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Stock futures rose sharply Thursday after applications for unemployment benefits fell to a five-month low. The government also reported that the economy grew slightly faster in the spring than previously reported.

Initial unemployment claims fell to a seasonally adjusted 391,000. That’s the lowest level since April 2 and also the first time applications have fallen below 400,000 since Aug. 6. The big drop suggests that layoffs are stabilizing. Still, economists say unemployment requests need to consistently fall below 375,000 to indicate job growth.

The Commerce Department also said that the economy grew at a 1.3 percent annual rate in the April-June quarter, up from the 1 percent estimate made a month ago. The improvement reflects modest growth in consumer spending and trade.

Both reports gave investors some confidence about the strength of the economy.

“The economy in the rear-view mirror here … was growing at a pretty modest pace; not anywhere near what anyone would like, but not troublesome,” said Rob Lutts, president and chief investment officer of Cabot Money Management. “This gives us a little more confidence that maybe the economy will muddle through here as we go through all these challenges.”

About a half hour before the opening bell, Dow Jones industrial average futures are up 137 points, or 1.3 percent, at 11,113.

Standard & Poor’s 500 futures are up 15, or 1.3 percent, at 1,163. Nasdaq 100 futures are up 35, or 1.6 percent, at 2,253.

In Europe, German lawmakers voted to expand the powers of the region’s bailout fund quick guaranteed personal loans. That reassured investors that Europe is working to contain its debt problems.

The measure needs to be approved by all 17 countries that use the euro before it can take effect. It will allow the bailout fund to buy government bonds and lend money to troubled governments before they get to a full-blown crisis. Finland approved it on Wednesday.

Concerns about Europe have roiled the financial markets since late July. Analysts say investors are reacting to every bit of news from the region, which has contributed to volatility in stocks.

Case in point: Stocks rose earlier this week on hopes that Europe was moving closer to resolving its debt problems. The Dow soared 272 points on Monday, its fourth-largest increase this year, and another 147 points on Tuesday. By Wednesday, a three-day winning streak came to an end on more uncertainties about Europe’s debt. The Dow fell 180 points.

In corporate news, Advanced Micro Devices Inc. fell 9 percent in premarket trading Thursday after the company cut its revenue and earnings forecast for the third quarter, saying it was having problems getting its chips made.

Wheel and tire maker Titan International rose 3 percent ahead of the opening. The company boosted its revenue forecast for the year and said it is in a “great position to grow.”

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An Egyptian court has convicted Hosni Mubarak’s powerful information minister on corruption charges and sentenced him to seven years in prison.

Anas al-Fiqqi’s conviction on Wednesday is the latest by an Egyptian court of former regime figures. Those already convicted and sentenced include the former interior and tourism ministers, as well as former ruling party stalwart and steel magnate Ahmed Ezz.

Former state television chief, Osama el-Sheikh, was sentenced to five years in the same case as al-Fiqqi’s.

Mubarak himself is on trial on charges that he ordered the use of deadly force against protesters in the 18-day uprising that toppled him in February. His two sons, businessman Alaa and one-time heir apparent Gamal, are also on trial on corruption charges.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

CAIRO (AP) _ Egypt’s first parliamentary elections since the ouster of Hosni Mubarak will begin on Nov. 28, the country’s military rulers said Tuesday in an announcement greeted with little fanfare by activists who have grown deeply suspicious of the generals’ commitment to change.

The military council, which took over from Mubarak as he stepped down in February, promised it would transfer power to civilian rule within six months, but no date was announced for presidential elections that would bring an end to military rule.

The concerns reflect the broader uncertainty over Egypt’s post-Mubarak course under a military council led by a man who served as Mubarak’s defense minister for many years. Egypt’s new revolutionary groups say the council has done little to dismantle Mubarak’s legacy and bring figures of the old regime to account for corruption, human rights abuses and other crimes.

“The new parliament won’t reflect the real spirit of the revolution and will provide justification for the military council to continue to be present in the background of the political scene,” said Mustafa Shawki, a youth group leader.

