A look at economic developments around the globe (AP)

A look at economic developments and activity in major stock markets around the world Wednesday:

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BEIJING ? China raised a key interest rate for a third time this year as it tries to cool surging inflation. The recent slowdown in some Chinese industries has prompted fears more interest rate hikes might trigger a sharp slump. But most analysts say the government should be able to avoid that.

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LISBON, Portugal ? Portugal's financial plight deepened, with borrowing rates jumping higher and stocks slumping after its bonds were downgraded to junk status. Spain and Italy were dragged into the downturn, adding new momentum to Europe's sovereign debt crisis.

Ratings agency Moody's downgraded Portugal's debt four notches Tuesday and said the country will likely follow Greece in needing a second rescue package.

Portugal took a euro78 billion ($112 billion) bailout from its European partners and the International Monetary Fund earlier this year after nervous investors began charging it unsustainably steep returns on loans. Lisbon's stock market fell 2.7 percent. Bank shares took the brunt of the sell-off.

Madrid's main stock index fell 1.2 percent and bond yields rose. Spain, a much bigger country, until now has managed to dodge major fallout from the continent's fiscal woes.

The jitters were even felt in Italy, where stocks dropped 2.4 percent on concerns that spending cuts might not be enough to bring down high debt.

The FTSE 100 index of leading British shares closed down 0.4 percent, Germany's DAX fell 0.1 percent and the CAC-40 in France was 0.4 percent lower.

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WASHINGTON ? The new chief of the International Monetary Fund pledged to diversify the global lending organization and make it more open for developing countries.

Christine Lagarde is the first woman to lead the IMF. She takes over after a sex scandal led her predecessor, Dominique Strauss-Kahn, to resign.

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TOKYO ? Stocks had risen in Asia. Japan's Nikkei 225 index rose 1.1 percent and South Korea's Kospi rose 0.4 percent. Hong Kong's Hang Seng Index fell 1 percent. Mainland Chinese shares fell 0.2 percent. They closed before the People's Bank made its interest-rate announcement.

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PARIS ? The biggest banks in the eurozone met to hash out ways to contribute to any new financial rescue package for Greece, as trouble in Portugal revived worries about Europe's financial health and hit stock markets in Spain and Italy.

The meeting of senior executives from top European banks in Paris ended with no public announcement of a deal, but plans for further discussions in the weeks ahead.

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ATHENS, Greece ? Striking taxi drivers blocked rush-hour traffic in protest at government market reforms, as the Prime Minister George Papandreou promised to see the unpopular changes through and take a tougher line against violent demonstrations.

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BERLIN ? German industrial orders rose for a second month in May on the back of healthy orders at home.

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MILAN ? Italy's finance Minister said the most "revolutionary" part of the euro47 billion ($68 billion) three-year austerity budget are spending cuts to the country's notoriously hefty bureaucracy.

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SEOUL, South Korea ? Inflation, rising household debt and troubles in part of the banking sector are weighing on South Korea's rapid economic recovery from the global financial crisis, the country's new finance minister said.

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LONDON ? The European Central Bank is expected to raise interest rates on Thursday and indicate that further increases are likely as it tries to dampen down high inflation despite the debt problems afflicting smaller European countries.

Higher rates may be necessary for Germany, where prices are rising fast. But they are likely to add to the growth concerns of some of the eurozone's more indebted nations, such as Greece and Portugal.

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BERLIN ? Germany's Cabinet paved the way for tax cuts in 2013, while approving a budget for next year that sees spending remaining more or less unchanged along with a significant reduction in new borrowing.

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MANILA, Philippines ? The World Bank says Philippine economic prospects remain favorable in 2011, with investments, private consumption, services and exports expected to post gains.

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SYDNEY ? Australia resumes its $350 million a year live cattle trade with Indonesia following a temporary ban over concerns that the animals were treated with cruelty as they were being slaughtered.

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MEXICO CITY ? U.S. and Mexican officials signed an agreement allowing each country's trucks to traverse the other's highways, implementing a key provision of the 1994 North American Free Trade Agreement after nearly two decades of bickering.

Source: http://us.rd.yahoo.com/dailynews/rss/business/*http%3A//news.yahoo.com/s/ap/20110706/ap_on_bi_ge/economy_countries_glance

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