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The European Union and IMF forged a deal on an austerity plan for Greece after EU finance ministers delayed the transfer of another ?12B in bailout funds.Chinese banks helped arrange 320 billion yuan of loans between companies in the first quarter that weren't recorded in the lenders' balance sheets, raising the risk on their bonds to a two-year high. The U.S. Federal Reserve left its record-low benchmark interest rate unchanged, saying it was surprised by the recent weakness in the economy, causing a lowering of its growth forecast for the second time this year to 2.8%.

German chancellor Merkel and French president Sarkozy said they want a quick solution on the Greek bailout and that they will work to preserve the stability of the euro. The four principles on which there was agreement between the two governments were voluntary private-sector participation, no default, full agreement with the ECB and movement as fast as possible to secure a solution. China raised its reserve ratio by 50 basis points to 21.5% for the country's biggest lenders, after inflation accelerated at the fastest pace in almost three years and industrial production rose more than estimated.The U.S. Michigan Consumer Sentiment Index fell to 71.8 in June from 74.3 in May, below economists' expectations for a fall to 73.5. The index averaged 89 in the five years leading up to the recession that began in December 2007.

The U.S. Fed’s Beige Book showed signs of an economic expansion over the past two months, striking a more positive tone after Chairman Bernanke issued an uninspiring outlook on the economy. The Bundesbank raised its forecasts for German growth to 3.1% this year and 1.8% in 2012, up from previous predictions of 2.5% and 1.5%, respectively. Asian stocks declined for the sixth straight week, marking the longest streak of weekly losses since Oct 2008, on concern that the region's central banks will continue to raise interest rates to tame inflation despite signs of a faltering global economic recovery.

Moody's downgraded Greece's sovereign rating three notches to Caa1 from B1 with a negative outlook. Moody's said the downgrade was triggered by the increasing risk that Greece will fail to stabilize its debt position without a debt restructuring, and the likelihood that Greece's supporters will demand the participation of private creditors in a debt restructuring as a condition for additional support. In a sign of recovery from the March earthquake in Japan, Toyota Motor Corp. expects to resume production at 90% of normal capacity during June and match last year's output for the full year. The unemployment rate edged up to 9.1% from 9.0% in April, while economists were expecting the rate to remain unchanged.

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