European Markets Rebound With All Eyes on Wall Street

BY News Desk  August 12, 2011 at 9:36 AM EDT


Trader at Frankfurt Stock Exchange. Photo by Hannelore Foerster/Bloomberg via Getty Images

European markets rebounded Friday as a short-selling ban on financial shares in four eurozone countries seemed to have a positive effect. Regulators in France, Italy, Spain and Belgium imposed temporary bans on short-selling of financial shares late Thursday.

The advance in Europe followed gains on Wall Street Thursday, which helped support most markets in Asia.

Wall Street was poised for a modest retreat Friday, the Associated Press reported. Dow futures were down 0.6 percent at 11,021 while Standard & Poor’s 500 index fell a similar rate to 1,161.

Italian Prime Minister Silvio Berlusconi called an emergency cabinet meeting Friday where he is expected to discuss adopting tax hikes and spending cuts. The meeting comes in response to demands from the European Central Bank for urgent reforms to bring the budget into balance by 2013 and spur growth in Italy’s chronically stagnant economy.

Also reported Friday: In France, economic growth ground to a halt in the second quarter, compared with a year ago, increasing pressure on the government to reduce its deficit. French Finance Minister Francois Baroin, however, insisted the economy was solid.

Meantime, the Greek economy shrank by 6.9 percent in the second quarter, compared with the same period a year earlier. Greece, which has twice been forced to seek international bailouts, is on course for a third consecutive year in recession.


Postal Service

Facing a second year of losses totaling at least $8 billion, the U.S. Postal Service is proposing to cut its workforce by 20 percent — 120,000 workers — and to withdraw from the federal health and retirement plans because it believes it could provide benefits at a lower cost.

The layoffs would be achieved in part by breaking labor agreements and the overall plan would require congressional approval.

Afghanistan

Eight NATO service members have been killed in the past two days of fighting in Afghanistan, military officials said Friday.

The latest service member to be killed died Friday in a roadside bombing in southern Afghanistan, the coalition said

The deaths come as forces are still here mourning the deaths of 30 American troops and eight Afghans killed in the shootdown of their Chinook helicopter in the east,

U.K. Riots

British courts worked through a second night to process arrests from this week’s riots and looting. More than 1,200 people have been arrested.

The rioting and looting began after a young black man, Mark Duggan, was shot by police in a taxi during an operation last week. His family and friends held a peaceful demonstration following the incident when they couldn’t get information from the police, but protests later turned violent as people fought with police and attacked banks and stores.

British Prime Minister David Cameron condemned the violence, which continued throughout the week and spread to other British cities. Authorities dispatched 16,000 police to patrol London during the night, including on Friday.

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