The Greek debt crisis has taken a deadly turn. From Reuters:
European leaders warned on Wednesday that the euro zone debt crisis could spread like a bushfire beyond Greece, and investors sold stocks and the euro as Greek anti-austerity unrest claimed its first lives...
Three people, including a pregnant woman, choked to death when rioters set an Athens bank ablaze during a protest against wage and pension cuts that were the price of the 110 billion euro ($146.5 billion) EU/IMF bailout agreed on Sunday.
A general strike shut down Greek airports, tourist sites and public services and about 50,000 demonstrators marched against the planned public spending cuts and tax rises, demanding that tax cheats and corrupt politicians be put on trial...
Anxiety that the crisis may spread sent stocks tumbling worldwide...
The euro hit a 14-month low of $1.2801 and the cost of insuring Spanish and Portuguese debt against default spiked to euro lifetime highs.
Moody's Investors Service put its credit rating for Portugal on a three-month review, and an analyst at the agency said that a downgrade was now likely.
Economic reports on the euro area on Wednesday were mixed. Markit's composite index for services and manufacturing industries rose to 57.3 in April from 55.9 in March. However, retail sales were flat in March.
Nevertheless, the European Commission remains confident about economic recovery and has even upgraded its growth forecasts for the euro area. From Reuters:
Euro zone economic growth should be stronger this year than previously thought and the budget gap lower, the European Commission said, but it warned of risks to recovery from financial market tensions sparked by Greece.
In its twice-yearly economic forecasts for countries of the 27-nation European Union, the bloc's executive said economic growth in the 16 countries using the euro would be 0.9 percent this year, rather than the 0.7 percent it projected in February.
Norway's central bank also appears confident enough about economic recovery to resume monetary tightening. From Bloomberg:
Norges Bank raised its benchmark interest rate a quarter point, resuming a tightening cycle policy makers shelved last quarter as they seek to balance the krone’s appreciation against rebounding household demand.
The central bank increased the overnight deposit rate to 2 percent, it said in a statement on its website today, though policy makers considered making no change. The decision had been expected by nine of sixteen economists surveyed by Bloomberg. Seven predicted no change.
A relatively positive set of economic numbers from the US also added to evidence of continuing recovery for the global economy. From Bloomberg:
Service industries in the U.S. expanded in April at the same pace as the prior month, indicating factories will drive any pickup in the economy.
The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, held at an almost four-year high of 55.4 for a second month. Readings above 50 signal expansion...
Companies increased payrolls by 32,000 workers last month, the most since January 2008, data from ADP Employer Services showed today...
Job cuts announced by U.S. employers plunged 71 percent in April from a year earlier, figures from Chicago-based Challenger, Gray & Christmas Inc. also showed today. Planned firings dropped to 38,326, the lowest level since July 2006.
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