But German Chancellor Angela Merkel rebuffed pressure from EU partners and the United States for Europe's most powerful economy to underwrite debt or guarantee bank deposits in the single currency area. Spain's 10-year bond yield hit a euro lifetime high above 7 percent on Thursday - a danger level above which Greece, Ireland and Portugal were driven to seek international rescues - despite last weekend's euro zone agreement to lend Madrid up to €100 billion ($125 billion) to recapitalize ailing banks.

"It is not a situation that can be maintained over time... and I am convinced that we will continue to take more measures in the coming days and weeks to help bring it down," Spanish Economy Minister Luis de Guindos told reporters in the corridors of parliament. In Rome, Parliamentary Affairs Minister Piero Giarda, in charge of a public spending review, said Italy will seek to cut €5 billion in state administration spending this year instead of a previously announced €4.2 billion. The money saved would help fund areas hit by two earthquakes last month.

Moody's Investor Service slashed Spain's sovereign credit rating by three notches to Baa3, just one level above junk, late on Wednesday, citing the government's "very limited" access to international debt markets and the weakness of the economy. The downgrade added to a sense of emergency in financial markets ahead of an election in debt-plagued Greece on Sunday that could deliver a mandate to an anti-bailout party.

The yield on Spanish benchmark 10-year debt hit 6.8 per cent just days after eurozone finance ministers agreed a €100 billion bailout package for the country’s banks. The move was accompanied by rising bond yields in countries deemed less risky, such as Germany and the UK, where market interest rates have been at record lows.

“The crisis is deteriorating at an ever-increasing pace,” said Mark Schofield, a senior strategist at Citigroup. “Investors are increasingly pricing in either of the two tail risks – full eurozone break-up or fiscal union.” Officials have insisted the EU has sufficient short-term mechanisms to deal with the crisis in the form of its rescue funds, while the debate over longer-term measures has shifted towards greater fiscal co-ordination and Europe-wide banking supervision.

Angela Merkel, German chancellor, spoke out in support of European banking regulation, although she stopped short of backing a region-wide resolution scheme, which Berlin fears could burden the country with joint liability for other’s debts. “Germany – and I can say this for the whole country – is prepared to do more on integration but we cannot get involved in things which I am convinced will lead to an even bigger disaster than the situation we are in today,” she said.

In London, George Osborne, Britain’s chancellor of the exchequer, questioned whether a Greek exit from the eurozone was a price that had to be paid to persuade Germany to save the single currency. The ECB saw EU banks shrinking balance sheets by €1.5 trillion, mainly via asset sales, by the end of 2013 – although that was less than estimated by the International Monetary Fund. The report did not consider the risks of a possible Greek exit from the eurozone, which Mr Constâncio said would be “virtually impossible to assess”.

The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992. The data represent one of the most detailed looks at how the economic downturn altered the landscape of family finance.

Over a span of three years, Americans watched progress that took almost a generation to accumulate evaporate. The promise of retirement built on the inevitable rise of the stock market proved illusory for most. Homeownership, once heralded as a pathway to wealth, became an albatross.

The findings underscore the depth of the wounds of the financial crisis and how far many families remain from healing. If the recession set Americans back 20 years, economists say, the road forward is sure to be a long one. And so far, the country has seen only a halting recovery. “It’s hard to overstate how serious the collapse in the economy was,” said Mark Zandi, chief economist for Moody’s Analytics. “WE WERE IN FREE FALL.”

The announcement comes as the Falklanders prepare to mark the 30th anniversary of the liberation of the Islands. Argentina have continued to claim the territory calling them 'Las Malvinas' despite it being three decades since Margaret Thatcher sent 27,000 troops to the land. The Falkland Islands government said it hopes a referendum will send a firm message to Argentinian president Cristina Fernandez de Kirchner that islanders want to remain British.

Ms Fernandez de Kirchner has continuously ramped up tensions with Britain over the Falkland Islands, calling Prince William a 'conqueror-pirate' as he undertook a tour of duty earlier this year. The Falklanders were also left outraged after the Argentines aired an advert describing the disputed islands as 'Argentine soil'. Reacting to the announcement of a referendum, Foreign Office minister Jeremy Browne said this is a "truly significant moment".