Even more troubling for the young activists who led the uprising against Mubarak’s rule, many believe the law governing the parliamentary election will enable remnants of the former regime to retain power in the post-uprising legislature.

The elections for parliament’s two chambers will be staggered over several months, with the vote for the legislative People’s Assembly starting Nov. 28 and the less powerful Shura Council, the chamber’s upper house, on Jan. 29. The first session for the People’s Assembly will be held on March 17. The Shura Council will convene on March 24.

Critics accuse the military of dragging out the process to prolong their time in power and sap the protest movement of its energy.

Youth groups are planning a protest this weekend to push for an amendment to the election law to have voters select party lists only, rather than a mix of party lists and individual candidates. Limiting the voting to party lists, they say, would make it harder for former members of Mubarak’s now-outlawed ruling party to run. They say the change would also help make Egypt’s politics less about personalities and more about policies.

Without those changes, some are contemplating a boycott.

There are also fears that the vote could widen the rift between Egypt’s well-organized Islamist parties and the new youth-driven secular groups, who fear the religious will dominate the parliament.

Islamic groups, kept on a tight leash under Mubarak, are also critical of the new election law. But they are eager to throw their weight around in the elections and are better prepared to win a big share of seats.

Essam el-Erian, the deputy head of the Freedom and Justice party, the newly launched political arm of the country’s strongest Islamist group, The Muslim Brotherhood, said the council disregarded discussions with the political groups over the shape of the new law.

But he said: “Egypt entered a new phase with this law. It is a de facto law that we have to deal with.”

For him, boycotting the elections is not an option. A boycott, he says, “is a dream and hope of many who want to maintain the current state of confusion.”

Without a broad consensus, a boycott of the elections appears highly unlikely.

The military rulers have accusations of their own against the protest movement. They claim some of the youth groups behind the Jan. 25-Feb. 11 uprising received training abroad and unauthorized foreign funding _ a claim that discredits the groups in the eyes of many Egyptians.

Adding to the tension was a late-night stroll Monday by the country’s military ruler, Field Marshall Hussein Tantawi, dressed in civilian garb in a downtown Cairo street near the epicenter of the protests that forced Mubarak out of office. Tantawi had never before appeared in public out of military uniform.

The surprise walkabout was interpreted by some as a sign that Tantawi may be entertaining ideas to shed his military uniform and present himself as a possible civilian president.

Calls to the military press office were not returned Tuesday.

“I just hope this was not the launch of a new election campaign for him,” said Shady el-Ghazali Harb, a protest leader and now a founder of a new party, called al-Waai or Awareness.

The last parliamentary election under Mubarak was held in November and December last year, when the ousted leader’s now-dissolved ruling party swept the vote, winning all but a handful of seats in the People’s Assembly.

The vote was widely condemned as the most fraudulent under Mubarak’s 29-year rule and considered one of the causes behind the 18-day popular uprising that forced him to step down on Feb. 11.

Egyptians went to the polls in March for a nationwide referendum on constitutional amendments. A decent turnout of more than 40 percent and the absence of any serious instances of fraud led many to declare it Egypt’s cleanest vote in living memory.

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The home-buying season was a bust.

March through August are typically the peak buying months. But this time, Americans bought fewer new homes in that stretch than in any other six-month period since record-keeping began a half-century ago.

And sales of previously occupied homes didn’t fare much better. They nearly matched 2009’s total for the peak buying months. And that was the worst since 1997.

Combined, total sales this spring and summer were the weakest on records dating to 1963. The figures underscore how badly the housing market is faring and suggest that a recovery is years away.

Because the economy is barely growing and unemployment exceeds 9 percent, many people see a home purchase as too big a risk. Some worry about losing their jobs. Others can’t afford the 20 percent down payment that most lenders now require.

Not even shrunken home prices and the lowest mortgage rates in six decades are convincing would-be buyers.

“The job engine has really sputtered out, and without jobs, Americans really can’t purchase homes,” said Celia Chen, a housing economist at Moody’s Analytics.

