A look at economic developments around the globe

AP News
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Posted: May 23, 2011 12:57 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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LONDON _ Europe's stubborn debt crisis shook financial markets amid concerns that Greece will not be able to avoid default without another bailout and that Spain's government is losing support in its drive to cut debt.

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MADRID _ Spanish financial markets slumped Monday after voters angry about austerity measures dealt the ruling Socialist party a painful loss in local elections.

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LONDON _ Heightened tensions over Europe's debt crisis combined with weak economic surveys to send world stock markets sliding. The euro dropped below $1.40 for the first time in two months.

Investors fretted amid mounting speculation Greece will have to restructure its debts, defeat for Spain's governing Socialists in regional elections and a warning from a leading credit ratings agency over Italy's public finances.

The FTSE 100 index of leading British shares closed down 1.9 percent, Germany's DAX fell 2 percent and the CAC-40 in France ended 2.1 percent lower.

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ATHENS, Greece _ The Cabinet in crisis-hit Greece met to discuss a massive cost-cutting and privatization program through 2015, two years beyond the government mandate.

The meeting began as Greek borrowing rates touched 17 percent for 10-year-bonds, hitting a new record margin _ or spread _ over the benchmark German rate.

Finance Minister George Papaconstantinou says the government has decided to "immediately proceed" with the sale of state stakes in several major enterprises as part of efforts to deal with Greece's financial crisis.

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LONDON _ A dense cloud of ash from an Icelandic volcano was being blown toward Scotland, causing one airline to cancel nearly all its flights and officials to warn of possible further flight disruptions.

The disruption from the Grimsvotn volcano is not expected to be as great as that caused by another volcano last year that led to the grounding of almost all air traffic in Europe for several days amid fears that the ash could cause engines to stall. Systems and procedures have been improved, and the ash is currently not expected to move into continental Europe.

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BEIJING _ An explosion at one of two factories that make Apple's new iPad 2 highlights the risks of a global manufacturing strategy that has cut costs but concentrates production in a few locations.

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THE HAGUE, Netherlands _ The Netherlands threw its support behind French Finance Minister Christine Lagarde to lead the International Monetary Fund, while the much-talked-about Frenchwoman kept silent about whether she even wants the job.

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PARIS _ French President Nicolas Sarkozy positioned himself as the defender of workers' rights and financial regulation, claiming ground normally occupied by his Socialist opponents now in disarray over the loss of Dominique Strauss-Kahn as their best-hope challenger in next year's presidential elections.

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LONDON _ Britain's major banks are failing to meet pledges to the government to increase lending to small and medium enterprises.

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LONDON _ Fitch Ratings agency says it has cut the outlook for Belgium's government bonds, citing the risk that political disagreements over the creation of a new government could hurt the country's drive to lower debt.

Fitch affirmed the country's AA+ rating, but the negative outlook means there is a chance it could be downgraded in coming months.