Prime Minister David Cameron said Britain would "respect and defend" the outcome of the referendum. He said: "I have always said that it is up to the Falkland Islanders themselves to choose whether they want to be British and that the world should listen to their views. Thirty years ago they made clear that they wanted to stay British. That's why British forces bravely liberated the island from Argentine invaders."

"Now the Argentine government wants to put that choice in doubt again, by shouting down the Islanders' ability to speak for themselves and punishing them for exercising their own free choice."

The analysts said that all potential negative scenarios involved Europe “to some degree” with the starting point of collapse coming over the summer. However, Brent crude rose $1.06 to $98.20 yesterday after the US Energy Department said the country’s stockpiles had seen a surprise fall of 191,000 barrels to 384.4 million barrels last week.

Comparing the situation in 2008 and today, Mr Stuart and Mr Revielle noted that “global imbalances are worse and much of the available political and real capital has merely been squandered in the interim.” The comments come ahead of an expected clash between the Organisation of the Petroleum Exporting Countries’ members at today’s key meeting in Vienna.

The OPEC cartel will hold a meeting to decide on crude output levels for the second half of the year and comments from Saudi Arabia ahead of the meeting have been at odds with fellow producers. Last week, Ali al-Naimi, Saudi Arabia’s oil minister, said that OPEC may have to raise its collective production ceiling of 30 million barrels a day in order to protect global economic growth. This increase in output would be needed despite the fact that the oil price has fallen below $100 a barrel, he said.

"Spain will reiterate its position and talk about the how the situation has been developing in recent months," confirmed a spokesman at Spain's Ministry of Foreign Affairs to the Daily Telegraph. "We will ask the UK to engage in conversation over sovereignty."

The report to the United Nations Decolonisation Committee comes amid rising diplomatic tensions over the Rock and just days after a Royal visit by the Earl and Countess of Wessex to the territory raised hackles over the border. Jose Garcia Margallo, Spain's foreign minister, had labelled the visit "inopportune" coming amid an ongoing dispute over fishing rights in the waters around Gibraltar that have led to stand-offs between Spanish Civil Guard boats and Royal Gibraltar police vessels.

Last week Spain lodged a formal complaint to the European Union over Gibraltar's new tax laws. Spain has told the Competition Directorate that it believes Gibraltar's 10 per cent tax regime amounts to illegal state aid under EU laws.

Father Ninni Treppiedi was sacked from serving as a priest after a series of church funds transactions made by his parish came to anti-mafia prosecutors’ attention this spring. The dealings, involving millions of euros, date back to 2007-2009. Prosecutors suspect Treppiedi was involved in money-laundering operations linked to Matteo Messina Denaro, a Mafia Godfather on the run. The cleric’s former post in Aclamo, near Trapani, is said to be the richest parish in the Mafia stronghold of Sicily.

Trapani prosecutor Marcello Viola made the request to disclose Treppiedi’s account details over six weeks ago. But the Vatican, though confirming the request has been received, maintains the issue is not mafia-related. “The letter the Vatican received on May 9 did not speak of any money laundering or mafia issues. It contained concerns over shortages and fraud made by ecclesiastical authorities in the Diocese of Trapani,” the Vatican spokesman told the Italian newspaper Corriere della Sera on Monday.

The first reports on the scandal emerged in the Italian media two weeks after the head of the Vatican Bank, Ettore Gotti Tedeschi, was ousted after receiving a unanimous vote of no-confidence from bank overseers. The banker is under investigation for another case of alleged money laundering. But there is speculation that the actual reason behind the no-confidence vote is that Tedeschi was aware of possible mafia links and leaked names and accounts details to police.

Described in two papers in Nature and a raft of reports in other journals, the data released Wednesday describe microbes of the skin, saliva, nostrils, guts and other areas of 242 adults in tiptop health. The $170-million, federally funded Human Microbiome Project also cataloged the genes contained within this zoo of life. The results shed light on the hum of microbial activity inside us as nutrients are chopped and guzzled, gas and other wastes are expelled, and bugs send chemical messages to one another, jostling for supremacy or attracting new neighbors to help keep their community going.

The research is important because it gives scientists a reference point of what the microbial community looks like in healthy people, and they plan to use it to study how changes in a person's microbiome can lead to illness. A spate of studies in the last few years has documented potential links to conditions such as inflammatory bowel disease, asthma and obesity.

