Europe sets out euro defences as Portugal fears rise

Fears Portugal will seek an urgent financial bailout overshadowed an EU summit Thursday that had been called to bolster defences against the rollercoaster euro debt crisis.As leaders gathered from 1600 GMT for the two-day talks, a last-minute demand from economic powerhouse Germany to renegotiate its contribution to future bailout funds looked set to pose an extra headache for the 27-nation bloc.

Slovenia’s six-day-old government is being urged to prevent the nation becoming the euro region’s next bailout battleground. Prime Minister Alenka Bratusek’s Cabinet must quickly carry out a plan to revamp the country’s ailing lenders, the central bank said yesterday. The former Yugoslav nation needs about 3-billion euros (US$3.9-billion) of funding this year, while banks need 1-billion euros of fresh capital, the International Monetary Fund said last week.

Slovenia’s creditworthiness is deteriorating at the fastest pace in the world after Cyprus as investors speculate a banking crisis will force it to follow the island nation and become the sixth euro country to need aid.

Fears Portugal will seek an urgent financial bailout overshadowed an EU summit Thursday that had been called to bolster defences against the rollercoaster euro debt crisis.

BRUSSELS – 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 eurozone’s debt crisis. EU finance ministers forged a deal on the single supervisor in the early hours of Thursday after marathon talks. Leaders will give their stamp of approval at a summit starting later in the day, their last of 2012, and also discuss closer fiscal ties for their troubled currency area.