Greek sovereign bonds suffered a sharp sell-off on Tuesday as investor concerns over the country’s financial health flared up again, the Financial Times reported. In spite of mooted support from the European Union and the International Monetary Fund, investors remain concerned that Germany could refuse to provide financial aid if the Greeks fail to meet their deficit reduction targets later in the year. Greece must raise €35 billion ($47 billion) of debt this year to avoid a bail-out. It has sold €18 billion so far.

Germany's tough conditions for any aid for Greece, which other euro-zone countries were forced to swallow at a European Union leaders' summit last week, signal a broader division that threatens to hamper Europe's ambitions as a global power: Germany has cooled to unity, except on its terms, The Wall Street Journal reported. In the past two years Germany effectively vetoed joint European action to rescue banks and stimulate growth, and rejected euro-zone calls for more teamwork on economic policy.

Greek debt managers, bankers and economists voiced relief on Friday at moves by European Union leaders and the European Central Bank to rescue the country from the threat of a sovereign default, the Financial Times reported. The EU decision on a “last resort” financial package including assistance from the International Monetary Fund would help reduce Greece’s high borrowing costs – provided its fiscal consolidation effort stayed on track, they said.

A senior Chinese central bank official criticized the handling of the Greek debt crisis, highlighting global concern about the situation in Europe, The Wall Street Journal reported. Speaking at a conference in Hong Kong, Zhu Min, deputy governor of the People's Bank of China, also said China "should and could" import more goods to keep its trade surplus small. And he noted that the central bank's efforts to tighten monetary policy were having their intended effect, even without China having to raise interest rates.

European Union leaders hold what is likely to be a tense and difficult summit on Thursday, divided over how to help heavily indebted Greece and struggling to maintain confidence in the euro, Reuters reported. Diplomatic efforts on the eve of the two-day summit failed to bridge differences over whether to offer a safety net to Greece, helping push the euro down to a 10-month low after Portugal suffered a debt down downgrade.

Britain operates one of the largest welfare states in Europe. And that, it seems, is just fine with many of the British, The New York Times reported. Despite the worst recession since World War II, many people here show little appetite for shrinking a system that eats up half the nation’s economic output, more than in Portugal, Greece or Spain — all of which are trying to push through painful cuts. Indeed, as Britain’s Labour government confronts a yawning budget deficit, public sector workers are mobilizing to head off any reductions in wages or jobs.

Euro-zone leaders on Tuesday were working on a deal that could secure German backing for a financial rescue plan for Greece in return for an agreement by other countries to let the International Monetary Fund play a substantial role, according to senior European officials, The Wall Street Journal reported. But Germany, which has been pushing for IMF involvement in any bailout, is demanding tough conditions: Chancellor Angela Merkel insists that aid could come only to prevent a Greek default.

German chancellor Angela Merkel’s hard-line stance on Greece has come under attack from a top European Central Bank policymaker, who warned that the cost of inaction could be far worse than offering temporary financial support, the Financial Times reported. The unusually-strong criticism by Lorenzo Bini Smaghi, an ECB executive board member, highlighted frustration in Frankfurt at Berlin’s intransigence, which is threatening a showdown among eurozone political leaders at their summit in Brussels starting on Thursday.

Germany has set out three fundamental preconditions for any rescue package for Greece, including involvement of the International Monetary Fund, and a commitment by its European Union partners to tough new rules to control public debt and deficits in the eurozone – including necessary EU treaty changes, the Financial Times reported. A senior government official in Berlin said there would be no agreement at this week’s EU summit on a specific rescue package for the debt-strapped Greek government.

Greek Finance Minister George Papaconstantinou said Tuesday that Greece has no need for financial assistance and insisted that the country will fix its fiscal problems on its own, The Wall Street Journal reported. But Mr. Papaconstantinou said Greece's European partners should move ahead with some kind of support mechanism to help ensure stability in the euro zone, which is expected to be at the center of discussions at this week's European Union Summit. "Let me be clear, Greece has not asked for financial aid from anyone.