A look at economic developments and activity in major stock markets around the world Wednesday:
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SHANGHAI — China’s lavish bank lending spurred a recovery but also pumped up markets as speculators scooped up stocks and property and even dabbled in garlic, dried chili peppers and luxury Pu’er tea.
Now, China is reining in its spendthrift banks, shifting toward an exit strategy that aims to avoid a bust.
After a brief slowdown a year ago, China’s economy has bounced back rapidly, with growth forecast at 8.3 percent for this year. Yet the stimulus spending that led that revival — supported by more than 9 trillion yuan ($1.3 trillion) in new bank loans last year — has spurred speculation, raising alarm over a potential housing bubble.
The stimulus has also propelled huge investments in industries already larded with overcapacity.
The challenge now is to stave off inflation and ensure that the stimulus goes into productive investments rather than to speculators.
China has helped support the global economy during the recession and investors are worried it may not be such a big motor of growth in the months ahead, especially if interest rates start to rise, too.
China’s moves to curb bank lending sent Asian shares lower. Hong Kong’s Hang Seng slid 2.6 percent, the Shanghai benchmark tumbled 3.1 percent, South Korea’s Kospi shed 1.6 percent to 1,671.41, Singapore’s index fell 0.8 percent and Australia’s market retreated by 0.6 percent.
Japan’s Nikkei 225 stock average fell 1.3 percent, with Japan Airlines down another 81 percent on top of Tuesday’s 45 percent collapse as investors worried about an imminent bankruptcy filing.
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Markets will look for the European Central Bank’s views Thursday on the outlook for an uneven recovery amid mounting concerns about the burden placed by indebted governments, particularly that of Greece, on the Continent’s monetary union.
The monthly interest-rate meeting of the bank’s governing council is not expected to touch rates, currently at a historic low of 1 percent.
Bank President Jean-Claude Trichet will likely face questions about government debt and Greece at his news conference after the decision. A scathing report Tuesday by the European Commission on the unreliability of Greece’s budgetary data reignited speculation that Greece may need to be bailed out by its partners in the European Union or even be compelled to leave the single currency bloc.
In markets Wednesday, the FTSE 100 index of leading British shares closed down 0.5 percent, France’s CAC-40 rose a very slight 0.81 point to 3,998.27 and Germany’s DAX ended up 0.3 percent.
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ATHENS, Greece — A group of experts from the International Monetary Fund is visiting Athens to study the country’s urgent deficit reduction plans, the government said, but insisted it was not seeking outside financial assistance to overcome its acute debt crisis.
The Finance Ministry said the talks began Wednesday and were likely to last a week, with the IMF team set to visit five Greek ministries.
It said it had invited the IMF experts in a bid to get advice and boost international credibility in the country’s financial data.
The government has said it is not seeking a bailout from the IMF.
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BERLIN — Germany’s economy contracted 5 percent in 2009 amid the global economic downturn, by far its worst performance since World War II.
Exports were down a price-adjusted 14.7 percent, while imports were down 8.9 percent, the German Federal Statistical Office said.
“Foreign trade, which in previous years had been a major driving force for growth in the German economy, slowed down economic development in 2009,” the office said.
The worst postwar performance to date was a 0.9 percent decline in West Germany’s gross domestic product in 1975. The worst since German reunification was a 0.8 percent fall in 1993.
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LONDON — U.K. industrial production fell by 6 percent in November compared with a year ago, though it rose 0.4 percent higher from in October, official statisticians said.
Many analysts believe that Britain’s economy returned to a modest level of growth in the fourth quarter for the first time since the first quarter of 2008, though the latest report underlines the sluggish pace of recovery.
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PARIS — Societe Generale SA said it would record about 1.4 billion euros ($2 billion) in fresh asset write-downs in the fourth quarter of 2009, leaving the French bank barely in the black for the period.
In a statement, France’s second-largest listed bank blamed “the contrasted signals coming from the U.S. residential real estate market.”
It said that despite the write-downs, it expects to report a “slight” profit in the fourth quarter when it posts its earnings next month.
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BRASILIA, Brazil — Brazil inflation was 4.3 percent in 2009, the lowest in three years and below the government’s target of 4.5 percent.
The government’s statistics agency inflation declined from 5.9 percent in 2008 because food prices rose at a much lower rate.
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DAMASCUS, Syria — Syria’s central bank governor says foreign investors can now own majority stakes in local banks.
The announcement is the latest in a string of moves aimed at unshackling Syria’s economy as the country emerges from years of isolation.
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TEHRAN, Iran — Iran’s constitutional watchdog approved a contentious law that would sharply slash energy and food subsidies — a move that could provoke more unrest in a country struggling under international sanctions, double-digit inflation and a government crackdown on the opposition.
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