Plunging stock prices and renewed recession fears have led many economists to push back expectations for a housing recovery.

Chen expects prices to bottom at the start of 2012. And she doesn’t expect sales and prices to make a healthy recovery until 2015 at the earliest. In hard-hit areas such as California and Florida, it could take decades for prices to return to normal, she said.

Pierre Ellis, an analyst at Decision Economics, said that until wages increase and hiring picks up, sales will languish.

The “bad news is the evident absence of optimism that sales will pick up to any degree,” Ellis said.

Roughly 168,000 new homes were sold from March through August, the Commerce Department said Monday. That’s fewer than the 180,000 for the same period last year _ and last year’s sales were boosted by a temporary buyer’s tax credit fast cash advance loan. Over the same period in 2009, roughly 208,000 new homes were sold.

In a healthy six-month buying season, about 400,000 new homes would sell.

Among re-sales, about 2.8 million homes sold from March through August this year. That’s roughly as many as in the same periods in 2009 and 2010. In a healthy market, about 3.3 million would be sold in that six-month stretch.

Michael McGrew, who runs McGrew Real Estate in Lawrence, Kan., said many families won’t buy until the economy strengthens. Even in Lawrence, which had a low unemployment rate of 6.4 percent in July and is home to the University of Kansas, people are worried, McGrew said.

What would help most would be a relocated company that’s ready to hire in the Lawrence area, McGrew says. But hopes for the housing market to turn around soon are dim, he said.

“We’re actually seeing more people trading down their home or trading out of our market entirely,” McGrew said.

Nationally, prices are still falling. Prices for previously occupied homes have sunk more than 5 percent over the past year to a median of $168,300. New-home prices have fallen even further, by 7.7 percent, to $209,100.

That suggests builders and Realtors are slashing prices to compete with low-priced foreclosures and short sales. Short sales occur when lenders allow homes to be sold for less than what’s owed on the mortgage.

Combined, foreclosures and short sales are selling at an average 20 percent discount. And they’re lowering neighboring home values.

Devan MacConnell, 28, an administrator at a nonprofit in southeast Virginia, had been renting for years before buying a short sale this month _ a one-bedroom condo in Virginia Beach overlooking the ocean. She picked it up for $215,000, about $35,000 less than neighboring apartments.

“It was a steal,” she said.

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It may almost be time to start hyperventilating.

American Girl, the retailer that has a cult-like following among little girls, is proposing to put a store at Chesterfield Mall. In the words of a tween: OMG!

I have never set foot inside an American Girl store. But my colleagues have regaled me over the years with tales of taking their mesmerized daughters to the company’s flagship store in Chicago. In the store, you can dress up and accessorize the dolls, take them to a hair salon, and have tea parties with them. And that’s just the highlight reel.

So when I told my co-workers on Friday about the proposed store, one of them screamed in delight. But another groaned and said her daughter’s head was going to explode.

“In fact, mine just did,” she said, adding that she enjoys visiting the store, but is not so happy with how much poorer she is by the time she drags her can-we-stay-just-a-little-bit-longer daughter out of it.

An American Girl spokeswoman was quick to note that the retailer hasn’t signed a lease yet.

“Nothing is official or final,” Susan Jevens, the spokeswoman, wrote in an email.

But the retailer has submitted detailed plans to the city of Chesterfield to develop the former Wapango space at the mall into a 10,850-square-foot store.

The submitted architectural renderings, which include a candy apple red facade and pink awnings, makes the store seem more than just a pipe dream.

The proposed development goes before the city’s planning commission on Monday night. The next step will be getting a building permit, said Aimee Nassif, Chesterfield’s planning and development director.

American Girl has been slowly expanding in recent years. It opened its first store in Chicago in 1998 and later opened two more flagship stores

Under pressure from skeptical financial markets, the world’s economic powers are scrambling to keep Europe’s debt crisis from tumbling out of control.

Finance ministers and central bankers are pushing for bold action by the Group of 20 nations to get the global economy back on track, while wavering over helping Greece avoid a destabilizing default.

