Pundits greeted Angela Merkel’s convincing election win in Germany Sunday with a collective yawn. Commentators think the German economy is sluggish and over-dependent on exports, and believe that a change in the German government from a grand coalition to a center-right coalition will make little policy difference.

Europe is rapidly following the US into financial oblivion. The eurozone’s economic cycle some six to nine months behind the US. This means the the short-term future looks bleak on the other side of the Atlantic.

But Eric Roseman says Spain’s solid regulatory system should protect its banks from the worst of the storm. This is despite a major slump in real estate that is wreaking havoc in the wider economy.

This makes the country’s biggest bank, Banco Santander (NYSE:STD), an interesting investment option…

As Eastern Europe plays catch up with Western Europe, it is opening up some great investment opportunities. The Street Authority’s Nick Lanyi says the region’s strong economic growth and high dividends offers an attractive alternative to the stuttering US market. And Nick says he has found an ETF that rounds up the highest-paying stocks in the area…

Smart Commodities UK Editor Garry White says two things are vital for Britain to be able to power itself in 2015. Firstly, despite environmentalist concerns, more coal stations are needed in the short term. Secondly, British Energy (LON:BGY) must be sold to Electricite de France SA (EPA:EDF), which would provide the expertise for an efficient nuclear powered energy system…

A seemingly innocuous news story in the Financial Times could spell disaster for some European banks, says David Stevenson in Money Week. The ECB is looking to clamp down on struggling European banks that have become dependent on the cheap finance made available by Brussels. David says the alarm bells will be ringing loudest in Spain, where the banking sector is falling foul of a property market slump.

After the global financial industry shed $403 billion in write-downs, European banks are finally turning a corner and boosting their share prices.

German giant Deustche Bank AG (DB) and Switzerland’s UBS AG (UBS) both declared they would not need to raise further capital yesterday (Wednesday) as the bulk of losses tied to mortgage-backed securities is now behind them.

“At first glance this is some much-needed positive news for Deutsche in particular but also for the whole sector,” Helge Rechberger, head of equity market research at Raiffeisen Zentralbank in Vienna, told Bloomberg News. He said he remains “cautious” about the financial industry.

Editor’s Note: Profit taking by traders is the only thing slowing the dollar’s slide against the euro at the moment, says The Daily Reckoning’s Chuck Butler. He sees the euro heading back towards 1.60 in the coming days. With the market likely to have already priced in an ECB rate hike this week, it will be Governor Trichet’s comments that count most for currency traders…

European stocks were gutted yesterday (Thursday) as banks took heavy losses in the face of more hawkish inflation comments from European Central Bank (ECB) President Jean-Claude Trichet that put pressure on already struggling financials.

The Dow Jones Stoxx 600 closed down 2.6% to 288.48, the worst finish for the Eurozone index since October 2005.

The FTSEurofirst 300 had a 2.5% drop, to close at 1,197.02 points, its largest one-day percentage drop since mid-March, Reuters reported.