Hopes for a quiet summer recess, giving much needed time to Spain to organise its broke banks, are fast receding, with many expecting the country to need a bailout and warnings that France could be dragged into the mire.

Eurozone leaders are working on a draft proposal in Brussels, under which Ireland looks set to benefit from a cheaper interest rate on its EU loan, and a longer term to pay off the debt.

SIGNS of a slowing eurozone economy and intensifying austerity measures mean the European Central Bank will likely wait until the third quarter of 2011 to raise interest rates, a Reuters poll showed.