A look at economic developments around the globe

AP News
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Posted: Sep 02, 2011 4:26 PM
A look at economic developments around the globe

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

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LONDON _ Worries that the U.S. economy is stalling and may be heading back into recession caused stock markets around the world to slump.

With European indexes already shaken by a disagreement between the EU and Greece over how to plug a deficit gap, worse-than-expected U.S. jobs data drove investors to unload stocks.

Britain's FTSE 100 closed down 2.3 percent, Germany's DAX slumped 3.4 percent and France's CAC-40 shed 3.6 percent.

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TOKYO _ Earlier in Asia, Japan's Nikkei 225 index fell 1.2 percent, Hong Kong's Hang Seng index declined 1.8 percent, mainland China's Shanghai Composite Index fell 1.1 percent, South Korea's Kospi shed 0.7 percent and markets in Australia, New Zealand, Thailand and Singapore also fell.

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BRUSSELS _ Disagreements over Greece's massive budget deficits and how to make up for the funding shortfalls led international debt inspectors to suspend their review and leave Athens. Greece's finance minister warned an even deeper recession will hurt its deficit-cutting efforts.

The unexpected departure of the debt inspectors _ officials from the European Commission, the European Central Bank and the International Monetary Fund _ marks yet another point of conflict between international institutions demanding greater reform efforts and a government and country that are reaching their limits.

Greek Finance Minister Evangelos Venizelos denied there were any serious disagreements and said Greece's economy will likely shrink up to 5 percent this year. Just three months ago, the government said it expected a 3.75 percent drop. A return to growth next year also looks increasingly unlikely, Venizelos warned.

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ROME _ The European Central Bank, Italy's main industrial lobby and even the Vatican voiced increasing concern over Italy waffling on an austerity plan, which has been changing almost daily to placate various interests.

ECB chief Jean-Claude Trichet said in an interview with Il Sole 24 Ore newspaper that the euro45.5 billion ($65.8 billion) legislative package of spending cuts and tax increases was of "extreme importance" and urged Italy to carry through with it.

The government, which introduced the measures Aug. 5, has been changing the proposals amid protests and internal squabbling within Premier Silvio Berlusconi's coalition. Already, the government has scrapped a tax on high earners, though it was kept for public officials, and cutbacks for town governments.

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VIENNA _ Austria's central bank chief says eurobonds _ debt backed by the entire eurozone _ are not a solution for financing bailouts of countries in the currency bloc.

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MADRID _ Spain's lower house of Parliament approved a hotly contested constitutional amendment that will force the government to keep its future deficits very low. The change is aimed at reassuring markets jittery over the country's debt.

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CERNOBBIO, Italy _ Business leaders and finance experts gathered at the annual Ambrosetti Forum in Italy offered a downbeat assessment of the global economy. Several predicted another recession because of sluggish growth, eurozone dysfunction and financial market volatility.

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SHANGHAI _ China's environmental regulators say they plan to crack down on dumping and improper storage of hazardous materials, with special attention to heavy metals and electronic waste.