Greece bailout in doubt as eurozone economy shrinks

China appears ready to help the euro area overcome its debt crisis, with Premier Wen Jiabao and People's Bank of China Governor Zhou Xiaochuan both expressing support for the region in recent days.

The euro area's support for Greece, however, is in doubt. From Reuters:

After a three-hour teleconference between finance ministers of countries that share the euro, questions remain over the euro zone's bailout of Greece, a German government official said on Wednesday...

"Along with the examination of information made available at short notice, questions remain that are very important to Germany and other member states about the sustainability of the program," the official said.

The questions had to do in part with Greece's ability to work off its mountain of debt in the years ahead. Further information regarding this matter must be examined by Monday, the official added.

Greece's ability to reduce its debt to GDP ratio is being undermined by a shrinking economy that some analysts think could turn into one of the deepest economic slumps of modern times.

Meanwhile, the rest of the eurozone economy is only a little better off. Economic output in the euro area fell 0.3 percent in the fourth quarter, the first contraction since the second quarter of 2009. France managed to grow 0.2 percent while Germany shrank just 0.2 percent. However, Italy's economy contracted 0.7 percent while Portugal's shrank 1.3 percent.

Elsewhere in Europe, claims for jobless benefits in the UK rose by 6,900 in January to 1.604 million, the highest level since January 2010.

US data on Wednesday, though, were mostly positive.

Unusually warm weather caused a fall in utility output in January and left overall industrial production unchanged but manufacturing production increased 0.7 percent.

Strength in manufacturing was also indicated by the February Empire State manufacturing survey, which showed the general business conditions index rising six points to 19.5, its highest level in more than a year.

Housing also appears to be recovering. The National Association of Home Builders/Wells Fargo housing market index rose for the fifth consecutive month to 29 in February from 25 in January, reaching its highest level in more than four years.