From the Wires

Record drop in retail sales add to Spain’s woes

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MADRID (AP) — A record drop in retail sales added to Spain’s woes Tuesday as the country struggles to contain the crisis crippling its banking industry and investors remained wary of the country’s ability to manage its debt.

Retail sales dropped 9.8 percent in April in year-on-year on a seasonally-adjusted basis as the country battles against its second recession in three years and a 24.4 percent jobless rate that is expected to rise. The fall in sales was the 22nd straight monthly decline, and was more than double the 3.8 percent fall posted in March, the National Statistics Institute said Tuesday .

The country’s conservative government has introduced harsh austerity measures — including spending cuts on health and education — in attempt to control the level of its debt relative to the sign of its economy. It is also trying to reassure investors worried that the woes of the banking sector — heavily exposed to an imploded real estate bubble — will drag the country into a bailout like Greece, Ireland and Portugal needed.

Late last week Bankia, the nationalized lender and Spain’s fourth-largest bank, announced that it would need a further €19 billion ($23.88 billion) in state aid to shore up its defenses against losses from its toxic loans. News of the bailout, and concerns over how the government would raise the money, sent Spain’s main IBEX 35 stock index down to nine-year lows Monday and the borrowing costs up to dangerously high levels.

In an attempt to calm concerns, Prime Minister Mariano Rajoy gave an impromptu press conference Monday, insisting yet again that Spain’s banking sector would not need a bailout.

The interest rate, or yield, on Spanish 10-year-bonds rose steadily Monday toward 6.5 percent — a sign that investors are turning away even from Spanish debt — apparently to little effect. Meanwhile the spread between Spanish bonds and safe haven German bunds stayed sky high, above 500 basis points. On Tuesday it was at alarming 505 basis points. The yield was at 6.43 percent. Spain’s IBEX stock index was down a further 2 percent in early Tuesday trading at 6,265.

Late Monday evening, Bankia’s parent company restated its 2011 results to reflect a €3.3 billion ($4.15 billion) loss as opposed to a €41 million profit.

BFA, or Banco Financiero y de Ahorros, said in a statement that about half of this revised amount stemmed from losses at Bankia with another €1.6 billion in losses from an adjustment of expected tax deductions, which the company had previously recorded as assets. It said the profit recalculation was prompted by the nationalization.

Bankia’s exposure to toxic real estate assets is now calculated at about €40 billion, as opposed to the most recent total of €32 billion.

Strike forces Turkish Airlines to cancel flights

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ISTANBUL (AP) — A strike and work slowdown at Istanbul’s main airport has forced Turkish Airlines to cancel more than 100 flights.

Ground handlers, technicians and other workers are protesting a government-proposed legislation that would ban future strike actions by aviation workers.

Binali Yildirim, the country’s transport minister, says Turkish Airlines was forced to cancel 104 domestic or international flights on Tuesday while several other flights have been delayed. Private HaberTurk television is reporting long lines and chaos at Istanbul’s Ataturk International Airport.

An aviation workers union says the proposed legislation violates international labor laws and is unconstitutional.

The protest is expected to end on midnight Tuesday.

Sudan says will pull troops from oil-rich region

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KHARTOUM, Sudan (AP) — Sudan said it would withdraw its army Tuesday from a disputed border region that contains rich oil fields and is contested by neighboring South Sudan.

The decision to pull the military out of Abyei comes as Sudanese officials are scheduled to meet with their South Sudanese counterparts Tuesday in the Ethiopian capital, Addis Ababa.

The talks follow an escalation in fighting between the two sides last month.

Sudanese military spokesman Col. Sawarme Khalid Saad told reporters that the redeployment would help talks with South Sudan.

In a statement issued late Monday, Saad also denied reports that Sudan’s army had attacked the disputed north-south border earlier that day.

“We have nothing to do with what happens in the South,” Saad said. “The army has not crossed the international frontiers.”

South Sudan military spokesman Col. Philip Aguer said Monday the country’s Western Bahr-el-Ghazal, Northern Bahr-el-Ghazal and Unity states experienced three days of bombardment by Sudan.

The two countries are set to resume bitter negotiations on issues left over from the 2005 peace deal that eventually saw South Sudan break away from Sudan to form an independent nation in July last year after more than two decades of civil war. Among the most contentious issues are the separation of their once-unified oil industry and the demarcation of the long and ill-defined border.

The negotiations are led by former South African President Thabo Mbeki, who has been unable to push the two sides closer to a deal.

Sudan’s planned withdrawal of troops would be followed by the creation of a police force and parliament for the territory, Khartoum’s official in charge of Abyei affairs Al-Khair al-Faheem Mekki told state Radio Omdurman.

The U.N. Security Council this month extended its security force’s mission in Abyei, which includes about 4,000 peacekeepers, and demanded that Sudan withdraw their troops from the region following South Sudan’s removal of about 700 police officers in early May.

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UK reporter won’t be prosecuted for hack leaks

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LONDON (AP) — British prosecutors say they won’t press charges against a Guardian journalist and her suspected police source over leaks about the country’s high-profile phone hacking investigation.

The decision closes a sensitive case which has tested already strained relations between Britain’s media and its largest police force, both of whom are struggling to deal with the fallout from the phone hacking scandal which erupted last year.

Media groups were angered that police were pursuing The Guardian reporter Amelia Hill over the leaks, especially given that her paper had helped uncover the scandal.

Britain’s Crown Prosecution Service said in a statement Tuesday there was enough evidence to show that Hill had gotten leaks about the case from an unnamed 51-year-old detective constable, but that prosecuting them would not be in the public interest.

AP NewsAlert

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MILAN (AP) — Italian news reports say 8 dead in new 5.8-magnitude quake that rocked northern regions.

Europeans ambivalent over euro, survey finds

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LONDON (AP) — A survey across five eurozone countries finds a prevailing skepticism over Europe’s single currency, with a large number of people in France, Italy and Spain thinking it’s been more damaging than beneficial.

Pew Research’s survey, published Tuesday, finds that among the five countries there isn’t one with a majority that thinks the currency has been beneficial to them. The euro was launched in 1999.

However, more people in Greece, the epicenter of the debt crisis, think the euro has been good for them than bad. That may be crucial as Greece heads to the polls on June 17 in an election many see as a referendum on the country’s euro membership.

Pew surveyed more than 8,000 people in eight EU countries between March 17 and April 16.

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