A look at economic developments around the globe

AP News
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Posted: Jan 05, 2010 2:27 PM

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

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REYKJAVIK, Iceland _ Iceland's president blocked a bill to pay Britain and the Netherlands $5.7 billion for losses from the collapse of one of its banks, potentially undermining the nation's attempts to repair international relations.

Olafur Ragnar Grimsson vetoed the legislation, which was passed last month by the country's parliament, after receiving a petition signed by a quarter of Iceland's population of 320,000.

The Icelandic government said it would review the decision but added that it remained "fully committed" to implementing the bilateral loan agreements, stressing they are an "integral part" of the country's economic program as it struggles to recover from collapse.

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ATHENS, Greece _ Greece promised to speed up ambitious targets to reduce its massive budget deficit Tuesday to conform with European Union spending rules in just three years, helped by higher taxes on cigarettes and alcohol and lower bonuses to civil servants.

Finance Minister George Papaconstantinou announced the news on the eve of a visit by EU finance officials, who are arriving in the Greek capital Wednesday to review the nation's fiscal plans.

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LONDON _The annual inflation rate in the 16 countries that use the euro rose in December to its highest level in 10 months.

In its flash estimate for the month, the European Union's statistics office Eurostat said consumer prices increased 0.9 percent in the year to December, up from November's 0.5 percent.

Eurostat did not provide an immediate reason for the increase, which was towards the top end of market expectations. However, analysts were expecting a rise given the recent spike in oil prices.

In European markets, stocks took a breather as some of the optimism that drove the previous session's hefty gains was dented by disappointing U.S. housing data. The FTSE 100 index of leading British shares closed up 0.4 percent, but Germany's DAX fell 0.3 percent. The CAC-40 in France slipped 1.06 point to close at 4,012.91.

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TOKYO _ Japan's elderly finance minister has offered to resign due to health reasons after being hospitalized last week, reports said.

Finance Minister Hirohisa Fujii, 77, told Prime Minister Yukio Hatoyama that he would like to step down, Kyodo News agency said, citing an unnamed ruling party lawmaker.

Japanese public broadcaster NHK also said Fujii wanted to quit, but Hatoyama wanted him to stay on.

A spokesman for the finance ministry said he was aware of the reports, but he declined to comment further.

Fujii checked into a hospital on Dec. 28 for rest and health checks. He said he expected a final judgment from doctors in the next day or two. But the finance minister declined to say at a news conference that he was planning to step down.

In Asian trading, Hong Kong's Hang Seng closed up 2.1 percent, Shanghai's main stock measure climbed 1.2 percent, Tokyo's Nikkei 225 stock average added 0.3 percent, Australia's market was up 1 percent and Singapore's index gained 0.8 percent. However, South Korea's Kospi edged down 0.3 percent.

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BERLIN _ The number of unemployed people in Germany rose in December by 60,000, pushing the jobless rate up to 7.8 percent.

The Federal Labor Office said the German unemployment rate grew by 0.2 percentage points from November. A total of 3.27 million people were without jobs in Germany at the end of last year, compared with 3.22 million people in November.

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TOKYO _ Auto sales in Japan declined to their lowest in 38 years, slumping 9 percent to 2.9 million vehicles for 2009, an industry group said.

Auto sales have been hammered by the economic slowdown as consumers tightened their pursestrings, despite tax breaks and cash-for-clunkers incentives introduced by the government.

Sales of new vehicles for 2009 fell below 3 million units for the first time since 1971, the Japan Automobile Dealers Association said.

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BEIJING _ Some Chinese factories were ordered to shut down to ensure sufficient power to heat homes as demand surged amid record-setting winter cold, a utility company said.

No outages were reported, but coal supplies were running low at power plants in central China, said Liu Xinfang, a spokesman for State Grid Corp., which operates most of China's power-distribution network.

A weekend storm blanketed much of China with snow, sending temperatures plunging, snarling traffic and prompting some cities to close schools.

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BUCHAREST, Romania _ Romania's central bank unexpectedly cut its main interest rate to 7.5 percent from 8 percent as it tries to revive a weak economy and keep inflation in line with midterm targets.

Romania has been mired in a deep recession, with the IMF predicting a 7 percent contraction in the economy in 2009. The central bank says demand for loans is still low due to the downturn.

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PARIS _ The French economy will rebound faster than expected this year, growing by at least 1 percent, the country's finance minister said.

The estimate is an increase on the French government's earlier forecast, published in its budget for this year.

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MADRID _ The number of people seeking unemployment benefits in Spain rose by 54,657 in December to a total of nearly 4 million as the recession continued to bite.

The number increased by nearly 800,000 in 2009 and now totals 3,923,603 _ 25.4 percent more than at the end of 2008, the Labor Ministry said.

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TOKYO _ Japanese business leaders said they were looking to Asia for growth and banking on Japan's strength in technology to keep an emerging recovery going in the coming year.

"Expanding in Asia is going to drive growth," Fujio Mitarai, chief executive of Japanese camera and equipment maker Canon Inc. told reporters at an annual New Year's gathering for business leaders.

In the past, businesses here mainly looked to the U.S. to furnish growth.