By: The Associated Press
07 May 2010 03:04 PM ET
A look at economic developments and activity in major stock markets around the world Friday:
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LONDON — A strong set of U.S. jobs data failed to shore up confidence in world markets as stocks plunged again amid mounting fears that Europe's debt crisis could derail the global economic recovery.
In Britain, where investors were grappling with uncertain general election results, the FTSE 100 index slid 209.98 points, or 4 percent, at 5,051.01, while the pound oscillated wildly. Germany's DAX slid 226.05 points, or 3.8 percent, to 5,682.21 while the CAC-40 in France was 112.56 points, or 3.2 percent, lower at 3,443.55.
On Wall Street, the Dow Jones industrial average plunged 210.09 points, or 2 percent, to 10,310.23 soon after the open while the broader Standard & Poor's 500 index tumbled 26.30 points, or 2.3 percent, to 1,101.85. The declines come a day after dramatic events on Wall Street, when a trading error pushed the Dow Jones industrial average down 1,000 points at one stage, though it did recover to end "only" 347.8 points lower.
Across Asia, stocks were hit hard even though the government debt crisis is centered on Europe — all the main indexes ended lower with Taiwan, Indonesia, Thailand and New Zealand down sharply. China's Shanghai Composite Index closed 1.9 percent lower while Hong Kong's Hang Seng index ended down around 1.1 percent. The most dramatic retreat was seen on Japan's benchmark Nikkei index, which closed 3.1 percent down at 10,364.59.
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ATHENS, Greece — Greek borrowing costs hit another record high and shares on the Athens stock exchange are lower amid losses in European markets and fears that Greece will have difficulty implementing a tough austerity plan.
Spreads on Greek bonds, compared with their 10-year German equivalent, reached 1,025 basis points, or 10.25 percent, while shares dropped 1.47 percent to 1,653 in midday trading in the Greek bourse.
Greece's parliament approved the austerity package needed to secure euro110 billion in rescue loans from euro zone countries and the International Monetary Fund. The 16 leaders of the euro zone will meet in Brussels to finalize the plan.
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BRUSSELS (AP) — Amid ruthless financial turmoil, and ahead of an evening summit of the euro countries, German Chancellor Angela Merkel urged European leaders to sharpen the core rules underpinning the euro to avoid future debt crises.
Merkel said the 16 eurozone leaders should consider changes to the 1992 treaty that laid the groundwork for the shared currency, "otherwise, it won't work, in my opinion." The euro has dropped to its lowest level in 14 months as nervous bond markets dump Greek debt.
Many economists think Greece will eventually default anyway, which could deal a sharp blow to the euro and lead to sharply higher borrowing costs for other indebted countries in Europe. Market contagion to other countries could lead to panic, intimidating consumers from spending and making banks fearful to lend money to businesses and consumers.
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AMSTERDAM — The Dutch parliament authorized the government to lend Greece euro4.7 billion ($6 billion), its share of the euro110 billion European Union-IMF bailout package.
Leftist and reactionary parties opposed the bailout, both arguing that Greece will default anyway. The ruling Christian Democrat party called the bailout a "necessary evil" that would benefit the Netherlands by preventing a collapse of the European common currency.
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BERLIN (AP) — The Finance Ministry says a group of German banks and other financial companies have agreed to provide euro8.1 billion ($10.3 billion) in financing to Greece as a follow-up on a public pledge to help Greece weather its financial crisis.
The ministry says Deutsche Bank AG and others will provide euro4.8 billion in financing to replace Greek bonds expiring by May 6, 2013, and euro3.3 billion for lines of credit that expire May 6, 2010 until at least May 6, 2013.
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ROME — Italian government ministers approved an emergency decree authorizing up to euro14.8 billion ($18.8 billion) in rescue loans for debt-ridden Greece. Italy will raise the money through a series of medium- and long-term treasury bonds.
Italian officials have been staving off concerns of contagion from the Greek crisis, emphasizing that the Italian banking system is robust, that overall debt is low and savings are high.
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LISBON, Portugal — Portugal's parliament agreed to lend Greece just over euro2 billion ($2.55 billion) as its part of a wider bailout — even though the eurozone's poorest member is also under pressure from markets over its own debt load.
Markets fear that after years of feeble growth and low productivity, Portugal cannot generate the wealth it will need to service its borrowing. The interest rate gap, or spread, between Portuguese and benchmark German 10-year bonds, was still ticking higher. On Friday it rose 0.09 percentage points, its highest rate since 1997.
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MADRID — The Bank of Spain says the country's economy grew in the first three months of 2010, putting an end to six quarters of recession.
Gross domestic product rose by 0.1 percent from January to March, the bank said. Unemployment fell for the first time in eight months, said the Labor Ministry. However, the economy remained 1.3 percent smaller than a year earlier.
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BERLIN — The Economy Ministry says German industrial production rose an unexpectedly strong 4 percent in March over the previous month, an additional sign that Europe's biggest economy is on the rebound.
The ministry already reported that German factory orders were up 5 percent in March over February. Manufacturing activity was up 3.4 percent month on month, while construction output jumped 26.7 percent despite the cold winter.
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TOKYO — Japan's central bank pumped 2 trillion yen ($21.8 billion) into money markets in an effort to calm nerves, as the yen appreciated sharply overnight after global stocks hit major turbulence on escalating European debt fears.
The emergency infusion was the first since Dec. 2. It underscores the Bank of Japan's commitment to keep monetary policy accommodative to help the world's second-biggest economy fight deflation and foster growth
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TORONTO — The Canadian economy added a record 108,700 jobs in April, more than four times the consensus forecast, pushing the unemployment rate down to 8.1 percent, the government said.
Royal Bank Chief Economist Craig Wright said the increase raises the odds Canada's central bank will up interest rates on June 1. That could make Canada the first Group of Seven country to raise rates since the financial crisis.
The unemployment rate fell from 8.2 percent in March.
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LONDON — Part-nationalized Royal Bank of Scotland reported a loss of 248 million pounds ($363.5 million) for the first three months of the year, compared with 902 million pounds a year earlier as the global economic recovery led to a reduction in impairments on bad loans.
Impairments for bad loans fell from 2.86 billion pounds to 2.68 billion pounds. Income was down 4.4 percent at 8.9 billion pounds. The government owns 83 percent of RBS following a bailout at the height of the credit crisis.
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LONDON — HSBC Holdings PLC, Europe's largest bank, said its first-quarter earnings rose from the same period a year ago as its U.S. unit posted a profit for the first time in three years.
HSBC was elevated to the unenviable position of biggest U.S. subprime mortgage lender after buying Illinois-based Household International Inc. six years ago for $14 billion. It announced in March that it would shut the unit, renamed HSBC Finance, over the next five years.
The bank said bad loan provisions at HSBC Finance declined to $2.3 billion, from $3.9 billion. The division made a loss for the quarter, but the U.S. business as a whole, HSBC USA Inc. made a profit.
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