Former Anglo Irish Bank chief executive David Drumm has challenged the bank’s lawsuit against him in his US bankruptcy case, arguing the Financial Regulator was “fully aware” of the transferring of Seán FitzPatrick’s multimillion euro loans off the books of the bank, the Irish Times reported. Mr Drumm has claimed in new filings lodged in the Boston court that the bank “regularly and fully reported the extent and nature of Mr FitzPatrick’s borrowings to the Financial Regulator as required by law”.

The euro-zone economy barely grew in the third quarter despite a temporary bounce in Germany and France, raising fears that the euro bloc may already be sliding into recession as businesses and consumers cut back on spending in response to Europe's escalating debt crisis, The Wall Street Journal reported. The euro zone remains marked by a deep divide between the vulnerable southern periphery, including Italy, Spain and Greece, and the more prosperous north.

Efforts to amplify the power of the euro zone's rescue fund and convince markets the bloc can handle its debt crisis risk being undermined by delays, surging bond yields and limited investor interest, potentially ruining the plan altogether, Reuters reported in an analysis. A leveraged EFSF bailout fund of 1 trillion euros ($1.4 trillion), agreed at an emergency summit last month, was supposed to be the euro zone's biggest weapon yet to protect indebted Italy and Spain from market attacks.

The Irish Bank Resolution Corporation is to ask the courts in Northern Ireland to overturn the bankruptcy of businessman Seán Quinn, the Irish Times reported. The bankruptcy was secured last Friday with no notice to the bank, which initiated proceedings nine days earlier for summary judgment orders for more than €2 billion against Mr Quinn. IBRC, formerly Anglo Irish Bank, is pressing ahead with its action here and Mr Justice Peter Kelly said yesterday it was “clearly at issue” whether the bankruptcy was properly obtained or, as the bank alleged, contrived to frustrate its case.

The European Commission is set to propose a law within weeks that could let supervisors impose losses on the bondholders of a flagging bank, officials said, a move it has delayed until the end of the year for fear it will panic markets, the Irish Times reported. The law is part of a European framework on winding up or salvaging troubled banks, seen as crucial to preventing another financial crisis, but which is sensitive because it has echoes of the Greek bailout package, in which holders of Greek government bonds share some of the losses.

France came under heavy fire on global markets on Tuesday, reflecting fears that the euro zone's second biggest economy is being sucked into a spiralling debt crisis, Reuters reported. Global stocks and the euro fell as Italian bond yields climbed back to unsustainable levels on doubts that Italy's Mario Monti and new Greek leader Lucas Papademos, unelected technocrats without a domestic political base, can impose tough austerity measures and economic reform.

Italy's largest bank, Unicredit, on Monday highlighted the obstacles faced by prime minister-designate Mario Monti when it sent out a plea to shareholders for extra funds to protect against bad loans to Greece and losses on subsidiaries in eastern Europe, The Guardian reported. Unicredit, which operates in 22 European countries with more than 168,000 employees, said it needed to boost its reserves by €7.5bn after it plunged into loss, was forced to ring-fence €48bn of toxic assets, and told staff that 5,200 of them would be made redundant.

Greece's new prime minister said Monday his interim government would focus on implementing a European debt rescue deal, warning that failure to do so could force the country out of the eurozone, Agence France-Presse reported. In his first parliamentary address since taking office at the head of a national unity government on Friday, Lucas Papademos said progress had been made on tackling Greece's debt crisis but more was needed to keep it in the single currency.

Thousands of British civil servants have voted in favour of a national strike at the end of the month over pension reform, two unions said on Monday, bringing the prospect of a national stoppage involving millions of workers a step closer, Reuters reported. The FDA union, representing 19,000 senior government workers, including diplomats, prosecutors, economists and tax professionals, said that on a turnout of 54 percent, 81 percent had voted in favour of a walkout.

Since the beginning of the financial crisis, the central bank has been lending euro area banks as much money as they want, trying to maintain the liquidity — or continual flow of money — that is the lifeblood of the global financial system, the International Herald Tribune reported in an analysis. But because the central bank has refused to offer the same easy lending service to countries like Italy and Spain, it is not confronting the euro area’s most fundamental problem — a sell-off of debt from the troubled countries that is pushing their borrowing costs to dangerous levels.