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These are stories Report on Business is following Monday, May 30. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Greece: From bad to worse Greece remains in the eye of the storm today as markets wonder and worry about its increasingly dim outlook.

Inspectors from the EU and International Monetary Fund are in Athens looking over the books, amid reports of a new deal taking shape to provide a further lifeline. But that deal, The Financial Times reports, could come with very tight strings attached.

The plan being negotiated by EU officials could see outsiders involved in tax collection and the privatization of government assets, and would include a voluntary extension of debt payments.

The Financial Times reports that up to half of the €60-billion to €70-billion needed by Greece through 2013 could come from amending the debt payment schedule, coupled with the money raised through asset sales. The EU and IMF would also have to float €30-billion to €35-billion more in loans to the government, an addition to the €110-billion bailout already arranged.

Markets increasingly believe Greece will have to restructure its debts, and that any further bailout only postpones the inevitable. As The Globe and Mail's Eric Reguly reports from Europe, unions are poised to fight the privatization effort, highlighted by the latest protest today.

The European Central Bank is fiercely opposed to a debt restructuring. Indeed, in an interview with The Financial Times, Lorenzo Bini Smaghi, an executive board member at the ECB, warned that "a debt restructuring, or exiting the euro, would be like the death penalty - which we have abolished in the European Union."

An orderly restructuring is a "fairy tale."

"Political posturing continues as we head into the conclusion of the IMF review of Greece's bailout (due this week)," said Elsa Lignos, senior currency strategist at Royal Bank of Canada in Europe. "... The ECB's Bini Smaghi repeated the ECB line that an 'orderly' restructuring is 'a fairytale' saying neither restructuring nor reprofiling can be done in an orderly way."

Chris Weston of IG Markets said traders appear confident, for the short-term, at least, that Athens will receive the fresh rescue funds it needs from the EU and IMF. But, he warned, if this is the case and they do receive the funds, expect a backlash from European taxpayers."

An IMF report on Greece this week is crucial to the next instalment for Greece that's pegged for late June.

"Part of the issue is whether or not the IMF highlights a potential funding gap," said Scotia Capital currency strategist Camilla Sutton.

"With Greek two-year yields at 25.6 per cent and 10-year yields over 16 per cent, it is increasingly unlikely that Greece will be able to fund its 2012 (approximately €25-billion) needs in the market, thereby introducing a funding gap," she said in a research report as rumours rippled through the markets.

"Should such a gap exist, it would imply that the IMF might not release the late June payment, which would throw Greece into greater turmoil. A potential solution would be for Greece to introduce new fiscal measures, which would need to be endorsed by EU leaders and the IMF. This leaves significant uncertainty over the near-term outlook for Greece."

Economy expands at healthy pace The Canadian economy grew at the fastest pace in a year in the first quarter as increased activity in manufacturing and business investment outweighed faltering consumer spending.

Broad gains fuelled the growth of 3.9 per cent annualized, led by the goods-producing side of the economy, The Globe and Mail's Tavia Grant reports.

Goods production - including factories, mining and energy - grew 1.8 per cent while the services side increased 0.7 per cent. Business investment rose for the fifth quarter in a row, suggesting firms are taking advantage of the strong Canadian dollar to invest in productivity-enhancing machinery and equipment.

Today's reading by Statistics Canada is only a shade below the 4-per-cent pace expected by economists, That marks a far faster pace than the 1.8 per cent in the United States in the same quarter, and is up from 3.1 per cent in the last quarter of last year.

But consumer spending was flat, highlighting the shift that had been expected in economic patterns. Consumers have driven the rebound from the recession, but that's changing now.

Today's report comes a day after Finance Minister Jim Flaherty said in a television interview that he's "quite worried" about the possibility of another global recession, and a day before the Bank of Canada is expected to hold its key rate steady again.

Russia hikes rate Russia's central bank surprised markets today with a hike of one-quarter of a percentage point in its deposit rate to 3.5 per cent, though it left other key rates alone.

Russia is grappling with an inflation rate of 9.6 per cent.

"The weekend's announcement that Russia is lifting its ban on grain exports is encouraging, and reflects expectations for a vastly improved crop," added economists Derek Holt and Karen Cordes Woods of Scotia Capital.

"That is not thought to be bearish for food prices that are grappling with depressed spring planting conditions in significant parts of North America, and soft global inventories. But it does signal that domestic price pressures in Russia may ease on the heels of a softening in domestic food price inflation that motivated the export ban in the first place."

Home construction to 'stabilize' Home construction in Canada is expected to slow to levels that reflect the country's democraphic trends, Canada Mortgage and Housing Corp. said today.

It projected housing starts of between 166,600 and 192,200 this year, its "point forecast" being 179,500 units. For next year, it projects a range of 163,200 to 207,000, with the forecast at 185,300.

