A look at economic developments around the globe

AP News
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Posted: Jun 14, 2011 2:57 PM
A look at economic developments around the globe

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

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LONDON _ A round of confidence-building corporate deals supported global stocks, despite fresh tightening measures in China and another savage credit rating downgrade of Greece.

An unscheduled meeting of the eurogroup ministers has stoked speculation that they are preparing to work out a way for the private sector to increase its share in helping Greece, a move the European Central Bank has so far opposed. The meeting takes place just a day after Standard & Poor's downgraded its rating on Greece's debt to triple C, the lowest of any sovereign in the world.

The FTSE 100 of leading British shares rose 0.5 percent, Germany's DAX was 1.7 percent higher and the CAC-40 in France rose 1.5 percent.

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SHANGHAI _ China's inflation rose to its highest level in nearly three years in May, thanks largely to stubbornly high food prices, adding to economic and social strains that have fanned recent protests.

China's central bank lifted the ratio of funds that banks must set aside as reserves by a half-point as it attempts to contain rising inflation.

The benchmark Shanghai Composite Index gained 1.1 percent because the 5.5 percent climb in prices was smaller than had been expected.

Elsewhere in Asia, Japan's Nikkei 225 index rose 1.1 percent, South Korea's Kospi rose 1.4 percent and Hong Kong's Hang Seng fell less than 0.1 percent.

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BRUSSELS _ "CCC" is the label rating agency Standard & Poor's slapped on Greece Monday night, dropping it to rank 131 of 131 states that have a sovereign debt rating. That suggests Greece's creditors are less likely to get their money back than those of Pakistan, Ecuador or Jamaica.

It's an astonishing low for Greece. As recently as January 2009, the country still had a stellar A rating despite a hefty debt burden. Becoming a member of the euro club in 2001 was meant to insulate Greece from its precarious financial history, which has seen it in default for much of the time since independence in 1829.

Now, Europe's top financial officials are debating whether they are going to hand Greece more money in addition to last year's 110 billion euro ($159 billion) bailout. Without another cash injection, the country won't be able to pay its creditors and a default will become inevitable.

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TOKYO _ Japan's central bank kept its key interest rate unchanged at virtually zero and expanded a lending program to bolster the disaster-hit economy.

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BRUSSELS _ Mario Draghi, the likely next head of the European Central Bank, endorsed the bank's hard line against letting Greece default on its borrowings to lessen its crushing debt burden.

Greece, which was already granted a 110 billion euro ($158 billion) bailout last May, needs tens of billion of euros in additional financing over the coming years as it remains locked out of international debt markets.

The question is whether to get private sector investors to share the burden, and if so, how to do that without disrupting Europe's financial system.

Draghi said at a European Parliament hearing on his nomination that he opposes any move by Greece to not fully repay investors what they are owed, which would be considered a default by ratings agencies.

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ATHENS, Greece _ A lawmaker resigned from Greece's governing Socialists to protest a new austerity drive, eroding Prime Minister George Papandreou's majority and raising the specter of further defections ahead of a crucial vote this month.

The defection came a day after barely solvent Greece was accorded the lowest sovereign credit rating in the world over fears private investors will have to share the burden of a potential debt restructuring.

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NEW DELHI _ India's inflation jumped more than a half-point in May to 9.1 percent, increasing expectations of another rate hike this week by the central bank. By

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BRUSSELS _ French President Nicolas Sarkozy said he wants the world's group of 20 rich industrial nations and major emerging markets to set up a shared central database of food prices to help control market volatility and keep commodity speculators in check.

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VIENNA _ An Austrian government agency abruptly pulled two sky-high pieces of real estate _ majestic peaks offering stupendous alpine views _ off the open market after an outpouring of national outrage over the perceived sellout of the nation's heritage.