Headlines

South Korea's government announced a $5.9 trillion won (about $5.23 billion) stimulus package for the economy Monday to combat stagnant growth. The program, formulated to inject 4.6 trillion won during the remaining months of this year and 1.3 trillion won next year, is designed around tax breaks on personal income and purchases of homes, automobiles and large electronics products such as televisions and refrigerators, The Korea Times reported.

Spanish Prime Minister Mariano Rajoy said Monday that a new backstop from the European Central Bank has helped to shore up confidence in the euro zone and made it less urgent for his country to seek a new bailout, The Wall Street Journal reported. "[The ECB] has sent a message that the euro is here to stay and that no country will be allowed to fall," Mr. Rajoy said in a televised interview with state-owned broadcaster TVE. "This message alone has sent borrowing costs for many European Union countries, including ours, much lower," he said.

Greece's prime minister started a new round of negotiations Monday with representatives of the country's bailout creditors, who are demanding a fresh set of controversial austerity cuts to release the next batch of rescue loans the country desperately needs to stay afloat, the Associated Press reported. Antonis Samaras' meeting with officials from the so-called troika of the European Union, International Monetary Fund and European Central Bank comes a day ahead of his talks in Frankfurt with ECB president Mario Draghi.

The euro zone enters a dangerous week, strewn with potential landmines, in a somewhat more optimistic mood after investors welcomed a European Central Bank plan to prevent a breakup of the single currency. German judges, Dutch voters, IMF inspectors and Brussels regulators could all spring surprises that make it harder to resolve a sovereign debt crisis which is almost three years old and weighing on the world economy. Wednesday is the main day to watch.

Although Chinese lenders don't disclose how many loans they extend or modify, the practice is becoming increasingly popular, according to companies and banking executives. The strategy—called "extend and pretend" by critics—is raising alarms among analysts and bank investors, The Wall Street Journal reported. They warn that it could add to banks' increasing piles of bad loans and may restrict banks' ability to lend to bolster the slowing economy.

State-controlled Royal Bank of Scotland said on Monday it would use the government's new flagship lending scheme to offer cheap funds to manufacturing companies, in a first move to put the scheme into action, Reuters reported. Britain launched its 'funding for lending' (FLS) plan in June as part of efforts to lift the economy out of recession, making 80 billion pounds of cheap loans available to banks provided they go to households and businesses.

The Finnish parliament would find it all but impossible to approve any changes to the latest Greek bailout, according to senior politicians in Helsinki, the Financial Times reported. Leading figures in the two main parties in the six-party coalition government said that if Greece was given more time to cut its deficit it would impose additional costs on Finland, making parliamentary approval “very difficult”.

French President François Hollande on Sunday sought to brace the nation for its toughest budgetary effort of the past six decades, as he outlined a raft of austerity measures—including a controversial tax on the rich—to shore up public finances. In a television interview, Mr. Hollande said he has given himself two years to turn around France's economy and acknowledged the gravity of that task. He said the country's growth prospects have clearly deteriorated and significantly downgraded the growth forecasts to "barely above zero" for this year and "about 0.8%" for 2013.

The Government will this week face calls to alter incoming personal insolvency legislation so the €3 million upper limit of debt is reduced and debtors will not have to sell engagement rings, the Irish Times reported. The European Commission has warned that the debt threshold is too high for a scheme aimed at struggling homeowners. Minister for Justice Alan Shatter has said expensive jewellery could not be exempt from debt relief mechanisms.

The European Central Bank on Thursday sent markets its strongest signal yet that it would deploy unlimited monetary firepower to save the single currency, the Financial Times reported. Mario Draghi, the central bank’s Italian president, said the ECB would offer to purchase eurozone countries’ short-term bonds in the secondary market in a programme dubbed outright monetary transactions, or OMT, that would address “distortions in financial markets”.