A look at economic developments around the globe

AP News
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Posted: Jun 21, 2011 6:24 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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ATHENS, Greece _ Greek Prime Minister George Papandreou passed a confidence vote in Parliament, winning a gamble on his government's survival and the danger of a devastating debt default that could spark a financial maelstrom around the world.

Papandreou won 155 votes to 143, with two abstentions in the 300-member legislature after facing down an internal party revolt. The win should help him pass deeply disliked austerity measures that have provoked strikes, protests and a slump in his popularity.

A loss would have likely led to early elections and thrown into question whether Greece could pass the new austerity bill by the end of June as demanded by the country's international creditors. Unless the new measures pass, Greece will not receive the next batch of funds from its bailout loans, and will face a disastrous default.

Greece is being kept financially afloat by a euro110 billion ($157 billion) EU-IMF bailout fund.

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BRUSSELS _ As budget cuts and tax increases push Greece deeper into recession, politicians, economists and business leaders are calling for a new approach. They suggest a Marshall Plan that would jolt its economy back to life and give its citizens new hope.

Debt-ridden Greece is currently negotiating a second rescue package, on top of the euro110 billion ($158 billion) it was granted a year ago. However, those loans depend on harsh austerity measures and an overhaul of Greece's economy, which are designed to make the country fit in the long-term, but will likely worsen citizens' financial pain in the short-term.

At the same time, billions of euros foreseen for Greece are languishing in EU coffers, as the country struggles to come up with its part of the funding.

Already, the Greek economy is expected to shrink 3.7 percent this year, following a decline of 4.5 percent in 2010 and 2 percent in 2009, while unemployment has shot above 16 percent. Citizens who have held on to their jobs have lost much of their pensions, had their salaries slashed and face more job cuts in the years to come as Greece slims down its public sector.

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LONDON _ Hopes that the Greek government would pass the crucial confidence vote helped lift the mood in world markets.

The FTSE 100 index of leading British shares closed up 1.4 percent, Germany's DAX rose 1.9 percent and the CAC-40 in France was 2 percent higher.

Earlier in Asia, Japan's Nikkei 225 gained 1.1 percent, Hong Kong's Hang Seng rose 1.2 percent, South Korea's Kospi added 1.4 percent and Shanghai's main index ended 1 percent higher.

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BERLIN _ As Greece teeters on the edge of the financial abyss, Germany stands accused of having exacerbated the crisis through mixed messages and indecision.

Europe's biggest economy and effective paymaster has not been able to reverse Greece's debt predicament over the past 18 months. Many say that a debt default by Greece could be as disastrous for Europe as the demise of Lehman Brothers was for the global economy in 2008.

Critics have argued that German Chancellor Angela Merkel has been too preoccupied with shoring up support in Germany, where the cost of Europe's bailouts is proving unpopular, rather than leading the single currency bloc in a swift resolution of the crisis.

Germany has been criticized for being too hasty airing initiatives that have stirred market anxieties and ultimately come to nothing.

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TOKYO _ Toyota says it will hire 3,000 to 4,000 temporary workers in Japan to be ready for a recovery in vehicle production as automakers bounce back from the March 11 earthquake and tsunami.

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BERLIN _ Fifty top executives from German and French companies have thrown their weight behind an ad campaign declaring that "the euro is necessary" and the eurozone must remain intact.

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BERLIN _ Greece's debt crisis and the faltering U.S. economy combined to send German investor confidence down to a 2 1/2-year low, the closely watched ZEW survey found.

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FRANKFURT _ The International Monetary Fund says Spain needs bolder reforms to cut its 20 percent unemployment rate and keep its economy growing.

So far Spain has avoided being drawn into a debt crisis like the one afflicting Greece, Ireland and Portugal.

But the IMF says Spain is still suffering from a burst real-estate bubble and the economy remains vulnerable.

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MADRID _ Spain easily raised euro3 billion ($4.3 billion) at an auction of short-term debt, passing a key market test despite fears of contagion from the Greek crisis.

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LONDON _ Britain's public sector borrowing dropped in May to 17.4 billion pounds ($28 billion). The result was somewhat higher than the market expected.