A look at economic developments around the globe

AP News
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Posted: Oct 19, 2010 3:59 PM
A look at economic developments around the globe

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

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BEIJING _ China raised its key interest rate Tuesday for the first time since the global crisis. The move is intended to control inflation and rapid growth even as other Asian economies move to keep their recoveries on track.

The rate hike, China's first since 2007, reflected Beijing's focus on guiding growth to a more sustainable level rather than revving up the economy. China's economy grew 10.3 percent in the second quarter.

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LONDON _ Germany's DAX closed down 0.4 percent, the CAC-40 in France fell 0.7 percent and Britain's FTSE 100 index of leading British shares ended 0.7 percent lower.

Earlier in Asia, Japan's benchmark Nikkei 225 stock index gained 0.4 percent, South Korea's Kospi slipped 1.0 percent, Australia's S&P/ASX 200 rose 0.1 percent and Hong Kong's Hang Seng index rose 1.1 percent. The Shanghai Composite Index jumped 1.6 percent.

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LUXEMBOURG _ European finance ministers reached a deal on tighter regulation of hedge funds, the latest step in the European Union's effort to increase the stability of its financial system in the wake of the credit crisis.

The deal, for the first time, puts hedge funds and other private investment vehicles under European supervision. It sets out requirements for risk management, transparency about who runs them, as well as minimal capital and liquidity cushions.

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OTTAWA, Ontario _ Canada's central bank left its key interest rate unchanged after three consecutive rate hikes and cut its economic growth projections for this year and next.

The Bank of Canada, which held its benchmark rate at 1 percent, said Canada's economic outlook has changed and expects the recovery to be more gradual than it projected in July.

Canada's dollar plunged versus the U.S. dollar.

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MADRID _ Spain said it raised 6.4 billion euros ($8.9 billion) at lower borrowing rates in an auction of 12- and 18-month bills, suggesting investors are gradually regaining confidence in the country's ability to handle its debt.

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ATHENS, Greece _ Greece announced a nearly 2.6 billion euros ($3.6 billion) jobs package to combat rising unemployment as the country tries to pull itself out of recession and the grips of a severe financial crisis.

Meanwhile, Greece's debt management agency said it raised 1.17 billion euros ($1.63 billion) by selling 13-week treasury bills at a lower borrowing rate than a similar auction last month.

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BRUSSELS _ The EU executive commission said it will still push for automatic fines to be levied on governments who flout euro spending rules _ even though a French-German deal containing less drastic enforcement has won broad backing from elected governments.

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TALLINN, Estonia _ Why would a small country with little debt and a flexible economy want to give up its currency for the euro, buffeted by a debt crisis and a looming currency war? In Estonia, which will become the 17th member of the euro zone in January, the question is largely confined to economists, while the country's leaders and public are taking it as a matter of faith that the euro will benefit the former Soviet republic.

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BERLIN _ German investor confidence fell for the sixth consecutive month, hitting a 21-month low as markets expect the pace of economic growth to slow, a survey said.

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BEIJING _ The World Bank raised its growth forecast for East Asia's developing countries, but said governments need to control rising risks from surging capital inflows and currency strains.

Output has rebounded to above pre-crisis levels and regional growth should hit 8.9 percent this year, up from a previous forecast of 8.7 percent, the bank said. Last year's expansion was 7.3 percent.

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MUMBAI, India _ A group of India's largest microfinance institutions filed a lawsuit to block strict new regulations laid down by the state of Andhra Pradesh _ a crucial market for small loans _ after reports that high interest and coercive loan collection by microfinance groups had led to some 30 suicides.

Microfinance was initially designed to free the poor from usurious rates charged by moneylenders by giving them small, affordable loans. It has come under increasing scrutiny as booming growth and profitability have complicated the industry's founding ideals.