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Did Europe misdiagnose debt crisis and make it worse?

By Luke Baker BRUSSELS (Reuters) - At the height of the euro zone debt crisis, with Portugal's economy nearing collapse, the European Commission told the government in Lisbon that it had to slash wages if it was ever going to boost competitiveness and grow again. Portuguese shoemakers - one of the economy's main export sectors - steadfastly ignored the advice and found a way to bounce back while actually increasing workers' pay.

Euro zone inflation sticks in 'danger zone', keeps ECB under pressure

BRUSSELS (Reuters) - A drop in March euro zone inflation to its lowest level since November 2009 was confirmed on Wednesday, keeping pressure on the European Central Bank to intervene if prices do not rebound. The year-on-year inflation rate in the 18 countries sharing the euro was 0.5 percent in March, down from 0.7 percent in February, the European Union's statistics office Eurostat said. It was the sixth straight month that inflation remained in what ECB President Mario Draghi called a "danger zone" of below 1 percent.

EU regulators to probe extra state aid given to two Latvian banks

BRUSSELS (Reuters) - European Union regulators opened on Wednesday an investigation into state aid granted to Latvian Banks AS Parex banka and Citadele banka, saying the measure may have violated EU state aid rules. The European Commission, tasked with ensuring a level playing field in the 28-country bloc, said Latvian authorities may also have failed to carry out the banks' restructuring in line with their pledge to the EU watchdog.

EU, Switzerland edge towards free movement accord

The European Union and Switzerland are close to reolving a spat over Swiss immigration curbs although Britain has asked for more time to consider the proposals, EU sources said Wednesday. EU ties with non-member Switzerland have been strained since a Swiss referendum in February when the country voted by a razor-thin margin to establish immigration quotas -- jeopardising a range of agreements with the EU based on a commitment to free movement of people.

Italy, Spain shine as Ukraine crisis hots up

LONDON (Reuters) - Italian and Spanish yields dipped on Wednesday morning, offering a combination of relatively safe and high returns that continued to attract investors with one eye on the developing crisis in Ukraine. Italian yields nudged back near record lows while Spanish paper was at 8-1/2-year lows. Both are likely to benefit from any asset purchase program the European Central Bank might introduce.

European Parliament approves 'banking union' reforms

The European Parliament approved on Tuesday the last elements of a new set of rules to prevent failing banks from ever again driving EU member states into bankruptcy. With 'banking union' passed, "we now have in place a true European system to supervise the eurozone banks and deal with any future failures," EU Financial Markets Commissioner Michel Barnier said.

Europe's banks prepare for ECB tests with new provisions

By Laura Noonan LONDON (Reuters) - The tens of billions of euros euro zone banks set aside for loan losses in their latest annual accounts may have substantially reduced the chance of institutions failing ECB stress tests in the next few months. A total of 71.5 billion euros ($99.3 billion) was set aside in 2013 by the 20 biggest listed banks involved in the exercise, a Reuters analysis of their new annual reports shows. Many also boosted capital ratios by raising cash and hoarding profits.

European Parliament approves 'banking union' reforms

The European Parliament approved on Tuesday the last elements of a new set of rules to prevent failing banks from ever again driving EU member states into bankruptcy. With 'banking union' passed by a very large majority, "we now have in place a true European system to supervise the eurozone banks and deal with any future failures," EU Financial Markets Commissioner Michel Barnier said.

Greek short-term borrowing costs tumble after return to bond market

ATHENS, Greece - Greece's borrowing costs in a short-term debt sale have tumbled, days after the country returned to the international bond markets. The interest rate on a 13-week treasury bill issued Tuesday fell to 2.45 per cent, compared with 3.1 per cent for a similar issue last month, according to the public debt management agency. Greece raised 1.625 billion euros ($2.25 billion) in Tuesday's sale, which was 2.73 times oversubscribed.

German MEP switches sights to wooing Greece

German MEP Jorgo Chatzimarkakis says he's so frustrated watching Greece struggle under austerity measures championed by Chancellor Angela Merkel that he's turning his back on his home country. Instead, the 47-year-old plans to run for a European parliamentary seat in May's elections in Greece, the nation his father left in the 1960s to settle in Germany's Ruhr industrial heartland. "I've always felt torn between the two but it irritates me that the German side of my heart is feeling so ashamed," he told AFP.
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