A Look At Economic Developments Around The Globe

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

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DUBLIN â¿¿ A defiant Irish Prime Minister Brian Cowen is vowing to push through Europe's toughest slash-and-tax budget in the face of voter fury, then defy the odds to win re-election despite a debt disaster that has shaken the entire eurozone.

Cowen's vigorous defense of his embattled leadership comes a day after lawmakers narrowly backed a 2011 budget containing euro6 billion ($8 billion) in cuts and tax hikes that will take an estimated euro3,000 ($4,000) per year out of average Irish households. The unprecedented scale of the budget-tightening was a key condition for Ireland's recent agreement of a euro67.5 billion ($90 billion) EU-IMF rescue fund to help Ireland cover its European-leading deficit and revive its debt-struck banks.

Wednesday's yields on 10-year bonds were little changed for the eurozone members rated most at risk of an eventual default, particularly Greece, which in May became the first eurozone member to be saved from bankruptcy. The most significant mover was Germany, whose benchmark bonds suffered a moderate selloff, driving their 10-year yields above 3 percent for the first time since May's Greek crisis.

Traders said the selling reflected investors' increased appetite for higher-risk bonds versus the Germans' top-rated and consequently low-yielding debt securities.

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LONDON â¿¿ European stocks traded in narrow ranges as bond market investors fretted about Europe's debt crisis and over the scale of U.S. borrowing following President Barack Obama's agreement with the Republicans to extend tax cuts.

In Europe, the FTSE 100 index of leading British shares closed down 13.92 points, or 0.2 percent, at 5,794.53 while Germany's DAX fell 26.04 points, or 0.4 percent, to 6,975.87. The CAC-40 in France ended 21.48 points, or 0.6 percent, higher at 3,831.98.

More dramatic developments are being seen in the dollar and in U.S. government bonds following Obama's tax cuts compromise. Bond investors are worried there is no credible plan to get a grip on the U.S.'s own problems.

By late afternoon London time, the euro was trading 0.4 percent lower at $1.3226, while the dollar was 0.8 percent firmer at 84.22 yen.

Investors are also keeping a close watch on developments in China, amid mounting market talk that the country's monetary authorities are planning to raise interest rates soon to rein in inflationary pressures and cool a property-related credit boom.

The benchmark Shanghai Composite Index lost 1 percent to 2,848.55 while the Shenzhen Composite Index for China's smaller, second market dropped 0.3 percent to 1,305.25. South Korea's Kospi slipped 0.4 percent to 1,955.72 and Hong Kong's Hang Seng lost 1.4 percent to 23,092.52.

Japan's Nikkei 225 stock average bucked the trend, adding 91.23, or 0.9 percent, to 10,232.33 as the yen continued to weaken against the dollar to the relief of the country's exporters.

Oil prices slipped slightly to just above $88 a barrel after hitting a two-year high on Tuesday.

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PRAGUE â¿¿ Thousands of angry state employees walk off the job across the Czech Republic to protest salary cuts, forcing the closure of hundreds of schools and government offices in what union leaders claimed was one of the largest protests in 20 years.

The strike, backed by the country's major umbrella union organization and the left-wing opposition, was aimed at a government plan to slash public sector pay by 10 percent as part of package of austerity measures. The union said that nearly 150,000 workers joined the protest in the country.

The government wants to eliminate the deficit by 2016, a plan that received positive reactions from rating agencies, but not from labor unions.

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SKOPJE, Macedonia â¿¿ Macedonia has requested a credit line worth 480 million euros over two years from the International Monetary Fund â¿¿ seeking a safety net in the midst of Europe's debt crisis and bond-market turmoil.

IMF Managing Director Dominique Strauss-Kahn said he will "rapidly" seek approval of the request from the fund's executive board.

Macedonia's conservative government says it will use the money to support the budget and capital investments. It expects the economy to grow 2 percent this year and 3.5 percent in 2011. The former Yugoslav republic dipped in recession in 2009 with unemployment hovering around a staggering 30 percent.

The arrangement does not require economic austerity â¿¿ contrasting with the IMF's bailout loans to neighbor Greece, which is receiving euro110 billion from the fund and European countries after over-borrowing brought it to the brink of default.

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BRUSSELS â¿¿ The EU competition watchdog fined five Taiwanese and South Korean electronics companies 649 million euros ($857 million) for fixing prices on LCD panels between 2001 and 2006.

The companies include Chimei InnoLux Corp., LG Display Co., AU Optronics Corp., Chunghwa Picture Tubes Ltd. and HannStar Display Corp. Samsung Electronics Co., also participated in the price fixing but escaped a fine because it blew the whistle on the cartel, the European Commission said.

Monday's fines targeted price-fixing for LCD panels used in flat screens for televisions, computer monitors and electronic notebooks. The European Union's initial investigation had also included smaller LCD screens like the ones built into mobile phones, digital cameras, or MP3 players, but the fines did not target price-fixing for those products.

Between Oct. 2001 and Feb. 2006, the companies met about 60 times, mostly in Taiwanese hotels, for what they called "the Crystal meetings," the Commission said. In addition to fixing prices, they also exchanged information on their future production plans and other business plans, it said.

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BERLIN â¿¿ Industrial production in Germany rose sharply in October and exports remained strong despite a month-on-month dip, indicating that Europe's biggest economy is still in good health amid troubles elsewhere on the continent.

Production was up 2.9 percent on the month, the Economy Ministry said â¿¿ led by a 4.6 percent increase in output of so-called investment goods such as machinery, a mainstay of the German economy. The increase followed a 1 percent dip in September, revised down from an initial reading of 0.8 percent.

Exports, meanwhile, declined by 1.1 percent on the month in October, giving up some of the previous month's sharp 3 percent gain, the Federal Statistical Office said. Germany, the world's second-biggest exporter after China, exported goods and services worth euro86.8 billion ($115.7 billion).

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LONDON â¿¿ Iceland's central bank has cut its key interest rate by 1 percentage point to 4.5 percent, continuing the bank's gradual lowering of the seven-day collateral lending rate as Iceland recovers from the global financial crisis.

The rate peaked at 18 percent in October 2008, when the country's banking system collapsed under the strain of the worldwide credit squeeze.

Sedlabanki also lowered its deposit and overnight lending rates.

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

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