A look at economic developments around the globe

AP News
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Posted: May 26, 2011 3:02 PM
A look at economic developments around the globe

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

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LONDON _ Stock markets and the euro fell on a report that Greece may not get the next installment of its international rescue loans. Weak U.S. economic data further weighed on sentiment.

Jean-Claude Juncker, the chairman of the Eurogroup, said in Luxembourg that the International Monetary Fund may have to hold back the next tranche of its funding for Greece, according to an analyst.

The reason is that the IMF's loans are contingent on Greece showing what its state financing will be over the next 12 months. Until recently, that was meant to include raising cash on bond markets next year, a move the Greek government has admitted is no longer possible as its market borrowing rates remain too high.

An IMF and EU delegation is now in Athens reviewing Greece's finances, and a decision on the IMF's next aid installment will be made in June.

The euro slumped, while Germany's DAX closed down 0.8 percent and the CAC-40 in France shed 0.3 percent. The FTSE 100 index of leading British shares bucked the trend, rising 0.2 percent.

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TOKYO _ Earlier in Asia, stocks enjoyed a strong day. Japan's Nikkei 225 stock average closed 1.5 percent higher. South Korea's Kospi gained 2.8 percent, Australia's S&P/ASX 200 rose 1.6 percent and Hong Kong's Hang Seng ended 0.7 percent higher. Mainland Chinese shares slid amid concerns that growth may slow in the latter half of the year.

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SHANGHAI _ China's worst drought in a half-century is deepening, with the parched conditions that have left millions in the Yangtze River region without enough drinking water pushing inflation higher and adding to widespread power shortages.

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ATHENS, Greece _ Greece's finance ministry said it has invited Germany's Deutsche Telekom to up its stake in the country's dominant telecoms provider OTE amid mounting European pressure to speed up privatization and cost-cutting.

Greece is hoping to raise an ambitious euro50 billion ($70 billion) from privatizations by the end of 2015 to help cut its massive national debt, but has been criticized by the European Union for failing to launch the program quickly enough.

Inspectors from the EU and International Monetary Fund are currently in Athens to review the crisis-hit country's austerity program agreed last year in return for a euro110 billion ($155 billion) bailout loan deal.

Top EU finance officials have urged Greece to speed up reforms and forge cross-party support for austerity measures before it would consider additional rescue funding for Greece, which remains locked out of bond markets and will likely face a critical funding shortage next year.

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BERLIN _ Germany's finance minister said Greece may need more time to implement reforms including a big privatization program. He also highlighted the risks involved in restructuring Greece's debt.

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DEAUVILLE, France _ Secretary of State Hillary Rodham Clinton gave a boost to the candidacy of French finance chief Christine Lagarde for the top job at the IMF, but stopped short of endorsing anyone yet.

Former International Monetary Fund chief Dominique Strauss-Kahn, a Frenchman, resigned last week over sex crime allegations.

World leaders at a summit in France will debate over who should be his successor and whether a European should get the job instead of someone from another region, as developing countries argue.

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PARIS _ The top U.S. trade official said it's too soon to declare the Doha Round of commerce liberalization talks a failure, even as its launch nears its ten-year anniversary and diplomats say a deal this year is impossible.

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FRANKFURT, Germany _ Nouriel Roubini, the New York University economist known as Dr. Doom, says Greek restructuring would not bring down Europe's financial system. The economist, who earned his nickname by predicting the global financial crisis, says an orderly debt restructuring could pre-empt more trouble.

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BERLIN _ The European Central Bank is signaling that it remains on track to raise interest rates further despite the continent's debt crisis. The ECB raised interest rates from an all-time low to 1.25 percent in April as it tries to keep inflation in check.

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DEAUVILLE, France _ Leaders of the world's rich democracies will urge Libya and Syria to halt violence that is threatening to extinguish the so-called Arab Spring, but remain divided about how to respond if the nations don't heed the call, officials said.

A draft declaration circulating at the Group of Eight summit in France contains no specific sanctions against Libya and Syria.

It illustrates fears among President Barack Obama and other G-8 leaders that uprisings around the Arab world could end up entrenching autocrats instead of defeating them.

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PARIS _ Secretary of State Hillary Rodham Clinton welcomed Russia's decision to sign a key international anti-bribery pact.

Clinton said Moscow's signing of the anti-bribery convention is "a significant step in its own right and a milestone in Russia's own path toward full OECD membership."

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BEIJING _ North Korea's supreme leader Kim Jong Il won fresh expressions of support from China's president on a visit to China, his most important ally. Kim's regime is struggling to feed North Korea's impoverished population and stabilize the country's collapsing economy.

Such backing is crucial for a regime in the throes of an economic crisis and facing increasing isolation. Most contacts with former benefactors South Korea and the United States are frozen.

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DUBAI, United Arab Emirates _ Credit rating agency Moody's Investors Service cut its ratings on Bahrain's government bonds and said their outlook is negative mainly because of the political turmoil in the Gulf island nation.

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BEIRUT _ The uprising against Syrian President Bashar Assad is eviscerating the country's economy, threatening to hit hard at the business community and prosperous merchant classes, which the embattled regime relies on to help retain its grip on power.

Two months of violent protests throughout Syria have shuttered businesses, driven away tourists and thrust Assad's regime into an unprecedented political quagmire. Economic growth rates that had hit around 3.5 percent in fiscal 2010, are seen, according to some estimates, contracting by 3 percent in fiscal 2011.

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LISBON, Portugal _ Portugal's debt agency said it wants to borrow up to euro2.25 billion ($3.2 billion) in short-term Treasury bill auctions next month as the bailed-out country seeks to maintain a presence in financial markets.

Portugal is taking a euro78 billion bailout from its European partners and the International Monetary Fund to avoid being bankrupted by interest rates that soared to unsustainable levels over the past year.

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MILAN _ Italy raised euro10 billion ($14.07 billion) by selling bonds, with good demand and at stable or lower interest rates, in the first market test since Standard & Poor's lowered the country's outlook to negative.