bank said it handed out €529.5 billion ($712.7 billion) in cheap, three-year loans to 800 lenders, the central bank's latest effort to arrest a financial crisis now entering its third year, The Wall Street Journal reported. Wednesday's loans were on top of the €489 billion of similar loans the ECB dispensed to 523 banks in late December. The ECB's goal is both to avoid an escalating crisis as banks struggle to pay off maturing debts and to mitigate a sharp pullback in bank lending to customers across ailing European economies.

Ireland's gradual recovery from euro zone basket case to periphery pin-up faces a testing time after the government called a referendum on Europe's new fiscal treaty that will put austerity in the firing line, Reuters reported. Prime Minister Enda Kenny surprised parliament on Tuesday by announcing the vote, Ireland's fifth on Europe in 11 years. It will be first and possibly only plebiscite on a German-led plan for stricter budget discipline across the bloc.

French presidential front-runner François Hollande said taxpayers earning over €1 million ($1.35 million) a year would be subjected to a special 75% tax bracket should he be elected, underscoring heightened interest across Europe in raising taxes on the wealthiest individuals, The Wall Street Journal reported. Speaking on French television late Monday, the Socialist candidate lamented the "considerable increase" in French corporate executives' pay, which he put at €2 million a year on average. "How can we accept that?" asked Mr. Hollande.

Loan impairments at Permanent TSB more than trebled last year on the back of rising mortgage arrears and tighter Central Bank guidance on provisions, the Irish Times reported. The bank said last night that thee had been a sharp rise in the number of mortgage loans that are in arrears for more than 90 days. At the end of last year, more than 11.5 per cent of mortgage loans were more than 90 days in arrears, up from 6.8 per cent at the end of 2010.

Insolvent German drugstore chain Schlecker will close around 2,000 stores and lay off almost half its workforce, the price for failing to keep up with rivals in a rapidly changing consumer market, Reuters reported. "It is very harsh that Schlecker's employees, some of whom have been with the company for a long time, are losing their jobs, and it is a decision that we did not take lightly," insolvency administrator Arndt Geiwitz said on Wednesday.

German reluctance to bolster EU debt rescue funds has delayed talks on the issue despite calls from the G20 for Europe to make progress on the issue, a eurozone governmental source said Tuesday, Agence France-Presse reported. "Germany is not ready," the source told AFP in reference to the latest developments in a global tug-of-war over eurozone emergency bailout funding.

German investor protection group DSW said Greece needs to provide clarity on the treatment of individual investors in its debt swap or risk a holdout that may trigger the default European leaders are trying to prevent, Bloomberg Businessweek reported. Greece should treat all small investors across the European Union equally, Dusseldorf-based DSW said in an e-mailed statement today. So far, DSW is only aware of plans by the Greek government to compensate Greek retail investors for their losses, it said.

Greece's government Tuesday resumed a legislative sprint to push through draconian overhauls demanded by its international creditors ahead of a European summit this week that will sign off on a new €130 billion ($174 billion) loan deal for the country, The Wall Street Journal reported. The cabinet met at midday to approve private-sector wage cuts, while parliament was to vote this evening on a fresh round of spending cuts to bring the 2012 budget back in line with deficit targets.