Reid plans to retain only the tax cut for employees to reduce measures cost.

Bonds of highly rated European nations see record volatility.

Countries could be downgraded based on results of this week's EU summit.

Rating agency expected to issue negative outlook on all 17 countries.

Merkel and Sarkozy to push for penalties for deficit violations.

Prime Minister Monti seeks $40 bln in additional economic measures.

Nation could save up to $6.7 bln by pulling out of climate-change agreement.

Germany and France differ on role of ECB, sanctions for violating deficit rules.