The focus of the three days of discussions shifts Saturday shifts from the G-20 to the International Monetary Fund and its sister institution, the World Bank. Both have warned the global economy is entering dangerous waters.

For Christine Lagarde, who took over as head of the IMF in June, the crisis poses a tough first test. Lagarde has warned that without bold and collective action, the world’s major economies risk slipping back into recession.

To avoid that, G-20 officials have pledged to “take all necessary actions to preserve the stability of banking systems and financial markets.” They are also encouraging Europe to move quickly to carry out its promises to help Greece. But private economists have questioned whether the action plan unveiled Thursday goes far enough to deal with market concerns that a Greek default is a virtual certainty that threatens to destabilize other highly indebted European countries.

German Finance Minister Wolfgang Schaeuble warned that a second massive bailout package for Greece _ tentatively agreed to in July _ may have to be re-evaluated after the country’s international debt inspectors discovered problems in implementing previous promises. This re-evaluation could include changing the terms of an agreed voluntary contribution from banks and other private investors to Greece’s rescue, two European officials said.

One of the officials said that Germany and other rich eurozone nations, including the Netherlands and Austria, are now pushing for an “orderly default” by Greece. That would entail losses for investors that go beyond the 21 percent cut in the face value of government bonds foreseen under the voluntary contribution. The officials spoke on condition of anonymity because of the sensitivity of the issue.

The comments underline how confidence is eroding among core eurozone countries over whether they can actually save Greece, whose debt is close to 160 percent of its gross domestic product and whose economy looks now set for a fourth straight year of recession.

Stock markets in Europe and the U.S. recouped some of their previous day’s hefty losses Friday, but investors remained skeptical about whether the world’s leading economies can keep the global economy from going over the cliff.

Investors will be looking for more during the meetings of the IMF and World Bank.

“I think many in the markets are no longer reassured by platitudes; we want to see action and not just words _ more walking the walk and less talking the talk,” said Louise Cooper, an analyst with BGC Partners. “The G-20 communique was more eloquent on the problems facing the world than the solutions to be found.”

In Europe, France’s CAC-40 closed up 1 percent at 2,810.11 while the DAX in Germany rose 0.6 percent to 5,196.56. The FTSE 100 index of leading British shares ended 0.5 percent higher at 5,066.81.

Wall Street pushed higher, too _ the Dow Jones industrial average was up 0.1 percent at 10,745 while the broader Standard & Poor’s 500 index rose 0.5 percent to 1,134.

Despite the modest gains Friday, the worries are piling up for investors: a U.S. Federal Reserve warning this week that the American economy is in significant difficulty, a raft of downbeat European and Asian economic indicators and the continued concern over Greece’s debt.

Sung Won Sohn, an economics professor at California State University’s Martin Smith School of Business said the great concern is that if Greece doesn’t make further painful cuts in government spending and ends up defaulting on its debt, the shock waves will rock big banks in Europe who carry heavy Greek debts their books.

He said this would cause fearful investors to sell bonds of other heavily indebted countries such as Italy and Spain, countries with much bigger economies.

“The fear in markets is that the problem will spread to bigger economies such as Spain and Italy. Europe would not have the resources to handle a crisis of that magnitude,” Sohn said.

The finance officials at the Washington meeting said they believed that the 17 nations that use the common euro currency were getting the message they needed to move more quickly to reform their surveillance procedures and increase economic support.

“The leading lights of the eurozone are aware that time is running out,” British treasury chief George Osborne said Friday. “There is a far greater sense of urgency than there was three weeks ago.”

Canadian Finance Minister Jim Flaherty said he had stressed during the G-20 discussions that “Europe will need an exercise of political will. We will need decisiveness and clarity.”

G-20 finance officials devoted part of their discussions Friday to the issue of providing more support to poor nations. French Cooperation Minister Henri de Raincourt said that one proposal being examined would be for the rich nations to establish an emergency food stockpile to help poor nations, particularly in Africa, deal with unexpected crises.

