A look at economic developments around the globe

AP News
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Posted: Dec 10, 2009 1:32 PM

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

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BRUSSELS _ European leaders ganged up against a favorite target _ fat bonuses to bailed-out bankers.

British Prime Minister Gordon Brown and French President Nicolas Sarkozy agreed it was a good idea to slap higher taxes on performance pay, especially considering they are back on the rise soon after last year's financial meltdown that led to taxpayer-funded bailouts in some cases. German Chancellor Angela Merkel also embraced the idea.

"We agree that a one-off tax in relation to bonuses should be considered a priority," the two wrote in an editorial in the Wall Street Journal.

Brown's government on Wednesday said it would impose a one-time 50 percent tax on 2009 bonuses above 25,000 pounds ($40,800), and French and British diplomats said Sarkozy made a similar commitment.

The French and British leaders "are completely aligned," said a British diplomat, who demanded anonymity because the talks were private.

Brown also wrote a letter to his 26 fellow EU leaders, urging them to take quick action on climbing bank bonuses.

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DUBAI, United Arab Emirates _ Dubai business leaders voiced support for some of the emirate's stronger state-linked companies, as the finance chief dismissed media coverage of the sheikdom's debt woes as "blind panic" and the city-state's main stock market snapped out of a three-day downward spiral.

Government-owned Emirates airline, the region's biggest carrier, said its finances were secure and announced it had lined up more than $1 billion in financing for six more Airbus A380 "superjumbo" planes.

Meanwhile, the head of the Dubai Electricity & Water Authority said the utility provider has "unequivocal confirmation" of continued support from creditors after Moody's Investors Service cut its credit rating to junk status earlier in the week.

The question of a state guarantee for corporate debt has taken on increased weight in recent days as officials in Dubai make clear the government will not be held responsible for much of the debt racked up by the companies it created and used to expand the city-state's international clout.

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ATHENS, Greece _ Prime Minister George Papandreou called on Greece's major opposition leaders to hold rare joint talks on the troubled economy.

Papandreou says President Karolos Papoulias has agreed to chair the meeting, but didn't set a date.

Greece has recently come under criticism for allowing its budget deficit to swell to four times the European Union limit. The government admits it is the highest debt in modern Greek history _ at some euro300 billion ($442 billion).

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BRUSSELS _ European Union officials were reluctant to promise help to debt-saddled Greece, saying it was up to Athens to put its economy back on track.

Swedish Prime Minister Fredrik Reinfeldt, whose country holds the rotating EU presidency, said Greece's trouble was "basically a domestic problem and has to be addressed by domestic decisions." He spoke before leading talks between European Union leaders at a summit in Brussels.

Greece's government debt was downgraded to the worst of the 16 nations that use the euro by Fitch Ratings on Tuesday, over worries that the country was not tackling a ballooning budget deficit.

German Chancellor Angela Merkel said the 16 nations that use the euro were limited in what they could do to get one of them to stick to the strict EU debt and deficit limits that stabilize their shared currency.

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LONDON _ The Bank of England held interest rates steady at 0.5 percent and also left its 200 billion pound ($325 billion) asset purchase program unchanged, a widely anticipated move amid recent improvement in the British economy.

The decision by the bank's Monetary Policy Committee to stay its hand on both measures gives it some breathing room to assess the impact of last month's 25 billion pound boost to its monetary expansion effort, aimed at spurring the lagging economy.

While Britain is the only major economy still officially in recession, both the central bank and the government expect a return to growth by the turn of the year.

In European trading, Britain's FTSE 100 closed 0.8 percent higher, Germany's DAX rose 1.1 percent and France's CAC 40 grew 1.1 percent.

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TOKYO _ Japanese machinery orders, a closely watched indicator of corporate capital spending, lost steam in October as companies reigned in spending amid mounting economic recovery doubts.

Core machinery orders tumbled 4.5 percent in October from a month earlier, the government said. The figure excludes orders from shipbuilders and electric power companies, which tend to fluctuate more.

October's fall follows a robust 10.5 percent jump in September, which seemed to point toward growing corporate confidence.

