Economy, Europe | featured news

The data is likely to put pressure on the European Central Bank to cut interest rates at its next meeting.

The risk that Britain is entering its third recession in four years grew on Friday with figures showing that manufacturing shrank unexpectedly last month and mortgage approvals for home buyers dropped in January.

The European Union's official economists predicted the euro-zone economy will shrink in 2013 for the second year in a row and for the third year of the past five, in a forecast that sees little hope that easing financial-market tensions in the region will provide a jolt to the real economy any time soon.

Even as the euro zone periphery starts to spy some glimmers of hope, concern is mounting that Germany is drifting apart from other countries at the core of the single currency bloc, notably France.

Tens of thousands of anti-austerity demonstrators took to the streets of Athens on Wednesday as unions staged a general strike to protest government spending cuts and tax hikes, which some predict will push unemployment to an alarming 30 percent. Police said up to 40,000 people were participating in two separate marches in central Athens that were so far peaceful.

The vast U.S. services sector expanded against last month, extending a three-year run of growth, while European business optimism hit an eight-month high, suggesting the euro zone economy was starting to recover.

The Greek government says its painful austerity drive is paying off, with the budget deficit reduced to 6.6 percent of annual output in 2012 from 9.4 percent a year earlier. A finance ministry statement Monday said that, not counting the cost of servicing Greece's debt mountain, the government posted a modest budget surplus of €434 million ($588 million) last year.

Like any nation, China has a host of problems, both societal and economic. It's getting older. It has yet to develop large portions of the west. Corruption is rampant. It has not serious entrepreneurial business culture that can drive the country's economic development. It has untold billions in government investments into states and municipalities that have no investment return for the foreseeable future. But this bridge to nowhere economy, as some naysayers might call it, has one big immediate hurdle. That hurdle is Europe.

Local governments across Spain have been paying their suppliers' bills months behind schedule, forcing companies to help shoulder the financial woes of the Spanish government.

Britain named Canadian central bank chief Mark Carney on Monday as the next governor of the Bank of England, springing the surprise choice of a foreigner to help steer the world's sixth-largest economy out of stagnation.