Topic: European Union

Ever wondered why European politicians appear so calm when attending summits in Brussels or G8 meetings despite all the talk of a “Grexit” and economic Armageddon?

German business confidence came in lower than expected in May, adding to bad news from the euro zone's paymaster and knocking both stocks and the euro lower on Thursday.

Germany's manufacturing sector has been shrinking at the fastest rate in three years in May, renewing concerns about the stamina of Europe's largest economy, which likely propped up the euro zone in the first quarter but is beginning to show signs of strain.

Angela Merkel, the German chancellor, finds herself increasingly on the defensive over the bonds, which she opposes as a near-term remedy for the region’s financial woes, The NYT reports.

The prospect of a Greek exit from the euro zone, rising losses at Spanish banks, and a failure of labor reform in Italy will force the European Central Bank to inject more liquidity into the banking system through a long-term refinancing operation, according to the chief economist at German banking giant Commerzbank.

"He is not in a confrontational mindset. He didn't arrive brandishing a
Kalashnikov and saying 'you must accept euro bonds'," one aide said. "It's a
different approach."

While money pours out of Greek banks and Europe debates whether or not Greece deserves its next handout, the people potentially in the best position to help shore up the nation’s finances are mainly keeping their heads down, the New York Times reports.

Gold rose on Thursday, snapping three days of losses to climb towards $1,578 an ounce, as the dollar swung back into negative territory versus the euro after a softer-than-expected U.S. manufacturing report.

European Union leaders, advised by senior officials to prepare contingency plans in case Greece decides to quit the single currency, urged the country to stay the course on austerity and complete the reforms demanded under its bailout programme.

To the frustration of Mario Draghi the European Central Bank is once again being eyed as a possible saviour of Europe’s monetary union. The FT reports.

Events of the past week suggest “the street” is beginning to take control of the financial system. People are expressing fears about the future of the euro and Europe by taking their money out of banks.

Greeks are notoriously reluctant to pay taxes, but even those that do are holding off at the moment until they are sure their country stays in the euro zone.

Spanish banks are likely to need more money from the government to make sure they are well capitalized, Moritz Kraemer, head of European Sovereign ratings at S&P, told CNBC on Wednesday.

The move would involve complex legal and financial steps and could set back the economy further, many say. The New York Times reports.

Each euro zone country will have to prepare a contingency plan for the eventuality of Greece leaving the single currency, three euro zone sources said on Wednesday, citing an agreement reached by officials.