The euro has been saved and the euro crisis is a thing of the past, European Commission president Jose Manuel Barroso has declared.

But his optimistic comments and the prospect of looser rules for banks failed to lift markets, which ended a strong run of recent gains.

‘‘I think we can say that the existential threat against the euro has essentially been overcome,’’ Mr Barroso said in Lisbon. ‘‘In 2013 the question won’t be if the euro will, or will not, implode,’’ he said.

Mr Barroso has maintained an optimistic stance throughout the crisis, but his comments were in sharp contrast to the new year’s message from German chancellor Angela Merkel, who told TV viewers last week that the currency zone faced another rocky 12 months.

City analysts are also deeply concerned that austerity measures demanded by Brussels as the price of bailout funds would lead to prolonged recessions in periphery countries and the need for steeper spending cuts.

Cuts to essential public services in Spain, Italy, Greece and Portugal are expected to increase unemployment and lead to further social unrest. Protests on the streets of Madrid on Monday highlighted the tensions inside the euro area after banner-waving protesters blamed Brussels, Berlin and the right of centre PP government of Mariano Rajoy for privatisations and cuts in healthcare spending.

Elga Bartsch, an analyst at Morgan Stanley, said she was anxious that Mr Barroso and his colleagues in Brussels would fail to resolve long-running disputes over the EU’s new institutions.

‘‘The euro crisis seems contained for now. But we think it is not resolved for good. In addressing the fundamental flaws in the euro’s institutional set-up, progress on banking union will be key. Assuming no crisis escalation, the euro area should re-emerge from recession and return to sub-par growth. Politics is the main risk,’’ she said.

Political deadlock, which has also characterised the reform agenda in Washington and Tokyo, could allow social unrest to grow and wreck any coherent reform plans, she said. ‘‘An extended recession, diverging political positions and several elections create a difficult backdrop for in-depth reforms. We therefore expect only limited progress on an effective resolution of the crisis this year. We believe that progress on banking union, where preparations are under way for a Single Supervisory Mechanism (SSM) and where discussions continue on harmonising, and possibly pooling, bank resolution and deposit guarantee schemes, will be key.’’

Ms Merkel faces a general election in the autumn against a resurgent Social Democratic party (SPD) while the Italians are expected to go to the polls next month in an election that could see a revived Silvio Berlusconi with enough votes to block reform measures.

Global stock markets, which have warmed to the message that the euro crisis is abating, drifted lower as some investors sought to cash in on last week’s strong gains and worries grew of more political brinkmanship in Washington.

Major indices surged last week after the US Congress passed a bill to avoid a ‘‘fiscal cliff’’ combination of government spending cuts and tax increases. The deal, however, remains incomplete. Politicians will face another deadline in two months to agree on more spending cuts while a debate over the country’s $US16 trillion debt ceiling is also looming.

The Guardian