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August 12, 2011

Italy Approves Cuts to Balance Budget by 2013

Italy's government has approved sharp budget cuts demanded by the European Central Bank despite regional opposition to the move.

Italian officials said Friday the austerity measures include $28 billion in cuts next year and $35 billion in 2013.  Regional leaders say the plan will hurt the poor.

The package aims to balance Italy's budget by 2013, as the European Central Bank has required to support Italy's bonds.  Interest rates on those bonds soared last week.   

Meanwhile, European stock indexes soared on Friday for the second straight day, with key exchanges in Britain, France and Germany up more than 3 percent.

U.S. markets also advanced Friday at the end of a volatile week on markets around the world.  Asian indexes finished the week mixed.  

Some stock trading in Europe was marked by new restrictions.  France, Italy, Spain and Belgium banned the short-selling of stocks to calm market turmoil.  Short-selling is an attempt to profit by betting that a stock's price will fall.

In the U.S., markets were boosted by a government report that U.S. consumer spending advanced in July by the biggest amount in four months. However, a second report showed that consumer confidence is waning, dropping this month to a 31-year low.

Analysts say stocks were helped Thursday by a U.S. government report that said first-time claims for jobless benefits fell to a four-month low in the past week, good news for the U.S. economy following an unprecedented downgrade of the U.S. credit rating.  That downgrade triggered Monday's sell-off, starting the week of market gyrations.