The euro zone is discussing the option of financing emergency help for Italy or Spain by using money from national central banks to boost International Monetary Fund resources - but only as a last resort, euro zone officials said, Reuters reported. Italy battled to raise funds by selling 3-year bonds on Tuesday, having to offer a euro life-time high interest rate of nearly 7.89 percent to sell the 7.5 billion euros ($10 billion) on offer.

Euro-zone leaders are negotiating a potentially groundbreaking fiscal pact aimed at preventing the currency bloc from fracturing by tethering its members even closer together, The Wall Street Journal reported. The proposal, which hasn't yet been agreed to, would make budget discipline legally binding and enforceable by European authorities. Officials regard the moves as a first step toward closer fiscal and economic coordination within the currency area. That would mark a seminal shift in the governance of the 17-nation euro zone.

The fate of Italian directories firm Seat Pagine Gialle hangs in the balance as it looks increasingly unlikely that all senior creditors will relent to junior bondholders' demands, sources close to the matter said, Reuters reported. The company on Monday asked lenders for more time to negotiate terms on a proposed debt-for-equity swap put forward by the subordinated holders of Seat PG's "Lighthouse" bond, the sources said.

Final bids for a GBP1 billion ($1.6 billion) portfolio of distressed commercial property loans being sold by Lloyds Banking Group PLC are due on Wednesday, people familiar with the situation told Dow Jones on Monday. Bids are expected from U.S.-based investors Colony Capital, Cerberus Capital Managment and Lone Star Funds, which were among the potential buyers shortlisted by the bank last month. Read more.

Bankrupt businessman Seán Quinn has been ordered to repay more than €2 billion to the Irish Bank Resolution Corporation (IBRC), the largest summary judgment amount ever entered in the Irish courts, the Irish Times reported.

The Maribor District Court has rejected Telekom Slovenije's demand for receivership at rival telecommunication services provider T-2 and confirmed the debt restructuring plan in line with which creditors of T-2 are to be repaid 44% of their claims totalling around EUR 180m by 2020, Slovenian news agency STA reported. Read more. (Subscription required.)

Italian Prime Minister Mario Monti will propose billions of euros in new austerity measures next week—according to a person familiar with the matter—to reinforce Italy's pledge to balance its budget by 2013, a key part of its efforts to restore investor confidence in the country, The Wall Street Journal reported. The planned measures—a mix of tax increases, public spending cuts, and infrastructure projects—are a first step in the Italian premier's broader push to introduce tougher reforms aimed at rebooting Italy's economy, the person said. Mr.

The U.K. Treasury will guarantee bank lending to small and midsize companies in a bid to reduce the costs of such debt and stimulate lending to a part of the British economy that has struggled to get new funds, according to a person familiar with the matter, The Wall Street Journal reported. The government will use its balance sheet to guarantee banks' lending, giving them the benefit of Britain's triple-A credit rating, this person said. The savings in interest payments banks make—which the government estimates could be around one percent on borrowing—will be passed onto companies.

In virtually all the debates about the eurozone I have been engaged in, someone usually makes the point that it is only when things get bad enough, the politicians finally act – eurobond, debt monetisation, quantitative easing, whatever. I am not so sure. The argument ignores the problem of acute collective action, the Financial Times reported in a commentary. Last week, the crisis reached a new qualitative stage.

Manroland AG, the German printing- press maker that’s majority owned by Allianz SE, filed for insolvency, in the country’s biggest corporate failure since retailer Arcandor AG collapsed two years ago, Bloomberg reported. Manroland filed to open insolvency proceedings with the district court in Augsburg, Germany, court spokesman Alfred Schwarz said. Werner Schneider was appointed as insolvency administrator, said the Offenbach-based company, which employs 6,500 workers worldwide, mainly in Germany.