Top Business: â€˜Is it too much to hope that the euro zone really is getting its act together?

These are stories Report on Business is following Wednesday, Sept. 12, 2012.

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Is Europe turning the corner?
Many questions remain, and some issues need to be resolved, but it is worth asking today whether the euro zone is beginning to turn the corner.

Facebook CEO Mark Zuckerberg hasn't enjoyed watching his company's stock price plunge, but he is relishing the opportunity prove his critics on Wall Street wrong. "I would rather be in a cycle where people underestimate us,'' he said Tuesday. AP

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Video: Zuckerberg says Facebook has overcome hurdles

The 17-member monetary union has been plagued by a debt crisis for more than two years, and several of the countries are deep in recession and crippled by high unemployment, but its leaders are moving more in concert to ease the strains.

"Is it too much to hope that the euro zone really is getting its act together?" said futures dealer Rupert Osborne of IG Index in London. "Probably. But we should for now be thankful that progress is being made."

Mr. Osborne's comments followed two positive developments today, including a key ruling by Germany's constitutional court in support of the rescue fund known as the European Stability Mechanism, or ESM. Added to that was the European Commission unveiling its proposals for a banking union, with central oversight by the European Central Bank.

Last week, ECB chief Mario Draghi did his bit by announcing a bond-buying scheme that would help drive down the borrowing costs of stressed governments.

Today, the German court cheered global markets, though it set restrictions on the country's liability, The Globe and Mail's Eric Reguly reports.

"The court ruled that the €190-billion German contribution can only be raised with legislative approval - in other words, liabilities are not unlimited," said Robert Kavcic of BMO Nesbitt Burns. "Over all, it appears that the conditions are somewhat softer than feared, and the market response has therefore been positive."

Markets had been watching closely, and the decision buoyed the hopes of investors, who were already upbeat after European Central Bank chief Mario Draghi's announcement last week of a bond-buying scheme that would help drive down the borrowing costs of stressed governments.

"With the Germans now seemingly fully committed to the ESM, and the Draghi plan in force, hopes are high for an easing of the euro zone crisis," said market analyst Chris Beauchamp, Mr. Osborne's colleague at IG Index.

Still, some observers questioned the effectiveness of the ESM.

"Any increase in Germany's contribution above the current commitment of €190-billion will still need to be passed through parliament and is likely to encounter strong opposition," said Jonathan Loynes of Capital Economics.

"Meanwhile, Spain is still holding out against asking the fund for help, for fear of the conditions likely to be attached. And more fundamentally, the ESM and ECB can only address one symptom of the crisis - high borrowing costs - rather than the underlying causes of chronically weak growth and cripplingly high debt. Another obstacle has been negotiated, but the path ahead is far from clear."

Apple unveils iPhone 5
Apple Inc. finally revealed the latest iteration of its blockbuster smartphone today, treating customers to a device that featured dozens of minor refinements, but no major departures from the formula that made the iPhone the most profitable gadget on Earth, The Globe and Mail's Omar El Akkad reports.

The iPhone 5 is taller, lighter and thinner that its predecessor, addressing a criticism Apple faced last year when it introduced the iPhone 4S, which looked exactly the same as the previous iteration. However, hoping to avoid complaints from other smartphone users who found larger devices too cumbersome to operate with one hand, Apple has made no changes to the width of the phone.

Apple says the new iPhone is the thinnest smartphone in the world, at 7.6 millimetres. It's also about 20 per cent lighter than its predecessor, at 112 grams.

Pump prices surge
Gasoline prices surged across eastern Canada, today diverting precious pennies from household budgets.

In Montreal, pump prices shot up by about 13 cents to just shy of $1.53 a litre before easing only slightly, The Globe and Mail's Shawn McCarthy reports. Prices also climbed by more than 3 cents in parts of Ontario, where, in Toronto, for example, regular gas is now just shy of $1.37.

That sparked long lineups at some gas stations in the city.

"This is not going to help flagging consumer confidence," said deputy chief economist Douglas Porter of BMO Nesbitt Burns.

We're not suggesting here that it's time to push the panic button, but price hikes are coming at a particularly bad time. A sustained increase would mean an even bigger burden for Canadian consumers who are already struggling to cut their debt loads.

"Let's just say that aside from October 2008, all of the largest monthly declines in Canadian consumer confidence in the past decade have been associated with spikes in gasoline prices - not rises in unemployment, stock market declines, or other negative news," Mr. Porter said.

"Consumers, of course, care first and foremost about things that affect them directly, and you don't get much more direct or high-profile as gas prices."

It's a particularly tough time for Canadian consumers.

Not only is unemployment high, at 7.3 per cent, but policy makers have been begging households to cut their record high debt burdens.

Evidence suggests Canadians are getting the message, but it's a tough road.

Household credit still swelled by $7.4-billion in July, according to Royal Bank of Canada. That's 5.7 per cent above the level of a year earlier, said economist David Onyett-Jeffries, a slower pace than previously.

EADS, BAE talk merger
Two major European concerns - European Aeronautic Defense and Space Co. and BAE Systems PLC - are in talks aimed at a blockbuster merger.

The proposed merger, worth more than $40-billion (U.S.) would marry the regions biggest defence group with its largest aerospace concern.

EADS, the parent company of Airbus, would hold 60 per cent of the merged company.