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A protester runs as others are caught by riot police during clashes in Athens, Wednesday, May 11, 2011 (Petros Giannakouris/Petros Giannakouris/The Associated Press)
A protester runs as others are caught by riot police during clashes in Athens, Wednesday, May 11, 2011 (Petros Giannakouris/Petros Giannakouris/The Associated Press)

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Greece: Sticks and stones can break bones. Names hurt too Add to ...

These are stories Report on Business is following Wednesday, May 11. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Greek strike halts services Watching Greece today brings to mind that old childhood ditty: "Sticks and stones can break my bones, but names can never hurt me."

In the case of Greece, it's both, actually. And the names aren't pretty: Basket case, slouch, PIG (It's just the G, but still), laggard.

In a continuing series of protests against the embattled government's austerity measures, a one-day general strike not only crippled most public services, it also sparked a clash between riot police and stone-throwing young people in Athens, The Associated Press reports.

Athens was the scene of tear gas, stun grenades and gasoline bombs, the agency said.

The protests come as European policy makers discuss another round of aid for Greece, which the country says it doesn't need, but no one believes that. EU finance ministers will meet to discuss that next week.

There's also mounting speculation that Greece will have to restructure its debts.

"Yesterday was a day of denial, with politicians and central bankers working hard to dispel rumours that a restructuring of any kind is possible," said Carl Weinberg, chief economist at High Frequency Economics.

"That is odd because anyone who looks at the problem as an investment banking challenge can plainly see that restructuring is inevitable."

Trade surplus widens Canada's trade surplus widened in March to $627-million, well up from $356-million a month earlier as exports rose faster than imports.

Exports climbed 3.5 per cent, led by the energy and factory sector, and imports 2.8 per cent, Statistics Canada said today.

Volumes outstripped price gains, a good sign for Canada's exporters. In volume terms, exports rose 2.5 per cent, while prices gained 0.9 per cent.

"Exports have generally been trending upwards since May 2009," Statistics Canada said. "Higher volumes have accounted for almost two-thirds of the growth during that period."

In the case of imports, though, volumes increased 3.2 per cent in March, while prices actually fell 0.4 per cent.

Canada's exports to the key U.S. market grew 1.9 per cent, while imports from south of the border increased 3.2 per cent. And here's a key statistic from today's report: Exports to markets outside of the United States climbed 7.8 per cent, largely because of a lift from Europe.

"Today's report confirms that despite significant headwinds from a stronger Canadian dollar, Canada's export-led recovery continues apace," said economic analyst Leslie Preston of Toronto-Dominion Bank.

"That will lend support to the case for the Bank of Canada to restart their monetary tightening cycle come July."

U.S. deficit widens In the United States, the U.S. trade deficit is getting fatter. The trade shortfall in March widened to $48.18-billion (U.S.) from $45.44-billion a month earlier, according to the U.S. Commerce Department today. Exports still climbed 4.6 per cent to a record high, though imports rose at a faster 4.9-per-cent pace.

"The deficit on the petroleum trade balance grew, not surprisingly given the jump in oil prices and the hard-hit greenback," said senior economist Jennifer Lee of BMO Nesbitt Burns.

"It was in March that average [West Texas Intermediate]broke through the $100-barrier (and careened through the $110 mark in April before easing so far in May)."

Worth noting is that the U.S. trade deficit with China narrowed as exports surged 12.8 per cent.

This comes at a tense time given American anger over the low level of China's currency.

As Globe and Mail Washington correspondent Kevin Carmichael reports, officials from the two countries ended their annual policy discussions yesterday with promises to address a list of small economic irritants and commitments to improve co-operation on the diplomatic front.

Britain trims forecast The royal wedding may have taken a bite out of Britain's economy.

In its quarterly inflation report today, the Bank of England said economic growth this year will be lower than expected, and could be partly held back because of the celebrated rmarriage of Prince William and Kate Middleton.

"GDP growth during 2011 is likely to continue to be temporarily affected by special factors; in particular, the additional bank holiday associated with the royal wedding and supply chain disruptions following the earthquake and tsunami in Japan," the central bank said.

"But some business confidence surveys, which are less likely to be distorted by such factors, are consistent with a pickup in underlying growth in the near term."

Because the wedding day became a public holiday held around Easter, many people took extra days off work, thus hitting productivity, said analyst Michael Hewson of CMC Markets.

But he believes it's all a "smokescreen" because it doesn't take into account the extra services laid on, the boost to tourism and air travel and such as many came from far and wide for the celebration.

"I think lost productivity can always be made back," he said.

Over all, the Bank of England report warned that, amid slower-than-expected growth, Britain is expected to struggly with sharply higher inflation, possibly as high as 5 per cent.

"Despite weaker growth prospects, the bank indicated that under the assumption of rate hikes in line with market interest rates, inflation will gradually fall back in line with the 2-per-cent target over the next two years, confirming market expectations (and our own forecast for one 25-basis-point hike in [the third quarter of 2011] followed by another in each quarter of 2012)," said economists Karen Cordes Woods and Derek Holt of Scotia Capital.

Americans cut back on driving As gas prices surge, Americans are cutting back on their driving. And, BMO Nesbitt Burns warns, that's not a good sign.

