PSA Peugeot Citroen, Europe’s second-largest carmaker, said it may have an operating loss of as much as €2 billion ($2.8 billion) this year as sales decline and people buy smaller, less costly autos, Bloomberg reported. Peugeot rose as much as 3.5 percent in Paris trading after the company said European unit sales may fall 12 percent this year, better than a 20 percent drop forecast April 22, as governments pay people to scrap old cars and buy new ones. The loss will be €1 billion to €2 billion, it said.

A plan to tighten financial-market regulation is pitting the U.K., home of Europe's financial center, against other members of the bloc, The Wall Street Journal reported. At a European Union summit starting Thursday, a key issue will be how much power should be handed to regulatory bodies that the EU's executive arm, the European Commission, wants to establish, and who will head them. The U.K.'s resistance to the EU plan comes amid tensions among British officials over financial regulation. In a speech Wednesday, Mervyn King, the head of the Bank of England, warned that the U.K.

London or Paris may become the hub for the resolution of dozens of lawsuits related to banks’ and investment funds’ exposure to Bernard Madoff’s Ponzi scheme, Luxembourg’s Treasury and Budget Minister Luc Frieden said. The nation’s courts have dealt with more than 20 lawsuits and will get hundreds more in the coming months from investors seeking compensation from banks, funds and auditors for losses.

France's US-owned couture house Christian Lacroix SNC has declared insolvency after falling foul of the global crisis, the company said Thursday. Arguably one of the most exuberant couturiers in Paris, Christian Lacroix SNC said in a statement that the company owned by Falic had declared insolvency before a Paris court due to "the sharp downturn of the luxury market," Agence France-Presse reported.

Britain yesterday became the first big economy to be warned in the financial crisis that it might lose its top-notch credit rating, in a move that raised fears of possible downgrades for other large industrialised nations, the Financial Times reported. S&P based its warning on a forecast that net government debt risked approaching 100 per cent of national income and staying at that level. "A government debt burden of that level, if sustained, would in Standard & Poor's view be incompatible with a AAA rating," the agency said.

The European Commission proposed a draft law on Wednesday that would make it mandatory for hedge funds to register and disclose information on leverage to supervisors if they want to operate in the EU, a Commission official said. The draft law has been subject to intense horse-trading ahead of its publication as Britain, the European Union's hedge fund centre, fears overly draconian rules, while France is a keen backer of tighter regulation. The global hedge fund sector has assets totalling $1.4 trillion, relatively small compared to the wider financial market.

In Spain, when the previous finance minister said there was no room for tax cuts or spending to buoy the economy, he was sacked by the prime minister. "There is room--there can't not be," new finance minister Elena Salgado said last week, in the face of a Europe-high 17% unemployment rate. But in the U.K., France and Italy, gaping budget deficits have largely ended the chance of major new tax cuts or spending . Germany says that despite expecting a 6% dive in its economy this year, it is more worried about stoking inflation in 2010.

Group of 20 leaders need to give regulators oversight of unregulated markets and products, such as credit-default swaps and collateralized debt obligations, to prevent future systemic crises, according to Jean-Pierre Jouyet, head of the French market watchdog AMF and head of an international task force on unregulated markets. "The crisis doesn't arise from the markets but from the lack of organization of some of them," Mr. Jouyet said in an interview Tuesday. "We need to redraw the perimeter of regulation." Financial regulators are looking to the G-20 for guidelines to act, with U.S.

French President Nicolas Sarkozy yesterday threatened to wreck the London summit if France’s demands for tougher financial regulation are not met, the Times Online reported. France will not accept a G20 that produces a “false success with language that sounds good but contains no commitments”, his advisers said.

Responding to a popular outcry, the French government issued a decree Monday banning stock options and limiting bonuses for bankers or auto executives who lay off workers after accepting government aid to weather the economic crisis, The Washington Post reported. Prime Minister François Fillon, announcing the measures, said France was the first European country to lay down such legal restrictions on executive pay. Although not retroactive, they will run through 2010, he said in a statement, and they could be extended.