Asian stock markets mostly fell. Tokyo's benchmark Nikkei 225 stock average dropped 1.4 percent; Hong Kong's Hang Seng retreated 0.2 percent; and Australia's market shed 0.7 percent as sinking commodity prices weighed on resource companies like BHP Billiton and Rio Tinto.

Meanwhile, China's Shanghai index climbed 0.5 percent and South Korea's Kospi rose 1.1 percent.

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COPENHAGEN _ Denmark's central bank trimmed its key lending rate by 0.05 percentage points to 1.20 percent.

The central bank said it also cut its interest on certificates of deposit by 0.05 percentage points to 0.95 percent. However, it maintained its discount rate at 1.00 percent.

The rate changes come into effect Friday.

Denmark is a member of the 27-nation European Union but has stayed outside the bloc's 16-member euro zone.

It typically follows European Central Bank changes as part of a policy of trying to keep Denmark's currency, the krone, stable against the euro.

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SYDNEY _ Australia's jobless rate unexpectedly fell in November as full-time employment surged, raising the prospect of more interest rate hikes as the country's economic recovery gains momentum.

The jobless rate fell to 5.7 percent from 5.8 percent in October with 30,800 new full-time jobs created during the month, the Australian Bureau of Statistics said. Part-time employment increased by 300.

Economists had expected the jobless rate to rise to 5.9 percent. The government's official forecast is for unemployment to peak at 6.75 percent next year.

The Reserve Bank of Australia last week raised its key interest rate for the third month in a row _ by a quarter percentage point to 3.75 percent as the country's economy rebounds from the global downturn.

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SEOUL, South Korea _ South Korea's central bank left its key interest rate at a record low for a 10th straight month Thursday, seeking to nurture a budding recovery in Asia's fourth-largest economy.

The Bank of Korea's decision to keep the benchmark seven-day repurchase rate at 2 percent came at a monthly policy meeting, the last one scheduled for 2009. The decision was widely expected.

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MUMBAI, India _ India's food price inflation has hit 19.1 percent, the government said, after the country's weakest monsoon since 1972 cut into agricultural output.

Food prices for the week ending Nov. 28 were 19.1 percent higher than they were during the same period last year, while fuel prices rose just 0.1 percent, the Ministry of Commerce said.

Overall inflation remains low _ headline wholesale inflation rose 1.3 percent during October from a year earlier _ but spiking food prices have complicated the central bank's efforts to sustain growth without stoking inflation.

The Reserve Bank of India expects headline inflation to hit 6.5 percent by March.

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DUBLIN _ The average cost of goods and services in Ireland has fallen 5.7 percent over the past year but the pace of price drops is slowing, the Central Statistics Office reported.

Ireland's inflation rate has fallen steadily deeper into negative territory throughout this year, reaching a 78-year high of 6.6 percent in October. The report said November's retreat to a 5.7 percent annual price drop reflected the fact that monthly prices did not move up or down overall.

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ZURICH _ The Swiss National Bank kept its key interest rate target at 0.25 percent, saying economic conditions were not right for a move and that while recovery is under way, it remains fragile.

The SNB will continue its supply of liquidity to the economy but purchase of Swiss franc bonds issued by private sector borrowers will stop, the bank said.

The SNB said its three-month interest rate band remains at zero to 0.75 percent.

Economic output is expected to fall by around 1.5 percent this year, the SNB said. That outlook is somewhat more optimistic than in September, when the bank estimated the country's GDP would fall up to 2 percent.

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SAO PAULO _ Brazil's government says its economy expanded in the third quarter as the nation continues to experience robust growth after emerging from a short recession brought on by the global meltdown.

The government's IBGE statistics agency says gross domestic product rose 1.3 percent from July through September compared to the second quarter, when Latin America's largest economy shook off its recession.

The report said third-quarter growth was down 1.2 percent from the same quarter a year ago.

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REYKJAVIK, Iceland _ Iceland's central bank on Thursday cut its key lending rate a full point to 10 percent.

The seven-day collateral lending rate had peaked at 18 percent in October last year as Iceland's banking system collapsed under the strain of a global credit crisis.

Sedlabanki, the central bank, also cut its overnight lending rate by 1.5 percentage points to 11.5 percent. The deposit rate on current accounts was trimmed by a half a point to 8.5 percent.