A look at economic developments and stock market activity around the world Thursday:
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LUXEMBOURG — The European Central Bank left its benchmark interest rate unchanged at 1 percent, holding steady as it waits to see if a recent massive infusion of credit into the banking system will help loosen up lending to consumers and businesses in the euro zone. Bank President Jean-Claude Trichet said the ECB was pleased by the demand for its record euro442 billion ($623 billion) 12-month loans offered to banks last week, but wouldn't comment about what more it might do.
In stock market trading, the FTSE 100 index of leading British shares fell 106.44 points, or 2.5 percent, to close at 4,234.27 while Germany's DAX dropped 186.95 points, or 3.8 percent, to 4,718.49. The CAC-40 in France lost 100.59 points, or 3.1 percent, to 3,116.41.
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BRUSSELS — Unemployment in the 16 countries that use the euro spiked to a 10-year high in May, with more than 15 million people out of work. The seasonally-adjusted unemployment rate for the euro zone in May rose to 9.5 percent of the work force from 9.3 percent in April. The May figure is the highest since May 1999.
The increase was expected amid decline in the industrial sector across Europe. In the first quarter of 2009, output dropped by 2.5 percent in the euro zone economy.
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LONDON — Crisis-stricken Ireland's debt rating was downgraded by Moody's amid mounting worries about the country's public finances and the cost of the government's bailout of the banking system. The credit ratings agency said it lowered its rating by one notch to AA1 from the top AAA level and warned another downgrade was possible. Moody's was the last of the big three ratings agencies to take the step.
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MUMBAI, India — The Indian government proposed sweeping economic reforms and said growth could revive to as much as 7.5 percent this year if the U.S. economy bottoms out by September and the monsoon rains return to normal. Economic growth for the fiscal year through March slowed to 6.7 percent from an average of 8.8 percent in the previous five years.
The proposed reforms included selling stakes in government-run companies to generate 250 billion rupees ($5.1 billion) a year and eliminating pricey fuel subsidies.
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BEIJING — China's exports fell again in June, but the decline was less severe than in May, deputy commerce minister Chen Jian said. He said he had no detailed data for June, which is scheduled for release next week.
China's exports in May fell by a record 26.4 percent from the same month of 2008, while imports were down 25.2 percent.
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MANILA, Philippines — Asia is set for a mild economic recovery from the global financial crisis in 2010 after bottoming out this year, the Asian Development Bank's chief economist said. However, sustained economic growth will take longer to achieve because Western industrialized countries, the main markets for Asian exports, will continue to struggle with "the worst recession since World War II," Jong-Wha Lee said.
The ADB forecasts 3.4 percent growth for developing Asia in 2009, down from 6.3 percent in 2008. The bank expects Europe's economy to shrink 4 to 5 percent this year, and the U.S. economy to contract by 3 percent.
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LONDON — The availability of credit in the U.K. increased modestly in the second quarter, although default rates and losses also rose and were expected to swell further in coming months, the Bank of England said. In its quarterly report on credit conditions, the central bank said the supply of secured credit to households had increased but that unsecured credit — such as credit cards — was less available.
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TOKYO — Slumping banks dragged Japanese stocks lower as investors doubted whether latest merger deal between Shinsei Bank Ltd. and Aozora Bank Ltd. would prove fruitful. The benchmark Nikkei 225 stock average lost 0.6 percent to 9,876.15. Elsewhere in Asian markets, Hong Kong's Hang Seng fell 200.68 points, or 1.1 percent, to 18,178.05, while South Korea's Kospi closed flat in back-and-forth trade. Taiwan's benchmark rose 1.4 percent. Markets in Australia and Shanghai also gained.
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BERLIN — Governments must follow through on pledges to reform the global financial system, German Chancellor Angela Merkel said, addressing parliament ahead of next week's Group of Eight summit in Italy. She insisted that signs the crisis is easing cannot mean a return to "business as usual."
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DUBAI, United Arab Emirates — A state investment fund in the Emirates capital Abu Dhabi says it has raised $5 billion in loans, a sign that banks remain willing to lend to the oil-rich Arab Gulf despite the global slump.
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STOCKHOLM — Sweden's central bank surprised markets by cutting its key interest rate by a quarter of a percentage point to 0.25 percent, saying the economic downturn appears to be deeper than previously forecast.
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MADRID — The number of people filing claims for unemployment benefits in Spain fell for the second straight month in June, the government said. The decline left the total at 3,564,889 and marked the first time since mid-2007 that the figure has gone down two months in a row. Spain's unemployment rate of 17.4 percent is the highest in the EU.
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REYKJAVIK, Iceland — Iceland's central bank left official interest rates unchanged at 12 percent on Thursday, saying it acted to support the national currency and because of concerns about inflation.
Copyright 2009 The Associated Press.