He said the stockpile could be tapped quickly during the 90 days it normally takes the international community to organize food shipments to disaster areas. The G-20 officials hope to develop an action plan on development aid to present at the G-20 leaders’ summit in Cannes, France.

____

Associated Press writers Martin Crutsinger and Luis Alonso Lugo in Washington and Sarah DiLorenzo in Paris contributed to this report.

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Alarmed by dismal economic conditions around the world, Toronto economist David Rosenberg asserts that “it’s time to start calling this for what it is: A modern day depression.”

Rosenberg made his reputation as a globally esteemed economist in New York as one of the top economic forecasters at Merrill Lynch & Co. When the Toronto money management firm Gluskin Sheff recruited Rosenberg home to his native Canada to continue his sage analysis from a slightly more Canadian perspective, I regarded this as a public service.

When someone of Rosenberg’s stature, even discounting his characteristic bearish sentiment, starts using the D-word, one can assume it will start popping up in the reports of securities analysts and macroeconomists worldwide.

There’s no question we’re in a world of hurt, from which Canada is not isolated.

Jim Flaherty, the federal finance minister, tried to slap down Peggy Nash, the NDP finance critic, in the Commons earlier this week by accusing her of “badmouthing” the economy. The International Monetary Fund (IMF) had just downgraded its forecasts of Canadian GDP growth — from 2.8 per cent this year to only 2.1; and to a mere 1.9 per cent next year from an earlier forecast of 2.6 per cent.

If Nash is badmouthing the economy, then so are the IMF and David Rosenberg. Spitting on the messengers doesn’t change the fact that for the almost 1.4 million Canadians who are unemployed, we are indeed in a depression. And that about one million children in this country are living in poverty.

Our jobless rate, at 7.3 per cent, remains higher than the 6.0 per cent of October 2008, when the Great Recession began. And Canadian household debt is at near-record levels, as the income of middle- and working-class Canadians has continued its 30-year stagnation.

The U.S. and Europe, markets we rely on for export revenue, are in economic crisis.

Yet for all that, we are not in a depression, nor bound for one. Not remotely.

Put aside that the same IMF report that downgraded our GDP growth also forecast that it will continue to outpace our G7 peers over the next two years. And that Flaherty remains convinced GDP growth will be strong enough to enable him to keep his pledge to eradicate the last of the deficit accumulated in 2009-10 within three to four years.

The crippling North American jobless rate during the Depression ranged from 17 to 28 per cent. It was much higher in the hardest-hit regions like Appalachia and in “Dust Bowl” communities where family farms perished by the thousands.

Not until 1954 did the stock markets recover to their previous peak at the time of the Crash of ’29 — a span of a quarter century.

Today’s stock market, despite a slide over the summer, is trading at 2000 levels — not shabby given the epic global financial meltdown of 2008-09. U.S. banks failed by the thousands in the Depression. Today’s U.S. banks are sitting on about $2 trillion in idle reserves they refuse to lend until they’re absolutely certain that the meltdown will have no second act.

Similarly, corporate profits have soared, recovering to record levels in many industrial sectors. And perhaps most important is the absence of Depression-era trade wars, regarded by most economic historians as the chief cause of the Depression’s depth and duration.

There was, of course, no elaborate social safety net in place during the Depression, an unprecedented failure of cowboy capitalism that caused us to bring about those protections.

If you look beyond the admittedly discouraging conditions of the moment, you can see the European powers — chiefly all-important Germany — overcoming their reservations about reinventing the eurozone, to resolve that crisis and emerge with a far stronger common currency zone than they first conceived only 12 years ago.

And concern about the so far “jobless recovery” has lately pulled governments in Canada, the U.S. and Britain away from their sole obsession — as recently as a few months ago — with balancing the books.

The Depression was wholly different. In 1932, the Saturday Evening Post asked John Maynard Keynes, the great British economist, if the Depression had any precedent. “Yes,’ he replied. ‘It was called the Dark Ages, and it lasted four hundred years.”

