A look at economic developments around the globe

AP News
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Posted: Dec 09, 2009 2:10 PM

A look at economic developments and activity in major stock markets around the world Wednesday:

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LONDON _ The British government slapped a one-time tax of 50 percent on bank bonuses as it tried to win over recession-weary voters ahead of a looming general election.

Treasury chief Alistair Darling's overall pre-budget report, in which he acknowledged that the economy will shrink more this year than previously predicted and increased government borrowing forecasts, was also criticised as likely to do little to aid Britain's sluggish economic recovery.

With Prime Minister Gordon Brown's government trailing the opposition Conservative Party in opinion polls ahead of an election that must be held by June, the tax proposal was clearly aimed at voters who funded a bailout of the banking system at the height of the crisis last year.

But opposition politicians, the banking industry and many economists said the tax, to be levied on 2009 discretionary bonuses of more than 25,000 pounds ($40,800), was political spin that would do little to raise revenue and could turn investors away from London.

Britain is facing a heavy hangover from the global credit squeeze because of its huge financial sector, and higher levels of personal debt among consumers. It remains the only major economy still officially in recession.

Darling acknowledged that the economy will shrink by 4.75 percent this year, significantly worse that the 3.25-2.75 percent contraction he predicted at the time of the full annual budget in April.

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TOKYO _ The Japanese government revealed the world's second-biggest economy grew far less in the third quarter than it first estimated, unnerving investors and economists who believed the recovery was gaining momentum.

It turns out the economy is actually slowing.

Gross domestic product expanded at a modest annualized pace of 1.3 percent in the July-September period, much lower than the government's preliminary figure of 4.8 percent provided last month.

The revision is the biggest on record. It also undershoots the growth of 2.7 percent in the second quarter.

That affected Asian trading. Japan's Nikkei 225 stock average fell 1.3 percent, Hong Kong's key index shed 1.4 percent, Shanghai's benchmark was off 1.7 percent, Australia's market lost 0.7 percent and Singapore's market was off 0.3 percent.

The South Korean market bucked the trend and advanced 0.4 percent to 1,634.17 after the International Monetary Fund raised the country's economic growth forecast for 2010. Taiwan's market also rose 0.4 percent

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FRANKFURT _ German consumer prices remained weak in November and manufacturing activity declined in October.

The Federal Statistical Office said consumer prices were 0.4 percent higher in November than in 2008 and fell 0.1 percent compared with October.

Meanwhile, the Wiesbaden-based office said exports rose 2.5 percent in October from September, but imports declined 2.4 percent.

Compared with a year earlier, October exports were down nearly 16 percent and imports fell by 15.3 percent.

October manufacturing levels fell 14 percent from a year ago, and 0.7 percent compared with September, the statistical office said.

In European trading, the FTSE 100 index of leading British shares closed down 0.4 percent, Germany's DAX fell 0.7 percent and the CAC-40 was 0.7 percent lower.

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SINGAPORE _ Singapore's economy will rebound from recession next year as improving global demand for the city-state's exports fuels a pickup in manufacturing, according to a central bank survey of analysts.

The country's gross domestic product will likely grow 5.5 percent next year, according to the median forecast of 20 economists in the quarterly survey, the Monetary Authority of Singapore said.

In the previous survey in September, analysts had expected the economy would grow 4.5 percent next year. The analysts also raised their forecasts for this year, now expecting a contraction of 2.0 percent compared to a 3.6 percent contraction in the September survey.

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DUBAI, United Arab Emirates _ The Dubai developer building the world's tallest skyscraper said it is calling off a planned merger with property companies controlled by the city-state's ruler, raising fresh questions about Dubai's debt problems and its willingness to repay.

Emaar Properties' surprise decision not to combine with three firms owned by Dubai Holding came after the emirate's main stock exchange plunged for a third straight day, as investors dumped holdings in the troubled Arab boomtown amid a scramble for details about the depth of its credit woes.

The Dubai Financial Market's benchmark index dropped 6.3 percent at the close, building on steep declines since Monday. The exchange has seen its year-long gains erased following the announcement that Dubai World, the emirate's biggest conglomerate, was $60 billion in debt and needed to restructure.

Dubai officials have said they will not guarantee debts racked up by the company, which served for years as one of its chief engines for growth, further stoking investor unease.

The drop was echoed in Abu Dhabi, the oil-rich emirate that is home to the United Arab Emirates' federal government. That bourse tumbled 2.8 percent.

As in previous sessions, shares of bellwether Emaar were among the hardest hit on the DFM, plummeting nearly 10 percent.

Concerns about Dubai's debt have prompted a series of credit ratings downgrades, the most recent coming Tuesday when Moody's Investors Service cut the ratings of six government-linked companies, leaving all in junk status. Emaar was among the companies downgraded.

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ATHENS, Greece _ Greece's new socialist government promised to step up efforts to reduce the growing deficit after a ratings agency downgraded the country's debt rating.

"We are doing and will do everything necessary to control the giant deficit," Prime Minister George Papandreou said at a cabinet meeting, broadcast on state television.

On Tuesday, Fitch Ratings cut Greece's rating from A- to BBB+ _ the worst in the eurozone.

Shares on the Athens Stock Exchange fell for a second day, with the general index ending 3.4 percent lower and banking shares tumbling 5.8 percent.

The general index dropped 6 percent Tuesday.

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BEIJING _ China says the country will continue to push domestic consumption next year to keep its economy growing.

Wednesday's announcement follows China's annual economic strategy meeting, with leaders promising Monday to keep economic stimulus and easy credit policies in place.

Domestic demand is seen as crucial for future growth, but economists say consumer spending accounts for less than half of China's economic activity.

The State Council statement posted online Wednesday says China should continue its current policies, including subsidies, to push consumption.

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RIGA, Latvia _ Latvia's economy shed 19 percent of its value in the third quarter compared with a year earlier, the country's statistics agency said, highlighting the woes in the European Union's worst economy.

Latvian Statistics said that the third quarter fall in gross domestic product was led by a severe drop in retail trade and construction.

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MADRID _ Credit ratings agency Standard & Poor's cut its outlook on Spain's government finances to negative because of lagging growth and a lack of aggressive efforts to control budget deficits.

S&P said the change from stable to negative stemmed low economic growth and "persistently high" fiscal deficits.

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MOSCOW _ Russian banks' bad loans are a substantial threat for the country's underdeveloped financial sector, despite hopes of improvements by mid-2010, rating agency Standard & Poor's warned.

Yekaterina Trofimova, a credit analyst with S&P, said the situation is worrying, although the amount of bad debts may level off next year.

S&P reiterated its previous forecast that the banking system may lose a total 14 percent of its loans by 2012.

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MEXICO CITY _ Mexico's president wants Finance Minister Agustin Carstens to replace central bank director Guillermo Ortiz.

President Felipe Calderon says Carstens can make the tough decisions required from the central bank president to help Mexico's economy recover quickly from the global recession.

The Senate must ratify or reject Calderon's choice.

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AMMAN, Jordan _ Jordan approved a sharply reduced budget for next year, reflecting the resource-poor nation's push to lower its deficit as it struggles to offset the impact of the global financial meltdown.