Euro Zone Status Quo 'Untenable': Economist

The current situation in the euro zone is "untenable" and policymakers will have to either pursue greater European economic integration or see countries exit the euro, George Magnus, Senior Economic Advisor, UBS told CNBC Tuesday.

"Every crisis takes us closer to the point where an existential decision has to be taken," Magnus said. "This sequential crisis that the euro zone has been through since the beginning of last year must be resolved."

Political incentives and the euro crisis

Several prominent economists have pointed out that some of the troubled countries in the Eurozone periphery may need to restructure their sovereign debts as soon as possible. Although debt restructuring will probably not spare these countries from a period of economic austerity and stagnation, it will at least provide some hope for the medium-term future. After some of the burden of the debt has been lifted, these countries will be able to channel more resources to economic recovery and will become more attractive destinations for investors. And, in any case, the sovereign debt of some of these countries, especially Greece, has reached such proportions that it is hard to see how it can be repaid without a significant restructuring.

Greek, Spanish, Italian Bonds Gain Amid Debt-Crisis Optimism

July 1 (Bloomberg) -- Greek two-year notes led gains by securities from the euro region's most indebted countries as speculation that the Mediterranean nation will default subsided, boosting demand for higher-yielding assets.

German 10-year government bonds snapped four days of declines as data showed growth in euro-region manufacturing slowed for a third month in June. Spanish bonds gained for a fourth day after Greece's lawmakers approved a budget-cutting package and banks lined up behind debt-rollover plans. Ten-year German yields have jumped 18 basis points this week, the biggest five-day increase in seven months.

Greece's economy to slump before rebounding on economic reforms: Finance minister

ATHENS - Greece's economy will slump further before starting to expand again next year thanks to fast injections of EU funds and reforms to spur growth, new Finance Minister Evangelos Venizelos told Reuters on Friday.

In his first interview to international media since being appointed last month, Venizelos pledged to accelerate efforts to sell off state companies and crack down on tax evasion, saying violent anti-austerity protests masked a high level of political consensus on the need to reform and keep Greece in the euro zone.

Contagion biggest threat to insurers in Greek crisis

(Reuters) - Greece's debt crisis has stirred fears of a wider euro zone sovereign credit meltdown that would be damaging for insurers, although the sector should be able to easily withstand any losses on its Greek debt, analysts said.

Most European insurers' holdings of Greek government bonds are small relative to their overall portfolios, enabling them to absorb any losses in the event of a default or restructuring, according to ratings agencies and equity analysts.