The row between France and Germany over whether to use the European Central Bank to rescue the eurozone has intensified, further shattering international confidence that a solution can be found to the escalating debt crisis, The Guardian reported. On a day when the US president, Barack Obama, accused the eurozone of suffering from a "problem of political will", Paris and Berlin clashed over whether the ECB should be called on to do more to bail out countries that are struggling to borrow.

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.

German and French officials have discussed plans for a radical overhaul of the European Union that would involve setting up a more integrated and potentially smaller euro zone, EU sources say. "France and Germany have had intense consultations on this issue over the last months, at all levels," a senior EU official in Brussels told Reuters, speaking on condition of anonymity because of the sensitivity of the discussions.

Dexia SA, the Belgian-French bank navigating a government-orchestrated dismantling, Wednesday booked a EUR4.1 billion ($5.6 billion) loss on the sale of its Belgian subsidiary and a EUR2.3 billion loss on its holdings of Greek sovereign debt, Dow Jones Daily Bankruptcy Review reported. Dexia didn't report third-quarter earnings because of the break-up, which will see the bank's public finance business sold to French savings banks and other businesses sold off once buyers are found.

The French government is finalizing an austerity package that could be unveiled as early as Monday, said a person familiar with the matter, as it seeks to meet its deficit reduction targets and hold on to its prized triple-A credit rating against a backdrop of slowing growth, The Wall Street Journal reported. French President Nicolas Sarkozy has already said he would need to pass an additional €6 billion to €8 billion ($8.3 billion to $11 billion) of austerity measures, the second set of government initiatives to shore up state coffers in just over two months.

France may unveil a new austerity plan to shore up its public finances as early as next week, a member of the National Assembly's finance commission said Thursday, only two months after the country took emergency measures worth €12 billion to hold on to its prized triple-A rating, The Wall Street Journal reported.

Decisions taken over the coming week will define Europe's destiny for generation, The Wall Street Journal Agenda blog reported. For the past 60 years, the European Union in its various guises has helped to ensure peace and prosperity.

Disagreement between France and Germany may prevent eurozone leaders from reaching a crucial deal on a second rescue package for Greece this weekend, a person familiar with the negotiations said Tuesday, The Washington Post reported on an Associated Press story. A common position of the two biggest eurozone economies is seen as a precondition for reaching agreement between all 17 countries in the currency union at a crisis summit on Sunday.

An autopsy of Franco-Belgian lender Dexia shows how funding and solvency are intertwined, highlighting the dangers facing other banks if the eurozone sovereign debt crisis is not resolved soon, International Financing Review reported. There are scores of financial institutions for whom wholesale funding markets are shut and who would be bust were it not for the European Central Bank pumping billions of unlimited liquidity into the system.

Europe's banks expect to be told to raise more capital under a Franco-German effort to solve the euro zone debt crisis after the state rescue of Franco-Belgian lender Dexia SA, Reuters reported. Dexia agreed to the nationalisation of its Belgian retail bank and secured 90 billion euros (£78.4 billion) in state guarantees, in a rescue that raises pressure on other euro zone countries to strengthen their banks.