Leaders of the European Community are confronted with a predicament on how to respond to the lingering debt crisis even as instability in the financial markets continued on Wednesday and apprehensions increased about the status of Euro banks.

Rifts seemed to widen as international auditors return to the negotiating table in Athens on Thursday to discuss eight billion euro-loan package for Greece that was put off a month ago.

A report from the Business Spectator stated that European Commission president Jose Manuel Barroso has told member-nations that the Union is facing one of its biggest challenges in its history during his statement to the European parliament in Strasbourg, France.

The group of finance ministers met in Luxembourg on Monday but EU economic affairs spokesman Amadeu Altafaj hinted that the talks in Athens may not be finished on time since another meeting of the 17-nation currency Euro group is necessary before a final decision can be made.

The 17-nation single currency area is not in accord over the idea of combining their debt.

A number of euro zone states still have to sign off on the second 159 billion euro bailout package for Greece that was agreed upon in July.

The Greek government needs to accelerate a privatization drive that is several months behind schedule to be able to secure the loan. It is still waiting for funds from the first 110 euro billion loan that was approved last year.

Stock markets all over the continent remained guarded as confidence waned whether Euro leaders are capable of resolving the debt issue.

German Chancellor Angela Merkel has proposed the need to renegotiate a second bailout for Greece while Berlin, Paris and the European Central Bank are at odds regarding how much banks stand to lose in the case of a default.

The Irish Times reported that Merkel has described the euro bond proposal as a "slippery slope that may possibly leave everyone worse off."

Members of the German Parliament are scheduled to cast their ballots on Thursday regarding the increasing scope and size of the European Financial Stability Facility that was also used in bailing out Ireland and Portugal.

Meanwhile, Prime Minister George Papandreou announced that his government is exhausting all efforts to bring down the country's debt of more than 350 billion euro.