The Euro zone slipped deeper into recession in the last three months of 2012 after its largest economies, Germany and France, shrank markedly at the end of the year. It marked the bloc's first full year in which no quarter produced growth, extending back to 1995.
European leaders agreed on Friday to press on with further steps to tackle their debt crisis but German Chancellor Angela Merkel threw out a proposal to boost risk-sharing with a fund to help Euro zone states in trouble.
The European Union reached a landmark deal on Thursday to make the European Central Bank the bloc's top banking supervisor, giving EU leaders greater confidence that they are gaining the upper hand over the Euro zone's debt crisis.
German Chancellor Angela Merkel demanded stronger central powers for the European Union's executive to veto national budgets that breach EU rules, risking a clash with close ally France at a summit of the bloc's leaders.
The European Union could be destroyed by the nightmare Euro crisis, and Germany needs to take the responsibility to save the common currency, billionaire fund manager George Soros said on Monday.
Chancellor Angela Merkel said on Tuesday that Europe could only hope to come out of its crisis stronger and compete in a globalized world if its members pressed ahead with painful reforms and moved to more responsible budget policies.
German business sentiment dropped for a fifth straight month in September to its lowest since early 2010, raising fears of recession and underlining that a bold bond-buying plan laid out by the European Central Bank is no economic blessing.
French and German leaders have stressed they will remain committed in tackling European issues on the 50th anniversary of a post-WWII reconciliation speech. Chancellor Angela Merkel and President Francois Hollande made the pledge in the German city of Ludwigsburg.
Angela Merkel is seeking help from her estranged, former mentor Helmut Kohl, architect of the Euro, to restore voter faith in the European project before next year's election.
Germany's Constitutional Court rejected on Tuesday an attempt to further delay a ruling on the European Stability Mechanism (ESM) and fiscal compact, which had previously been pushed back by months while the judges reviewed whether the German parliament is permitted under the constitution to ratify the treaties.