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When Europe's leaders receive unexpected news, it is rarely good. In the midst of the European Union's worst crisis in its sixty-year history, Friday's award of the Nobel Peace Prize caught everyone by surprise.

"When I woke up this morning I did not expect it to be such a good day," was European Commission President Barroso's first response.

The award brought welcome relief from an endless stream of negative economic data as the euro currency fights to survive its debt crisis, which is testing social cohesion and fuelling xenophobia and anti-European sentiment in the 27-member bloc.

The debt crisis has lain bare the discrepancies between the bloc's single monetary policy and a lack of accompanying political union, which has barely moved beyond the buzzwords coined by the EU's founding fathers.

At the same time, European enlargement - a key objective aimed at spreading peace and democracy to the bloc's neighbours - has been in the doldrums since Bulgaria and Romania joined the EU in 2007.

And the EU appears less able than ever to resolve its problems, having become bogged down in internal squabbles driven by national agendas, bureaucratic procedure and a loss of common purpose.

Indeed, as the prize was announced, observers were eager to know which of the EU's competing figureheads would step into the limelight to accept the prize in December. Some officials even reacted with scepticism about whether it was deserved.

"The awarding of the prize must not leave us in the illusion that we are today being as successful as our forefathers," said former Belgian premier Guy Verhofstadt, the leader of the European Parliament's liberal faction.

"The union has a moral obligation to step up its efforts in bringing peace to its neighbourhood. Too many conflicts are still raging and our track record is patchy," he added.

"Presumably this prize is for the peace and harmony on the streets of Athens and Madrid," charged Martin Callanan, a conservative lawmaker in the European Parliament. Commentators on Twitter quipped that the EU had notably not received the Nobel Prize for Economics.

In less than a week, European leaders return to the negotiating table to fight out their differences over a central eurozone banking supervisor, considered a key step to further integration and a precondition to bailing out ailing banks.

But in the midst of crisis, the bloc's key achievements are often overlooked. The peace that Europe has enjoyed since the end of World War II is now taken for granted by its citizens - despite recent conflict on its borders, in the Balkans.

"We were in war during centuries," said EU President Herman Van Rompuy. "With the European Union, that kind of war cannot happen again," he added, calling the EU the "biggest peacemaking institution ever created."

Luxembourg's Prime Minister Jean-Claude Juncker, who holds an influential post in the eurozone, has warned throughout the crisis that Europe has witnessed "a miracle" in the last sixty years.

"Anyone who doubts in Europe or despairs for Europe should visit soldiers' cemeteries," he told the German parliament in 2008, just months after the US banking crisis that triggered the eurozone's woes.

As Europe's debt crisis has worsened, Germany - the powerhouse that the EU was originally built to contain - has born the brunt of anti-European sentiment. Images of Chancellor Angela Merkel bearing Nazi symbols have become commonplace in anti-austerity protests.

Meanwhile, outside the EU - in Beijing, Washington or indeed Oslo - the world is growing increasingly exasperated at the failure of European leaders to overcome their problems.

Steven Blockmans, of the Centre for European Policy Studies, said the timing of the prize was key.

"It expresses the expectations ... that Europe sorts itself out and overcomes its internal squabbles on economic and financial integration and manages to keep the European integration project - which essentially is a peace project - going," Blockmans told dpa.

Jan Techau, the director of Carnegie Europe think-tank, also stressed the political dimension of the prize, which comes months before the 50th anniversary of the Elysee treaty reconciling France and Germany.

"It gives the EU a morale boost at a time when it has been shaken to its core. The prize is an encouragement to the EU to continue its peace-generating integration work," Techau said.

"It is a reminder to eurosceptics to consider the real merits of the union they so despise, and it is an appeal to Europe to finally become a serious strategic player in the world."