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European Markets Higher Despite Recession Woes


Stock markets around the world are posting strong gains Tuesday as Americans head to the polls to choose the next president of the world's largest economy.

U.S. share prices gained between one and two percent as trading opened. European indexes are up sharply in midday trading, and key Asian markets were higher at the close.

The gains come as a key measure of banks willingness to lend to each other improved again. Before recent declines in the "Libor" interest rate, credit markets had been stalled, making the economic crisis worse.

Also Tuesday, British Prime Minister Gordon Brown predicted oil-rich countries from the Persian Gulf will contribute more money to the International Monetary Fund (IMF) when world leaders meet in Washington next week. The IMF is already giving billions of dollars to help bail out Iceland, Ukraine and Hungary.

Still, some differences appear to be emerging ahead of next week's critical meeting.

The British Business Secretary, Lord Peter Mandelson, Tuesday questioned a French proposal to create special, state-controlled funds called "sovereign wealth funds" to help support Europe's troubled industries.

Finance ministers from the entire European Union will meet in Brussels Tuesday. The ministers have ruled out a joint economic recovery plan, opting instead to coordinate their separate national programs. A recent report said the continent's economy will barely grow, or possibly even shrink next year.

Governments around the world have made trillions of dollars in loans, stock purchases, guarantees and other aid to ease bankers' concerns and encourage them to lend again.

Australia's central bank announced a larger-than-expected interest rate cut of three-quarters of a percent Tuesday. The European Central Bank is expected to cut interest rates by half a point Thursday. Lower rates help the economy by reducing borrowing costs for businesses and consumers.

Malaysia's government has also announced plans to pump almost $2 billion into the country's economy through public projects to ward off slowing growth.

Some information for this report was provided by Bloomberg and Reuters.



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