A Look At Economic Developments Around The Globe

The Associated Press

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

___

SYDNEY — Australia's central bank unexpectedly raised interest rates by a quarter point, the first major economy to increase the cost of borrowing amid signs its recovery from the global slump is gaining momentum.

The Reserve Bank of Australia raised its cash rate to 3.25 percent from a 49-year low of 3 percent. Between September 2008 and April this year, the rate was slashed a total of four and a quarter percentage points as the financial crisis morphed into a global recession.

The rate increase, which comes after recent data showed the economy was improving, sent the Australian dollar soaring to a 14-month high against the U.S. dollar.

The central bank's governor Glenn Stevens said it was "prudent" to begin gradually reducing the stimulus provided by low interest rates. He said the risk of "serious economic contraction" in Australia had passed.