A look at economic developments around the globe

AP News
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Posted: Mar 07, 2011 1:24 PM
A look at economic developments around the globe

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

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BASEL, Switzerland _ The world's leading central bankers vowed to keep inflation under control as energy costs surge and food prices touch record highs due to strong demand from fast-growing countries like China and Brazil.

Sharp increases in living expenses and a spike in fuel prices caused by the Middle Eastern uprisings have policymakers worried that inflation could become a drawn-out problem.

The European Central Bank has signaled a rate hike is due soon, while the Federal Reserve is worried that economic growth is not yet strong enough to cope with higher borrowing costs.

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LONDON _ Stocks fell as oil prices rose to near 30-month highs amid intense clashes between forces loyal to longtime Libyan leader Moammar Gadhafi and rebels, who have taken control of a large chunk of the oil-rich country.

The main market impact of the uprisings in North Africa over the past couple of months has been in the oil markets. Under normal circumstances, Libya produces about 1.6 million barrels of crude per day, but its output has been heavily affected by the violence. The country also has the biggest proven oil reserves in Africa.

Investors are concerned that political upheaval could intensify elsewhere in the Middle East, where Iran, Iraq, the United Arab Emirates, Kuwait, Bahrain, Qatar, Oman and Saudi Arabia have more than 60 percent of the world's oil reserves.

In Europe, the FTSE 100 index of leading British shares lost 0.3 percent, France's CAC-40 fell 0.7 percent and Germany's DAX ended 0.2 percent lower.

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TOKYO _ Earlier in Asia, Japan's benchmark Nikkei 225 stock average closed down 1.8 percent. Sentiment in Tokyo was downbeat after Japan's foreign minister resigned Sunday over illegal political donations, dealing a new blow to Prime Minister Naoto Kan's embattled administration.

Hong Kong's Hang Seng skidded 0.4 percent, South Korea's Kospi shed 1.2 percent and Australia's S&P/ASX 200 index declined 1.4 percent.

But the Shanghai Composite index was up 1.8 percent. Shares in Singapore and New Zealand also rose.

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DUBAI, United Arab Emirates _ Economic growth across the Middle East could take a significant hit because of the political upheaval roiling the region, a senior analyst at credit agency Moody's Investors Service said.

Tristan Cooper, the firm's head analyst for regional sovereign ratings, said as much as 2 percentage points of economic growth could be wiped out this year.

Popular uprisings calling for widespread political reforms have hit several countries across the Middle East and North Africa this year. Protests in Tunisia and Egypt toppled leaders who had been in power for decades, and armed rebels in Libya are threatening the regime of longtime ruler Moammar Gadhafi.

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BEIJING _ China's imports will rise and its politically volatile trade surplus should shrink this year as Beijing builds up a consumer-based economy to reduce reliance on trade, the commerce minister said.

The government's 2011 economic blueprint calls for nurturing self-sustaining growth by promoting consumer spending. That might help to ease tensions with Washington and other trading partners that complain about currency controls and import barriers that they say swell China's multibillion-dollar trade surplus.

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LONDON _ Greece launched a tirade against credit ratings agencies after Moody's downgraded its debt grade further below junk status, warning the bailed-out euro country might have to default on its massive borrowings.

The agency slashed its rating by three notches to B1 from Ba1 and warned it may cut again if the government's commitment to austerity wanes or international creditors become less willing to support it. Greece was saved from bankruptcy last May after accepting a euro110 billion ($154 billion) bailout from the European Union and the International Monetary Fund.