For the second time in as many weeks, President Nicolas Sarkozy flew to Paris for the day from his holiday spot on France’s Mediterranean coast to try to calm the markets, The Economist reported. His meeting with the German chancellor, Angela Merkel, at the Elysée Palace on August 16th took place as the panic of recent weeks had given way to mere gloom about the stagnating euro-zone economy.

A dramatic sell-off in European financial markets on Thursday renewed fears that Europe's banks are too weak to withstand the Continent's debt crisis, increasing the chances that the region's leaders will be forced to pursue radical steps toward fiscal union in order to preserve their single currency, The Wall Street Journal reported. For more than a year and a half, the euro zone's strategy has been to buy time for its weak nations to regain the confidence of financial markets, while taking tentative steps toward closer cooperation on the bloated budgets that got them in trouble.

Spain will announce further austerity measures Friday aimed at fending off debt market attacks while avoiding drastic cuts which may damage the ruling Socialists' chances in November's general election, Reuters reported. The government aims to save around 5 billion euros (4.3 billion pounds) with measures that include front-loading tax payments from large businesses and cutting drug costs for regional governments with a new bill on generic medicines.

Silvio Berlusconi’s ability to pass a €45.5bn austerity decree swiftly through parliament, as demanded by the European Union, is being jeopardised by a slew of amendments proposed by his own coalition and opposition parties, the Financial Times reported. Although the centre-right government was able to speedily approve the fiscal adjustment package, it appears that the parliamentary procedure, due to start next week in Senate commissions, will turn into a time-consuming battle of strength for Mr Berlusconi and will challenge the credibility of his parliamentary majority.

The sharpest rise in British jobless claims in over two years is adding pressure on the government to boost the faltering economy at a time when the country struggles to regain confidence after riots hit major cities, the Irish Examiner reported. The number of people claiming jobless benefit rose by 37,100 last month, the Office for National Statistics said yesterday, the largest jump since May 2009. Some of the rise was still due to a change in benefit rules, though this could not explain all of the increase, the office said.

A committee representing so- called Pik note loanholders in Eircom has written to the board of its Cayman Islands-based parent stating they have every reason to believe the company is insolvent. In the latest twist to the Eircom financial saga, they have also questioned how the parent company intends to repay its debt. In addition, the committee has accused the directors of being in breach of their duty of care towards them and have warned they will take legal or other action if necessary to protect their position.

France and Germany on Wednesday increased the pressure on their euro-zone peers to improve fiscal discipline in the bloc with a proposal to cut off the region's wayward spenders from key European Union transfer funds, The Wall Street Journal reported. The proposal marks an effort to boost fiscal discipline across the euro zone by giving countries incentives to rein in spending and cut their budget gaps. But the idea is controversial and could be difficult to enforce, as well as to sell to the rest of the bloc.

Europe has never found it easy to define itself, and now it is having more trouble than ever doing so, the International Herald Tribune reported. When the rules for the euro currency were first drafted 15 years ago, the leaders of France and Germany had to compromise even to agree on the name for the proposal: Berlin wanted a “stability pact,” emphasizing Germanic fiscal discipline, while Paris insisted on adding “growth” to the title to make it more palatable to French voters.

A Czech court gave the go-ahead on Wednesday to the planned sale of national lottery firm Sazka in a tender, court documents showed. The ruling means the receiver at Sazka, which was put into insolvency in March, can start the tender within days, Reuters reported. The receiver, Josef Cupka, told reporters on Wednesday that price would be the only criterion in the tender. The sale will be open to anyone who places a 500 million crowns ($29.6 million) deposit.

Sweden's debt enforcement agency is preparing to seize assets of troubled car maker Saab in an attempt to recover at least 4 million Swedish crowns ($625,000) owed to parts suppliers, Reuters reported. "We have contacted Saab's banks," Hans Ryberg, an official at the Swedish Enforcement Authority said on Wednesday. The agency can now seize assets, including any cash in Saab's bank accounts.