A look at economic developments and stock market activity around the world Monday:TOKYO -- Japanese shares, already among Asia's worst performing this year, fell sharply to a 26-year closing low on the news that the world's second-largest economy posted a record current-account deficit in January. Japan's Nikkei 225 stock average fell 87.07 points, or 1.2 percent, to 7,086.03. The government said Japan's current account deficit stood at a record 172.8 billion yen ($1.8 billion) in January, far bigger than the previous deficit record of 25.6 billion yen in January 1996. The current account is Japan's broadest measure of trade in goods and services with the rest of the world. The government cited a 46.3 percent plunge in exports due to the deteriorating global economy. Imports fell 31.7 percent.
LONDON -- The Bank of England can control the threat of inflation generated by its radical new policy of creating money, the bank's deputy governor said. Britain's central bank announced a 75 billion pound ($103.6 billion) plan last week to buy assets, such as government securities and corporate bonds, over three months and pay for them by crediting banks' reserve accounts -- effectively creating new money. The bank's deputy governor for monetary policy, Charles Bean, said the move may lead to a rise in inflation in normal times, but that it was needed for economic recovery. He said the bank would watch the effect it had on spending.
Meanwhile, the British government over the weekend confirmed that it was taking a majority stake in Lloyds Banking Group PLC in exchange for insuring potentially more than 260 billion pounds ($367 billion dollars) of shaky assets. The bank's shares tumbled 10 percent at one stage before ending up nearly 5 percent higher. Barclays PLC was the worst-performing British banking stock, closing 5 percent down on fears that it may have to give up a stake to the government in return for participating in the insurance plan. The FTSE 100 index of leading British shares rose 0.3 percent.
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