Each of us is home to about 100 trillion microscopic life forms — a figure that's about 10 times higher than the number of cells in the human body. In a 200-pound adult, these organisms can weigh a combined 2 to 6 pounds. The team had set out to identify a "core microbiome," a base-line set of flora that would always be found in the mouth, say, or the large intestine. They didn't really find this, but their analysis revealed that each place in the body seems to have a distinct set of metabolic abilities, be it digestion of sugars in the mouth or of complex carbohydrates in the large intestine. In different people, different microbes appear to be performing the same tasks.

Some 41% correctly linked butter to a dairy cow, with 8% linking it to beef cattle, while 67% were able to link eggs to an image of a hen but 11% thought they came from wheat or maize. A total of 6% of those questioned knew that salad dressing could come from rapeseed oil, compared with the national average among all age groups of 24%.

Although four in 10 young adults (43%) considered themselves knowledgeable about where their food comes from, the results revealed a "shocking" lack of knowledge about how the most basic food is produced, the charity said. Leaf chief executive Caroline Drummond said: "We often hear reports that our food knowledge may be declining but this new research shows how bad the situation is becoming. Despite what they think, young adults are clearly becoming removed from where their food comes from."

"Three in 10 adults born in the 1990s haven't visited a farm in more than 10 years, if at all, which is a real shame as our farmers not only play an important role in food production but are passionate about engaging and reconnecting consumers too." The charity, which is organising an Open Farm Sunday event this weekend, also found almost two-thirds of young adults (64%) did not know that new potatoes would be available from British farms in June, and one in 10 (10%) thought they took less than a month to grow.

The last published opinion polls showed the conservative New Democracy party, which backs the €130 billion ($160 billion) bailout that is keeping Greece afloat, running neck and neck with the leftist Syriza party, which wants to cancel the rescue deal. As the election approaches, publishing polls is now legally banned and in the ensuing information vacuum, party officials have been leaking contradictory "secret polls".

On Tuesday, one rumor making the rounds was that Syriza was leading by a wide margin. "This is nonsense," one reputable Greek pollster said on condition of anonymity. "Our polls show the picture has not changed much since the last polls were published. Parties may be leaking these numbers on purpose to boost their standing." The pollster said there was some consolidation, with voters turning to New Democracy and Syriza from smaller parties but the pool of undecided voters remained unusually large so close to the election and the result was impossible to predict.

Both parties say they want Greece to remain in the single currency but Syriza has pledged to scrap the bailout agreement signed in March which has imposed some of the toughest austerity measures seen in Europe in decades. The European Union and International Monetary Fund have warned that Greece, which has only enough cash to last for a few weeks, must stick to the conditions of the bailout deal or risk seeing funds cut off.

The commentary was published by Fars News Agency, which is run by the Revolutionary Guards tightly and usually publishes official opinion. It indicates that Iran is changing gears, said Erick Staklebeck, who writes for the Christian Broadcasting Network. Staklebeck noted that the Islamic world already has nuclear weapons because Pakistan is known to have approximately 110 such weapons.

“If Pakistan uses one of its nukes, it will be to the East, against its arch-rival, India. Iran, on the other hand, clearly has its sights set on the United States, Europe and Israel,” he wrote. The commentary, which he said he received from a friend, was written by Alireza Forghani, a former governor of southern Iran’s Kish Province and an analyst and a strategy specialist “in the camp of the supreme leader, Ayatollah Ali Khamenei.”

“Having a nuclear bomb is our right. Israel would have been destroyed completely 30 years ago” but remains because of its assumed possession of nuclear warheads. Staklebeck commented that the article indicates that Iranian leaders are “telegraphing their intentions towards us and are very close to acquiring nuclear weapons that will make their apocalyptic visions a reality.”

The fact that Putin's first destination was Minsk is perceived as a clear signal. It is true that Russia's new president is seeking to consolidate the alliance of the post-Soviet countries which is destined to cause conflicts. Berlin seeks to strengthen its position in the Ukraine as well as in Belarus. Even though a certain alienation has been growing between Berlin and Moscow, economic ties remain strong. Europe's dependency on Russian natural gas is growing, as well as Russia's significance for Germany's export industries. East European and post-Soviet central Asian countries are buying more German products than the USA and China combined.