It’s hubris to say a Depression could never happen again. Yet in these troubled times, we are dealing mostly with familiar problems, to which there are solutions that have reliably worked in the past.

We are, it’s true, in the grips of economic malaise. And the lack of urgency in curing us of it is a temptation to strong words. But since the crisis is more political than economic, better that we hold to account the powers that be and not go into rhetorical overdrive about the conditions themselves.

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General Motors announced it will invest $380 million and will add a second shift to its assembly plant in Wentzville as part of a new contract under negotiation with the United Auto Workers.

If union members vote to approve the four-year contract next week, it will mean 1,850 new jobs for the Wentzville assembly plant, said UAW Local 2250 chairman Mike Bullock, who is in Detroit for GM’s announcement today. Local 2250 represents hourly workers at the Wentzville plant.

The expansion will be for production of a 2014 mid-size pickup truck and and a full-size van, although GM did not release which models.

Bullock said if the contract is approved, the second shift will be added at the first part of 2012. Local 2250 will vote on the contract Monday and all votes are expected to be completed by next Tuesday.

“This will be a real shot in the arm for Wentzville and the St. Louis area,” Bullock said. “This really is a tribute to the men and women who work at the Wentzville assembly center and produce the best quality product at the best cost payday loan.”

Last week, Wentzville’s board of aldermen approved tax abatement for expansion of the Wentzville plant, which currently has a single shift and 1,300 employees.

GM makes Chevrolet Express and GMC Savana full-size vans at the plant, about 40 miles west of St. Louis.

At GM’s press conference today, the Detroit-based automaker outlined investments at several other plants nationwide, including plans to invest $925 million at three Michigan factories that will create 900 jobs during the life of the contract. 

Including the Wentzville jobs, GM also outlined plans for investing in plants in Spring Hill, Tenn., and Fort Wayne, Ind., that will create or preserve a combined 3,700 jobs.

Check back on stltoday.com for updates to this story.  

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A military spokesman in Ivory Coast said the death toll from recent attacks by armed men from Liberia has risen to 23 dead.

A government official said the killings started Thursday night in an area of southwestern Ivory Coast which borders Liberia. The armed men crossed into Ivory Coast, attacking villagers just across the border, before retreating.

Capt. Leon Kouakou Alla confirmed that the death toll rose Monday from 15 to 23 dead.

The attackers are believed to be militiamen allied with ex-President Laurent Gbagbo who lost last year’s election and was eventually forced out in April following French and United Nations airstrikes.

His supporters fled to neighboring countries, and a large percentage of them are now housed in refugee camps in Liberia, from where the attackers came.

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Armed men from Liberia have killed at least 15 people in attacks on villages along the border over the last two days, Ivory Coast’s defense minister said Saturday.

The violence began Thursday night in the country’s southwest, a region that has seen fighting even after the resolution of Ivory Coast’s bloody political crisis earlier this year.

Also Saturday, an international watchdog said it had documented a similar attack that left at least eight people dead back in July.

Matt Wells of Human Rights Watch says the fighters loyal to ex-President Laurent Gbagbo crossed over the border at night and killed villagers, including women and children, and then disappeared back into the Liberia’s dense jungle just a couple of miles away.

“Some had their throats slit and others were shot. They shot a woman from behind at point blank range,” Wells says. “The latest attack looks to be of a very similar nature.”

Ivory Coast was plunged into months of violence after Gbagbo refused to cede power after losing the November presidential election. President Alassane Ouattara has pledged to investigate the killings of thousands of people during the conflict on both sides.

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German Chancellor Angela Merkel says that “if the euro fails, Europe fails.”

But as the debt crisis intensifies, the leader of Europe’s biggest economy is sticking to a course of gradual action that markets are losing faith in and refuses to take the radical measures some say are needed to keep the currency afloat.

Top officials, even in the European Central Bank, have called for a “quantum leap” in tackling the crisis. One option often mentioned by economists is issuing eurobonds, debt backed jointly by all eurozone nations.

