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updated 5/10/2010 2:22:25 PM ET 2010-05-10T18:22:25

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

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LONDON — World markets surged after the European Union agreed to put up $1 trillion to defend the embattled 16-country euro currency and prevent a spreading government debt crisis from choking off the global economic recovery.

In Europe, the FTSE 100 index of leading British shares closed up 264.40 points, or 5.2 percent, at 5,387.42 as investors put aside concerns about last week's inconclusive election. Germany's DAX surged 302.82 points, or 5.3 percent, to 6,017.91 while France's CAC-40 was the best-performing major European index, ending 327.70 points, or 9.7 percent, to 3,720.29. Both the main indexes in Greece and Portugal ended around 10 percent higher.

The relief rally on Wall Street saw the Dow Jones industrial average rise 420.65 points, or 4.1 percent, at 10,801.08 around midday New York time while the broader Standard & Poor's 500 index spiked 48.45 points, or 4.4 percent, at 1,159.33.

The early rally in the currency markets soon came to a halt, with the euro falling back toward $1.2850. The British pound dropped around a cent to $1.880.

Earlier, Asian investors applauded the EU's moves. Japan's Nikkei 225 stock average ended 1.6 percent higher at 10,530.71 while Hong Kong's Hang Seng index jumped 2.5 percent to 20,426.64.

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BRUSSELS — After weeks of dithering, European officials agreed the 16 countries that use the euro would put up some euro440 billion in loans to prevent the Greek debt crisis from mushrooming, with the EU adding euro60 billion and the International Monetary Fund some euro250 billion over three years. The European Commission would raise the money in capital markets, using guarantees from member governments, and lend it to crisis-stricken countries so they can pay their bills.

But the EU still needs to find ways to keep its member governments from spending their way to bankruptcy — and disastrously handing the others the bill, as Greece has done. And ultimately it needs to get its sluggish economy going if it wants to end the threat to its cherished currency union.

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LONDON — The Bank of England kept interest rates steady at 0.5 percent and refrained from any further asset purchases as it sought to provide markets with some stability after last week's general election resulted in a hung parliament, in which no single party holds a majority.

British interest rates have been at a record low for more than a year and the bank completed a 200 billion pound ($300 billion) quantitative easing program — purchasing assets to boost the money supply — in January. The next big sign post on the economy will come Wednesday when the bank releases its quarterly Inflation Report.

If the Conservatives succeed, markets are expecting faster cuts to spending to bring down Britain's huge budget deficit. If Labour manages to cling to power, it is expected to delay removing stimulus from the economy.

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BERLIN — German exports jumped by 10.7 percent on the month in March and nearly a quarter on the year as a recovering global economy spurred demand, official data showed.

German exports totaled euro85.6 billion ($109.3 billion) in March, up 23.3 percent year-over-year. Germany — which has Europe's biggest economy — lost its status as the world's biggest exporter to China last year, but exports have been recovering in recent months as the global economy recovers.

Germany had a foreign trade surplus of euro17.2 billion — up from euro11.6 billion in March 2009.

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ATHENS, Greece — Near-bankrupt Greece saw its borrowing costs fall sharply and promised to press ahead with major financial cutbacks and reforms. The difference between yields on Greek 10-year bonds and their benchmark German equivalents was at 5.69 percentage points, down massively from a record 10.25 points on Friday.

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MADRID — The finance ministry says Spain has agreed to make deeper spending cuts to reduce its large deficit and calm market worries that it could be next in line to suffer a debt crisis like Greece's.

A ministry official says Finance Minister Elena Salgado announced the cuts at Sunday's emergency EU meeting. The official told AP that under the new program, which involves euro15 billion ($19 billion) in additional spending cuts, the deficit will be reduced to 9.3 percent this year, rather than 9.8 percent as originally forecast, and to 6.5 percent in 2011 instead of 7.5 percent.

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TOKYO — Japan's central bank decided to restart a temporary dollar-swap agreement with the Federal Reserve, as part of a global effort to stabilize financial markets roiled by the European debt crisis. At an unscheduled monetary policy meeting, board members also voted unanimously to keep its key interest rate at 0.1 percent.

The Bank of Japan's decision follows a move by the Federal Reserve to ship U.S. dollars overseas to limit fallout from Greece's debt problems. The coordinated moves with the ECB and other central banks are designed to ease liquidity strains in U.S. dollar short-term funding markets in Europe, the Bank of Japan said.

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SHANGHAI — The surge in China's auto sales has begun to falter with growth in passenger car sales for April easing to just over half the previous month's increase. The slowing in demand was expected after a shift into overdrive last year thanks to an aggressive government subsidy and tax cut plan to help revive the industry from a slump that hit in late 2008.

There were 1.11 million passenger cars sold in April, up 34 percent from a year earlier, but down 12 percent from the 1.26 million sold in March. Feeble sales in the United States and a surge in car buying by newly affluent Chinese helped make China the world's largest auto market last year.

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BEIJING — China posted more double-digit trade growth in April in a positive sign for its recovery, but analysts said Beijing is unlikely to move quickly to let its currency rise because global demand still is too weak.

Beijing has kept the yuan frozen against the dollar since late 2008 to help its exporters compete abroad. Analysts expected Chinese leaders to allow a gradual rise by the middle of this year to ease stresses in their economy but say that probably was postponed due to turmoil over the Greek debt crisis.

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MUMBAI, India — India's car sales rose 39.5 percent in April over last year — the biggest jump in a decade — but Vishnu Mathur, the new director general of the Society of Indian Automobile Manufacturers said double-digit growth would eventually moderate as the global recession and rising commodity prices factor in.

India's sustained auto boom has attracted auto majors from around the world, including Ford, Nissan and General Motors, who are all trying to build smaller, more affordable vehicles to tap growing appetite for cars in Asia's third-biggest economy.

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BUCHAREST, Romania — At the end of a mission to assess the country's economic performance, the IMF mission chief to Romania cut the forecast for the country's economic growth this year to between zero and minus 0.5 percent. The IMF had previously predicted the economy would grow by 0.8 percent, after last year's decline of 7.1 percent.

Recently, Romania's President Traian Basescu announced severe cuts to public wages and pensions, to which unions responded with threats of protests. IMF mission chief Jeffrey Franks said the impact of the economic crisis was more severe than anticipated, and the "necessary" spending cuts still mean the budget deficit would be 6.8 percent of GDP in 2010, above Romania's deficit target of 5.9 percent of GDP for 2010.

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Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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