The growing political discord between Berlin and Moscow, which are supposed to be enjoying a "strategic partnership," are contrasted by the increasing economic interdependence of the two countries - and the growing significance of Eastern Europe and the post-Soviet countries for Germany's export economy. In fact, over the past few years, the German industry has reinforced its efforts by taking steps to further expand in Eastern Europe, compensating its export losses in the crisis riddled Euro zone.

Russia, at the same time, registers a clear six billion Euro trade surplus in relationship to Germany, even if it is less than in 2011. This has resulted from Russia's voluminous export of fossil energy sources. In Russia, the state-controlled energy sector is by far the most important economic sector of the country, which accounts for a large part of the country's receipts in foreign currency and budget surpluses.

Andreas Dombret, a key board member of the Bundesbank, said the grand plan by Brussels is premature and unworkable as constructed. "A banking union is a sensible way forward as long as liability and control are aligned. What I mean is you don't give somebody your credit card if you don't know what he or she is going to do with it." Mr Dombret said a pan-EMU deposit-guarantee scheme and a debt resolution fund would require "a genuine, democratically legitimated fiscal union" and a new treaty.

The Bundebank's vice-president Sabine Lautenschlaeger hammered home the point in what is a clearly co-ordinated push to check the plan. "The result would be a pooling of the governments' liabilities through the back door," she said. "Whoever is footing the bill must also have a right of control, particularly when it comes to the large sums that are seen in banking crises," she added, alluding to rulings by German courts that unquantifiable EU liabilities breach Germany's constitution.

Chancellor Angela Merkel endorsed the tough line at a party conference yesterday, insisting that Germany will not accept variants of debt pooling or eurobonds until Europe has created a machinery of joint government. "We can't take part in things that lead us into an even deeper disaster," she said. "We want more Europe, but a Europe in which joint liability and joint control go hand in hand. What is not acceptable is shared liability and control remaining in national hands."

Mrs Merkel said the failure of the European Banking Authority to uncover festering losses in Spanish banks in a series of stress tests showed that national regulators - acting out of "misguided national pride" - cannot be trusted to do the job.

Mr Barroso claimed the move was designed to increase stability following the eurozone debt crisis. But the proposal was not welcomed in London as it was seen as another bid by the EU to extend its control over British interests. As well as cross-border regulation, the banking union proposal would envisage an EU-wide deposit guarantee scheme and rescue fund paid for by levies on financial institutions.

This would hit the City of London particularly hard - an event which Chancellor George Osborne has already claimed he will fight 'tooth and nail' to prevent. A Downing Street spokeswoman said today that Britain would not subject its banks to the EU-wide supervisor being proposed by Barroso. She explained: "Our view is pretty clear on that. That is a matter for the eurozone if they feel that that is the next step forward. As the Prime Minister and Chancellor have said, there is some remorseless logic about that, but that is a matter for them. Britain will not be involved."

Prime Minister David Cameron and Chancellor George Osborne have already made clear they believe a banking union should be only for the 17 nations which use the single currency.

Spiegel's cover story about the sale of German-built submarines to Israel, which were then equipped with nuclear-tipped cruise missiles, has provoked a storm of debate in Germany and internationally. According to extensive research carried out by Spiegel, Israel is equipping submarines built in the northern German city of Kiel and partly paid for by the German government with nuclear-tipped cruise missiles. Three Dolphin-class submarines have already been delivered to Israel, and three more will be delivered by 2017. The contract for the sixth submarine was signed only recently.

On Monday, opposition parties called for an explanation from the German government and more transparency on weapons deals. "The German government needs to reveal the facts and make a report to the relevant parliamentary committee," Cem Özdemir, co-leader of the Green Party, told Spiegel Online. The opposition center-left Social Democrats (SPD) have been muted in their reaction, however. In 2005, former SPD Chancellor Gerhard Schröder personally approved the delivery of submarines to Israel.

The German government has neither confirmed nor denied the Spiegel report, which was published Monday. Government spokesman Steffen Seibert said that the government did not get involved "in speculation about a possible later armament" of the submarines, adding that the vessels were delivered "without weapons." Philipp Missfelder, parliamentary foreign policy spokesman for Chancellor Angela Merkel's conservative Christian Democratic Union, told the daily Süddeutsche Zeitung that the Israeli government was solely responsible for the decision about how the submarines were equipped. "We have to respect that," he said.