Economic developments around the world

LONDON – Britain is experiencing a deeper recession than other countries because of the relative size of the country’s financial sector, finance minister Alistair Darling said as he tried to deflect criticism of the government for the scale of the economic crisis. Darling’s comments followed last week’s prediction from the IMF that Britain’s recession would be deeper than elsewhere. It forecast that Britain’s economy would contract by 2.8 percent this year, which would be the country’s worst performance since the 1930s, and more than the 2.5 percent predicted for Germany and the 1.6 percent penciled in for U.S. European stocks rallied after better-than-expected U.S. pending home sales offset investors’ fears about the economy. Britain’s FTSE 100 closed up 2.1 percent at 4,164.46, Germany’s DAX jumped 2.4 percent to 4,374.96, and France’s CAC 40 added 1.6 percent to 2,977.24.

MEXICO CITY – Mexico’s central bank and the U.S. Federal Reserve have agreed to extend the terms of a currency swap through October to boost cash supply at Mexican banks. The agreement gives Mexico’s central bank access to $30 billion, in case it needs additional access to dollars as the global financial crisis tightens lending. The Bank of Mexico said the swap had been extended from April 30 to Oct. 30.

BRASILIA, Brazil – Officials say Brazil’s industrial output has posted its steepest decline in 17 years as the global economic crisis forces companies to adjust production to a demand slowdown. Brazil’s national statistics agency says that industrial production declined 14.5 percent in December 2008 from the same month in 2007. The agency known as IBGE says the country’s factories produced 12.4 percent less than in November and 19.8 percent less than in September.

MADRID – The number of people filing claims for unemployment benefits in Spain jumped 6.5 percent in January, a rate so fast the government may have to rewrite its economic forecasts for the year, officials said. Claims for joblessness benefits rose by 199,000 last month, bringing the total to 3.3 million, the Labor Ministry said. That’s the highest on record since Spain started using its current method for recording the ranks of the unemployed in 1996. The sharp rise means the government, which had budgeted 19.2 billion euros ($24.67 billion) for jobless benefits in 2009, may have to revise that figure up to 25 billion euros, said Maravillas Rojo, deputy labor minister.

TOKYO – Stocks in Japan fell for a third straight session, with a brief rally triggered by the central bank’s massive stock purchase plan smothered by concern over measures being debated to spur the U.S. economy. The benchmark Nikkei 225 stock average slipped 0.6 percent, or 48.47 points, to 7,825.51, near its low for the session. The Nikkei launched upward in the early afternoon, after the Bank of Japan said it plans to buy 1 trillion yen ($11.2 billion) in shares from banks through April 2010 to help shore up their capital. The central bank, which still requires government approval to carry out the plan, carried out similar but larger purchases between November 2002 and September 2004.

CANBERRA, Australia – Australia’s leader unveiled a new stimulus package to try to shield the economy from the global downturn, promising 42 billion Australian dollars ($26 billion) in spending that will send the budget into the red for the first time in nearly a decade. The package comes on top of one launched late last year worth A$10.4 billion ($7.4 billion) and underscores the threat the downturn poses to Australia’s resources-based economy, which has shuddered to a near halt since the worldwide financial turmoil began mid-last year.

HONG KONG – Hong Kong’s key stock index fell almost 1 percent, giving up early gains amid selling in property firms. The blue-chip Hang Seng Index closed down 84.60 points, or 0.7 percent, to 12,776.89. The benchmark had traded as high as 13,065.97. News of more stimulus plans in Australia and Japan helped support sentiment early on, but the market couldn’t hold its gains amid worries about sinking corporate profits and signs of economic weakness.

SHANGHAI – Chinese shares rose for a second day, led by financial and textile stocks, after Premier Wen Jiabao said the government is considering new economic stimulus measures. The benchmark Shanghai Composite Index jumped 2.4 percent, or 49.13 points, to close at 2,060.81. The Shenzhen Composite Index for China’s second exchange rose 2.6 percent to 639.05.

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