CMHC also projected sales of existing homes of 452,100 this year and resales of 461,300 next year.

"Modest economic growth, in conjunction with relatively low mortgage rates, will continue to support demand for new homes in 2011 and 2012," said the agency's chief economist Bob Dugan.

"Nonetheless, we are expecting new and existing housing markets to fall in line with demographic fundamentals, as changes to mortgage rules take hold."

Back in the money A Globe and Mail review of executive pay last year shows chief executive officers at Canada's 100 largest companies saw their compensation jump 13 per cent last year, led higher by a 20-per-cent increase in annual cash bonuses. Base salaries climbed 4 per cent, according to today's special report by Janet McFarland.

The 2010 gains for CEOs came on the heels of two years of weakness in 2008 and 2009 - when compensation fell by 5 per cent and rose less than 1 per cent respectively - and marks a return to the double-digit annual CEO pay increases seen commonly in the decade prior to the economic crisis.

Fortis strikes Vermont deal Fortis Inc. has struck a deal it says will allow the St. John's company to establish a "foundation" to build a utility business in the United States.

Fortis, which bills itself as the biggest publicly traded distribution utility in Canada, plans to buy Central Vermont Public Service Corp. for $35.10 (U.S.) in cash, or $470-million. Including debt, the deal's worth about $700-million.

The U.S. company is the biggest integrated utility in Vermont, with almost 160,000 customers in the state.

"The acquisition of CVPS represents the initial entry by Fortis into the U.S. regulated electric utility marketplace and establishes a foundation for Fortis to grow our utility business in the United States," chief executive officer Stan Marshall said in a statement.

"CVPS is a well-run utility whose operations are very similar to those of our Canadian regulated utilities, allowing us to use our collective competencies to further enhance service to customers and returns to our shareholders."

Analysts trim RBC Analysts are trimming their outlook for Royal Bank of Canada after the bank's quarterly results and dividend hike last week.

Analyst Peter Rozenberg of UBS Securities Canada cut his 12-month price target to $65 from $68, though held his rating at "buy."

As Globe and Mail banking writer Grant Robertson reported Friday, RBC hiked its dividend for the first time in almost four years, but its second-quarter earnings were lacklustre. RBC earned $1.51-billion, up 13 per cent, but an unexpected drop in profit at its capital markets division, caused by unexpectedly sluggish trading revenue, pushed down its shares after the results.

Mr. Rozenberg said RBC continues to be the leader "in every important segment with higher than average returns, capital and long-term growth."

Still, he said, he cut projected earnings per share by 2 per cent for this year and 4 per cent next "due to lower capital markets, lower margins and higher expenses."

Similarly, analyst Jason Bilodeau of TD Newcrest cut his price target to $66 from $68, also maintaining a "buy" recommendation.

"Q2 was a bit of a backslide for Royal after an impressive start to the year in Q1," he said in a research note.

"Much of the weakness can be explained by wholesale/corporate, and although we did trim our numbers, we still expect better results in [the second half of 2011]and decent growth in 2012. Royal is not the best fundamental story in the group, in our view, and we did trim our target price, but from current levels, returns still look good."

Husky eyes Hong Kong listing Husky Energy Inc. says it's looking at possibly also listing its stock on the Hong Kong exchange. Its primary base would still be the Toronto Stock Exchange, the Calgary-based energy company said today.

"The potential secondary listing of Husky's shares on the HKSE is under consideration as we believe it could potentially enhance investors' awareness of the company and its growth opportunities in one of the fastest growing financial markets in the world," chief executive officer Asim Ghosh said in a statement.

"The South East Asia region has been identified as a pillar of growth for the company and we are advancing several multibillion-dollar projects as part of our strategic plan. A Hong Kong listing could provide investors in this important capital market with easier access to participate in our business strategy."

Markets mixed World markets are mixed so far this morning amid holidays in Britain and the United States.

Tokyo's benchmark Nikkei dipped 0.2 per cent, while Hong Kong's Hang Seng gained 0.3 per cent. London's market was closed, though Germany's DAX and the Paris CAC 40 both rose.

In Economy Lab today

Warnings about population aging have been playing in the background of policy debates for two generations now, ever since the decline in the birth rate in the late 1960s made it inevitable. But the issue has now moved from being a problem of the future to being one of the present, Stephen Gordon writes.

In International Business today

Germany will shut all its nuclear reactors by 2022, parties in Chancellor Angela Merkel's coalition government agreed today, in a reaction to Japan's Fukushima disaster that marks a drastic policy reversal, Reuters reports.

In Personal Finance today

Most first-time buyers don't know how the system works or what questions to ask, Dianne Nice writes.

The easiest way to pay off your home faster is by breaking your mortgage to get a lower rate. Here's how to do it.

From today's Report on Business

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