Spanish stocks dropped after elections on Sunday left no clear winner, signalling weeks of political instability ahead.

Greek voters yesterday returned Alexis Tsipras to power with a strong election victory, ensuring that the charismatic leftist remains Greece’s dominant political figure despite caving into European demands for a bailout he once opposed.

Economic growth in the eurozone slowed in the second quarter as France stagnated and Italy lost momentum, held back by an uncertain global outlook that is even weakening investment in powerhouse Germany.

Mario Draghi can’t afford to play by the same crisis rules as the European Central Bank did in the past.

Greece delayed repayment of an IMF loan yesterday and a deputy minister said Athens might call snap elections to break an impasse with lenders that threatens to push the country into bankruptcy and out of the euro.

Greece has won access to more emergency funding for its banks as euro-area governments prepared for another round of talks on the country’s financial crisis.

German analysts and investors see further growth potential for Europe’s biggest economy, though its already strong base means any further improvement may be limited, the ZEW think-tank’s April survey showed yesterday.

As European Central Bank policy makers gather for their first meeting of 2015, the backdrop is a 0.2% annual drop in consumer prices, the first in more than five years.

Mario Draghi this week faces one of the dominant challenges for the euro-area economy in 2015, writes Catherine Bosley

European Central Bank president Mario Draghi said he can not exclude the risk of deflation in the eurozone, in a sign that the likelihood of large-scale quantitative easing is increasing.

Shares fell in Europe and Greek debt yields rose yesterday after the parliament in Athens rejected the government’s presidential candidate, setting the stage for an election that anti-bailout party Syriza could win.

Here’s an early Christmas present for the economists of Wall Street: 2015 may be the first year in five in which they get to raise forecasts for global economic growth rather than cut them.

Inflation remains stubbornly low in several eurozone states, according to data released yesterday which keeps pressure on the ECB to unveil new steps to stoke the moribund economy.

The ECB saw far less demand than expected yesterday for its new four-year loans to banks, raising doubts about a stimulus package it hopes will stave off deflation and revive the eurozone economy.

Portugal’s government is teetering on the brink of collapse, sending financial markets around Europe into a tailspin and reigniting concerns about the euro area’s strategy for dealing with its prolonged financial crisis.

The ECB pondered an interest rate cut yesterday and predicted the eurozone economy would shrink again in 2013, leaving the door open to a possible reduction in borrowing costs early next year.

German central bank chief Jens Weidmann’s reported threat to resign has piled pressure on ECB president Mario Draghi to mollify opposition to a new bond-buying plan without tying it up in so many knots it is rendered ineffective.

ECB president Mario Draghi said it may wade forcefully into bond markets in tandem with Europe’s rescue fund, stepping up its crisis response despite the reservations of Germany’s Bundesbank.

The ECB has put the onus firmly on eurozone governments to solve the bloc’s debt crisis, dashing expectations it could take near-term action despite saying the currency area’s economy was under increasing threat.

Just as the news coming from Athens augured a little better for the future of the eurozone, the word from Madrid plunged the future of the embattled currency back into doubt.

Hopes of a quick fix for Greece were dashed last night as a eurogroup finance ministers’ meeting due to be held today was cancelled.

GERMAN Chancellor Angela Merkel rejected French calls to deploy the European Central Bank as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil.

PRIME Minister George Papandreou’s call for a referendum on the latest Greek bailout plan has blown a potentially fatal hole in the eurozone’s strategy to overcome its sovereign debt crisis.

AN interest rate cut could be on the cards for early next year resulting in lower mortgage repayments for many homeowners.

HOMEOWNERS could be hit with increased mortgage costs today when the European Central Bank (ECB) announces if there will be any changes to interest rates.

EUROZONE inflation plunged more than expected to a 26-month low in December as the economy slowed sharply, knocking back the euro on expectations of a deep ECB rate cut next week.

AS the European Commission forecasts rising growth for the eurozone, a new report raises serious doubts about this economy’s ability to win a slice of that expanding market.

The European Central Bank, still collecting economic data on the effect of its last interest rate increase, is set to hold steady today, but set the stage for a series of raises starting next month.

China’s decision to free its currency from a decade-long peg to the US dollar drew praise yesterday from European officials who hoped the change might benefit their economies, which have been battered by cheap Chinese imports.