A look at economic developments and activity in major stock markets around the world Thursday:
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FRANKFURT, Germany — The head of the European Central Bank signaled another likely interest rate hike in July, warning that higher oil and commodity prices must not be allowed to fuel an inflationary spiral as Europe's economy grows.
Jean–Claude Trichet also reiterated the bank's opposition to letting Greece restructure its massive debts and was skeptical about a German proposal to get Greece's creditors to voluntarily accept Greek bonds with longer maturities to give the country more time to fix its finances.
Trichet, whose eight–year term expires at the end of October, was speaking after the bank's governing council left its key rate unchanged at 1.25 percent for the second straight month. In April, the bank lifted its main rate from the all–time low of 1 percent, its first increase in nearly three years.
He rejected suggestions that higher rates would make life harder for shell–shocked consumers in Greece and two other heavily indebted countries stuck in recession, Ireland and Portugal.
European stocks rose. The FTSE 100 index of leading shares closed up 0.8 percent, the CAC–40 in France rose 1.1 percent and Germany's DAX climbed 1.4 percent.
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ATHENS, Greece — Greek ministers approved a new round of austerity measures and a 50 billion euro ($73 billion) privatization drive that are essential for the debt–ridden country to continue receiving funds from its international bailout.
Two senior Cabinet officials who were at the meeting said a vote in Parliament was expected before the end of the month.
The new measures — budget cuts and a sell–off of state holdings in companies and real estate — are a precondition for Greece to receive the next part of its 110 billion euro ($161 billion) rescue package granted a year ago.
Meanwhile, Greece's international creditors stepped up their criticism of the country's handling of reforms promised in return for the bailout, according to a report obtained by the Associated Press (News - Alert).
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TOKYO — In Asian trading, Japan's Nikkei 225 index closed 0.2 percent higher while South Korea's Kospi dropped 0.6 percent and Hong Kong's Hang Seng lost 0.2 percent.
China's benchmark Shanghai Composite Index sank 1.7 percent.
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BEIJING — French Finance Minister Christine Lagarde said she is "very positive" after talks with Chinese officials about her candidacy to head the International Monetary Fund and said Beijing's stake in the body should increase.
China has given no sign whom it supports but says it wants the next IMF managing director to be selected through "democratic consultations."
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LONDON — The Bank of England kept its key interest rate at an all–time low of 0.5 percent as the muted economic recovery in Britain trumped concerns over rising inflation.
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SHANGHAI — China's auto sales fell in May as buyers wary of traffic quotas and rising fuel prices shunned showrooms in the world's largest auto market.
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TOKYO — Japan's economic contraction in the first quarter that stemmed from the March earthquake and tsunami was slightly milder than first estimated.
Real gross domestic product shrank at an annualized rate of 3.5 percent in the January–March period, compared with 3.7 percent in the Cabinet Office's preliminary report last month.
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HONG KONG — A Hong Kong government land auction failed to achieve the expected record price, indicating that higher mortgage rates and government measures to cool the property market are having some effect.
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MADRID — The Spanish government defended key labor market reforms which it plans to impose by decree. The changes have angered both unions and business leaders as the country battles a 21 percent jobless rate.
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MINSK, Belarus — Russia cut in half its electricity supplies to Belarus over back payments, ratcheting up the pressure on its neighbor to sell lucrative economic assets.
The power cut hits Belarus as it suffers its worst financial turmoil since the 1991 Soviet collapse.
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WELLINGTON, New Zealand — New Zealand's central bank held its key interest rate at 2.5 percent, citing the disruption caused by a major earthquake to the country's recovery from recession as a reason to continue to boost economic activity.
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VILNIUS, Lithuania — Lithuanian lawmakers have decided to gradually raise the pension age to 65 to improve the Baltic country's public finances.
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YANGON, Myanmar — Myanmar received a record $20 billion of foreign investment pledges in the last financial year despite Western sanctions against its military government.