But Merkel faces intense pressure at home to not expose her nation any more to the shaky finances of countries like Greece, leaving Germany _ and Europe _ in an uncertain position.

Merkel has so far justified the high cost of bailouts by noting that Germany’s interests as a leading exporter are bound to the wider eurozone. Its banks also are exposed to the fates of the countries.

The strategy she has led Europe to take has been to provide struggling nations with loans, in exchange for tough austerity measures. The powers of the eurozone bailout fund will also be increased to help stabilize debt markets.

But after multiple bailouts _ Greece, Ireland, Portugal and then Greece a second time _ taxpayers in Germany and other Northern European countries are losing confidence in the current crisis management.

And so are markets. Prices in Greek debt markets show investors are all but resigned to the fact the country will default on its debts.

But Merkel has rejected suggestions that more drastic measures might solve the situation. She has brushed away the notion of abandoning Greece to default or creating a full-scale fiscal union, in which German funds would directly plug funding gaps in other countries.

Many people feel the need to believe it “could evaporate with one buzzword _ be it eurobonds or insolvency or other words,” Merkel says. But “that won’t happen.”

She says resolving the crisis will be “a slow, hard road,” involving deficit cuts and economic reform to make stragglers more competitive.

That has dampened investors’ expectations that a change of strategy might be presented at a meeting of eurozone finance ministers in Wroclaw, Poland, on Friday and Saturday.

Merkel pointed out that even if she were for the introduction of eurobonds, they could be unconstitutional in Germany and require years of renegotiations to European treaties.

Merkel “is between a rock and a hard place,” said Louise Cooper, an analyst at BGC Markets. “Clearly Merkel does not want to be the … chancellor in Germany who was in power when the euro project blew up. But quite what she can do to prevent it, I am not at all sure.”

Prominent authorities, however, have warned Germany and Europe need to make up their mind on what they want the eurozone to be.

Jens Weidmann, the head of Germany’s hawkish central bank and once Merkel’s economic adviser, said there was a choice. On the one hand Europe could have a system under which countries are largely barred from taking responsibility for others’ debts and the markets discipline governments that spend too much. On the other, the region could take “a major leap” toward deeper integration.

“The decision for one of the two paths needs to be taken soon,” Weidmann argued. The current situation, in which government finances are separate but get rescued in times of need, risks failing, he said.

The European Central Bank president, Jean-Claude Trichet, said the eurozone should eventually create a common finance ministry to bind together the nations’ budgets.

Germany, whose political class views itself as a driver of European unity, could hardly countenance the idea of the European project failing _ quite apart from the steep financial costs.

Michael Meister, a leading lawmaker in Merkel’s party, argued against speculating about even a partial eurozone break-up. “It would be an absolute fiasco for an export nation like Germany,” he argued. “We have to consider that we’re discussing not just Greece, but our own economic prospects.”

But Merkel’s conservatives oppose eurobonds, and their junior coalition partner, the Free Democratic Party, is vehemently against them. They argue eurobonds would merely push up financially solid Germany’s lending costs and encourage others to run up more debts, as well as facing legal barriers.

Germany’s main opposition parties _ who currently have a majority in polls _ have advocated at least their limited introduction, arguing that other avenues could be more costly.

But that would likely cause trouble with Germany’s Federal Constitutional Court.

One implication of its recent ruling upholding Berlin’s participation in the bailouts so far was that “participation in an automatic and unmanageable guarantee mechanism, which might include the issuance of eurobonds, is not allowed,” UniCredit analyst Alexander Koch said.

While eurobonds remain off the menu of options to alleviate the crisis, Merkel can expect the main opposition parties’ support, at least for now, in pushing through the steps eurozone leaders have so far agreed on.

Markets will take some comfort in the notion that Germany, while unable to propose a lasting solution, is willing to keep supporting the eurozone’s system of bailouts.

“Germany is the lead actor in this film,” said Cem Ozdemir, a leader of the opposition Greens. “If the lead actor in a film stops playing, then the film’s over.”

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