A look at economic developments around the globe

UNITED STATED

A look at economic developments and activity in major stock markets around the world Tuesday:
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BRUSSELS — The European Commission said Germany, Italy, the Netherlands and six other EU nations are breaking a key rule requiring them to keep budget deficits under 3 percent of gross domestic product.

It said the budget gaps these countries are running up this year — largely as a result of the economic crisis — are not "exceptional and temporary."

The EU executive warned that it will soon take legal action that could see all 27 EU governments collectively order these countries to bring their deficits under the limit by a target date.

It also criticized euro nations Austria, Belgium, Slovenia, Slovakia and Portugal and one country outside the eurozone, the Czech Republic, for running budget deficits above the 3 percent limit.

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BERLIN — German industrial orders rose 1.4 percent on the month in August, an increase that was powered by stronger foreign demand and beat economists' expectations.

The August increase was the sixth consecutive month-on-month rise, and the Economy Ministry said that industrial orders have now recovered about a third of the ground they lost during the crisis. It beat economists' forecasts of a 1.1 percent climb and suggests the economy is picking up.

Still, it compared with a larger increase in July of 3.1 percent. The number of large industrial orders was below average for the month in August, according to the Economy Ministry.

In European trading, the FTSE 100 index of leading British shares closed down 0.6 percent, while Germany's DAX fell 0.3 percent and the CAC-40 in France was 0.4 percent lower.

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TOKYO — Asian shares mostly rose. Japan's Nikkei 225 stock average gained 1.1 percent, Hong Kong's Hang Seng advanced 2.1 percent, Australia's index jumped 2.3 percent, Singapore's index gained 0.9 percent, Taiwan's benchmark was up 1 percent, while South Korea's market closed flat.

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BRUSSELS — Second-quarter growth in the 16-nation eurozone fell by 0.2 percent compared with the first quarter of 2009, said Eurostat, the EU statistics office.

The figure revises its previous estimate, issued in early September, of a drop of 0.1 percent.

For the 27 EU nations as a whole, second-quarter growth slid by 0.3 percent compared with the first quarter, revised from 0.2 percent in the September forecast.

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HELSINKI — Finland's economy shrank 11.6 percent in July from a year earlier, the sharpest rate registered so far during the current recession, the government statistics agency said.

Previously, the largest annual fall in GDP had been in May, when it dropped 10.6 percent on the year.

Last month, the government reported a 9.4 fall in second-quarter GDP but said that the recession had bottomed out.

The Finance Ministry has predicted that the economy will shrink by 6 percent in the full year and cautioned that recovery will be slow with growth of 0.5 percent not expected until 2010.

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RIGA, Latvia — Latvia will have to choose between "bad and really bad scenarios" for its economy as it struggles to satisfy international lenders and avert rising frustration at home, Prime Minister Valdis Dombrovskis said.

Dombrovskis explained in an interview with Latvian Radio that the bad scenario would be to further reduce the budget deficit, while the worse scenario would be to forego the painful cuts and jeopardize the international bailout program, without which Latvia could go bankrupt.

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SEOUL, South Korea — British Business Secretary Peter Mandelson said governments have no choice but to keep in place for now the massive stimulus that is propping up the global economy, though he warned such measures must ultimately be unwound for the sake of fiscal soundness.

"The task of sustaining the recovery and not doing anything to wreck it is the biggest economic policy challenge facing the world," Mandelson told a meeting sponsored by a South Korean business group. "We need to coordinate what we're doing so as to maximize the impact of our national policies."

___By The Associated Press

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