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Morning briefing: Talks between Greece, striking fuel-tanker drivers collapse

Good morning! Here's what happened overnight in Europe and Asia:

*Striking fuel drivers in Greece said negotiations with the government have collapsed. The drivers are protesting an overhaul in licensing rules that are among the measures the government agreed to in order to get loans from the International Monetary Fund and other European countries. The strikes, which have already lasted for five days, have triggered gasoline shortages across the country. Greece's government said it has not ruled out ordering civil mobilization to get supplies moving.

*Bank of England governor Mervyn King said Britian cannot be confident that a sustained economic recovery is underway and that the government therefore still needs to stimulate the economy. In remarks to the Parliament's Treasury Committee, King said, "The debate is about the appropriate degree of stimulus, not about applying brakes." He warned against returning interest rates to "normal." There has been debate among policymakers in the U.K. about whether to keep the key interest rate at 0.5 percent, an all-time low, or raise it because of worries about inflation.

*Spain, which recently emerged from a recession that lasted almost two years, said its budget deficit narrowed in the first half of 2010, thanks to spending cuts and increased tax revenue. The shortfall was 2.83 percent of GDP as compared with 3.76 percent a year ago.

*Lithuania, which suffered the European Union's second-worst recession last year, returned to growth last quarter, thanks to a boost in exports and industrial output. On a quarterly basis, GDP gained 2.9 percent. Industrial output grew 1.1 percent from a year ago.

*Moody's said the results of the stress tests on 91 European banks will not affect European bank ratings.

*China's National Development and Reform Commission said it will subsidize key agricultural companies to promote mergers within the industry and stabilize market expectations.

*Stocks in Asia rose, with the MSCI Asia Pacific Index closing at its highest level in more than 10 weeks on better-than-expected earnings reports from China's industrial companies. But those in Europe fell for the first time in six days amid continuing worries about the U.S. economy.

By Ariana Eunjung Cha  |  July 28, 2010; 8:02 AM ET
Categories:  *Morning briefing  
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