Based on the number of miles travelled from last September through to February, Americans cut back by 3.5 per cent as prices at the pump surged 18.5 per cent, BMO's Kenrick Jordan noted in a report.

"With gasoline prices flirting with the $4 mark, it won't be a surprise if miles travelled fell further over the past two months," Mr. Jordan said.

"In relative terms, this recent pullback in driving is nothing to dismiss. It is only slightly smaller than what occurred during the first half of 2008, when oil prices were rising sharply and the economy was entering recession. And, it reflects the fragile state of consumer confidence."

There's no comparable data yet for Canada, but it wouldn't be surprising to see the same trend.

As The Globe and Mail's Carrie Tait and Nathan VanderKlippe report today, a spike in gas prices in Central Canada has exposed a surprising regional divide. And consumers want answers.

There's a disparity at the pump of up to 30 cents a litre. While drivers in Central Canada suffer record prices, some in the West and Atlantic Canada are seeing little change.

(To see how U.S. drivers are cutting back, see the accompanying infographic or click here.)

China grapples with inflation Some observers expect China's central bank to raise reserve requirements for the country's banks again amid a fresh reading that shows annual inflation running at a still high 5.3 per cent, down in April only slightly from the 5.4 per cent of a month earlier.

The People's Bank of China has hiked both reserve requirements and key lending rates to cool things down, but the latest batch of numbers, including retail spending and industrial output, also indicate a slightly weaker-than-expected economy. That suggests the next move will be to boost reserve requirements, rather than tinker with the policy rate, said Mark Williams, senior China economist at Capital Economics in London.

"Further interest rate hikes cannot be ruled out, but we wouldn't be surprised if many officials outside the People's Bank think that too risky following the latest activity data," Mr. Williams said.

"Reserve requirements will continue to rise, though, to offset the expansionary impact of foreign exchange reserve purchases. The last three moves have each come on the 17th or 18th of the month. We expect another move imminently."

Enbridge profit climbs Enbridge Inc. today posted a 15-per-cent jump in first-quarter profit to $393-million, or $1.05 a share, from $342-million, or 93 cents, a year earlier.

The company also held its outlook steady, pleased with the results.

"The steady performance of Enbridge's liquids pipelines, gas transportation, gas distribution and green energy businesses continued to deliver solid earnings for the company and its shareholders during the first quarter," said chief executive officer Patrick Daniel.

Enbridge is also renewing its efforts to expand overseas, including into China and India, The Globe and Mail's Nathan VanderKlippe reports from Calgary. The renewed international interest comes just two years after Enbridge divested its last international assets.

Toyota profit slumps Toyota Motor Corp. today posted a sharp drop in profit, highlighting the impact of the March earthquake and tsunami that devastated Japan.

Toyota earned ¥2.4-billion in its fourth-quarter, compared to ¥122.2-billion a year earlier.

The auto maker said today production may bounce back earlier than expected.

Gildan ups guidance Gildan Activewear Inc. sees even better times ahead. The Montreal-based T-shirt maker today posted record second-quarter sales and profits and boosted its outlook for the year, buoyed by its acquisition of God Toe Moretz and price increases.

Gildan earned $61.4-million (U.S.) or 50 cents a share, diluted, in the quarter, up from $48.8-million or 40 cents a year earlier. Sales climbed about 17 per cent to $383.2-million.

For the year, Gildan now projects revenues of about $1.8-billion, up from an earlier forecast of $1.6-billion, and earnings per share, before charges, of $2 to $2.10. For the third quarter, it projects sales of almost $550-million, and earnings per share, again before charges, of about 70 cents.

Upgrades to Tim Hortons, CI Financial Royal Bank of Canada has boosted its price target on shares of Tim Hortons Inc. to $50 from $46, rating the doughnut king as "sector peform."

RBC analyst Irene Nattel cited expected "strong underlying" first-quarter results tomorrow.

TD Newcrest increased its 12-month price target on CI Financial Corp. to $27 from $26 after it "delivered another strong quarter" yesterday. Analyst Doug Young held his recommendation at "buy."

In International Business today

The Colonel's secret recipe in China has more to do with egg tarts and breakfast fritters than how he spices his chicken. In Beijing, Carolynne Wheeler looks at the push in China by KFC.

Mario Draghi is about to become the world's second most powerful central banker, Globe and Mail European correspondent Eric Reguly reports from Rome. The job as president of the European Central Bank is unofficially his after German chancellor Angela Merkel finally gave the Italian her blessing.

In Economy Lab today

Is gifted education a bright idea? Research presented at the recent Society of Labor Economists meeting in Vancouver suggests that sometimes it isn't. Frances Woolley reports.

China may be battling high inflation, but may still escape the need to hike interest rates again. But that doesn't mean bank reserve requirements won't still climb.

In Personal Finance today

With reduced prices, strong currency and low financing, it may seem like the perfect time for Canadians to buy U.S. real estate. In this excerpt from Buying Real Estate in the U.S., author Dale Walters explains how it's done.

With the exchange rate in our favour, this is an opportune time to start a U.S. account, writes Angela Self.

Insurers are seeing a big rise in water damage claims, but homeowners can prevent the problem from starting, Roma Luciw reports.

In today's Report on Business

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