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A look at global economic developments

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

ATHENS, Greece _ Greece must be able to borrow money on terms similar to those given other European Union countries or the results will be “something worse than catastrophic,” Prime Minister George Papandreou said.

Greece has been facing a severe financial crisis that has hiked up the price at which it can borrow money, because international markets are worried about whether the country can pay back its debts.

The government has already announced an austerity plan, but the prime minister said further measures needed to be taken. The comments come a day after the EU’s finance chief, Olli Rehn, told Athens it must impose more painful, permanent spending cuts soon if it is to emerge from the crisis.

BRUSSELS _ European socialists are calling for a eurozone economy rescue fund to be set up that would be financed by selling bonds at rates well below the premiums that Greece and others are currently paying to finance their debt.

The Party of European Socialists says this would protect the 16 nations that use the euro “against speculative attacks on sovereign debt and the single currency.”

European Union governments have been reluctant to say how they would rescue a eurozone country that is heading for bankruptcy.

Stocks around the world were mostly higher. In Europe, the FTSE 100 index of leading British shares closed up 1.5 percent, Germany’s DAX rose 1.1 percent and the CAC-40 in France was 1.1 percent higher.

Earlier in Asia, Japan’s Nikkei 225 stock average gained 0.5 percent, South Korea’s Kospi gained 1.3 percent, Australian stocks closed up 0.3 percent and markets in Taiwan and Singapore also gained.

But Hong Kong’s Hang Seng dropped 0.7 percent on heavy selling in HSBC shares. China’s Shanghai index closed down 0.5 percent.

MUMBAI _ India’s manufacturing exports rose for a third-straight month in January and new orders hit an 18-month high in February _ further evidence of the country’s solid economic rebound.

LONDON _ Inflation in the 16 countries that use the euro fell in February in a further sign that price pressures remain subdued in the wake of the recession.

Eurostat, the EU’s statistics office, said that eurozone prices are estimated to have risen by 0.9 percent in February from the previous year. That rate is down from the 11-month high of 1 percent recorded in January.

FRANKFURT _ The German Federal Statistical Office says the country’s three main export sectors _ machinery, cars and chemicals _ fell in 2009, when the country struggled to emerge from recession.

TOKYO _ Japan’s unemployment rate fell to a 10-month low in January and household spending posted solid growth despite a decline in wages _ further signs of recovery in the world’s second largest economy.

ADELAIDE, Australia _ Australia’s central bank raised its key interest rate, the fourth increase since October, as it continues to reduce stimulus to an economy that has rapidly recovered from the global recession.

TORONTO _ Canada’s central bank held its key interest rate at a record low 0.25 percent and reaffirmed that it expects it will keep the rate there until the middle of this year.

The Bank of Canada said the 5 percent economic growth Canada saw in the fourth quarter was slightly higher than expected.

DUBLIN _ Ireland’s largest financial institution, Allied Irish Banks PLC, reported its first-ever full-year loss Tuesday as bad loans soared amid a burst property bubble.

REYKJAVIK, Iceland _ Icelandic Prime Minister Johanna Sigurdardottir said she hopes to reach a deal in the next couple of days over the controversial payment of $5.7 billion to Britain and the Netherlands for deposits lost when the country’s banks collapsed.

Iceland is holding last-ditch talks with the two countries to try hammer out a new payment plan after criticisms of a previously agreed deal forced it to call a potentially damaging referendum on the issue.

GENEVA _ The Swiss economy recorded a second consecutive quarter of growth in the last three months of 2009, expanding by 0.7 percent, the government said.

BRUSSELS _ Budget airlines in Europe gained 13 million more passengers last year, with cheaper prices pulling in customers amid an overall drop in air travel.

Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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