Trading in Dexia's stock was suspended Thursday as governments and the bank's management scrambled to figure out what to do with the Franco-Belgian lender, The Wall Street Journal reported. It has been clear for days that the bank would have to be broken up, given its heavy exposure to Greek and Italian sovereign debt—a factor that has made other financial institutions wary of lending to Dexia. But details of the plan have yet to be agreed upon.

French Finance Minister François Baroin Wednesday said the extent of private-sector involvement in bailing out Greece may need to be reexamined after the volatility on financial markets over the summer, The Wall Street Journal reported. The comments mark a public acknowledgment from France—which up until now has argued that an agreement by euro-zone heads of state on July 21 should be applied in full—that further participation from private-sector creditors may be required as Greece's financial crisis deepens.

France and Belgium rushed to the aid of Dexia SA on Tuesday, in what will be the first state rescue of a European bank in the euro zone sovereign debt crisis, Reuters reported. The lender to hundreds of French and Belgian towns, which also needed propping up after the 2008 financial crisis, will see its French municipal finance arm broken off and put under the ownership of French state banks.

French President Nicolas Sarkozy will have to walk a fine line on Wednesday, when his government presents its 2012 budget amid faltering growth and a deepening debt crisis in the euro zone, The Wall Street Journal reported. Mr. Sarkozy's room to appeal to French voters ahead of next year's presidential elections is constrained by his commitment to rein in France's deficit—the highest among triple-A-rated euro-zone countries—and retain its prized credit rating. "In France, the problem of deficit reduction is a credibility problem," said ING economist Julien Manceaux.

Workers at an oil refinery owned by LyondellBasell Industries NV in southern France voted Tuesday to strike to protest against the closure of the plant announced by the company earlier in the day. "They voted around noon and the strike started immediately," Charles Foulard, a leader of the CGT Union for the petrochemical industry, told Dow Jones Newswires in a telephone interview.

Investors and analysts who think a government bailout for the troubled French banking sector is increasingly likely are focussing on what form any aid could take, even as banks continue to deny they need state help, Reuters reported.

France has denied reports that it had drafted a plan to inject up to €15 billion into its major banks amid fears over their heavy exposure to Greek debt, the Irish Times reported. The Journal du Dimanche yesterday reported that the state offered a €10-15 billion bank recapitalisation at a meeting earlier this month with senior officials from five institutions: BNP Paribas, Société Générale, Crédit Agricole, Banque Populaire-Caisse d’Épargne and Crédit Mutuel.

French president Nicolas Sarkozy has given the green light for a highly political budget, placing the burden of new revenue raising on the richest and on big companies while preserving the benefits of some tax breaks for ordinary workers, the Financial Times reported. Just nine months away from a presidential election, France’s high earners will face higher taxes as the government seeks some €12bn in extra revenue by the end of next year to help bring public finances under control.

Some of France’s wealthiest individuals, including the L’Oréal heiress Liliane Bettencourt, have called for a tax on the rich in a gesture of national solidarity as the government prepares to announce swingeing cuts to bring public finances under control, the Financial Times reported. The proposal follows a similar demand in the US from billionaire investor Warren Buffett, who earlier this month criticised the fact that his tax rate was lower than many of those who worked for him.

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.