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A woman passes a shop with a closing sale in Madrid, April 27, 2012 (SERGIO PEREZ)
A woman passes a shop with a closing sale in Madrid, April 27, 2012 (SERGIO PEREZ)

Top Business Stories

Spain: Too big to save, but too big to fail? Add to ...

These are stories Report on Business is following Thursday, May 31, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Spain's fortunes Global markets are somewhat calmer today after tumbling yesterday over fears of "Spanish Flu," but the banking issues surrounding the latest trouble spot in the euro zone are going to be with us for awhile.

As our European correspondent Eric Reguly writes in today's Report on Business, Spain is different than Greece, Ireland and Portugal because it's so much bigger and thus would be far more costly to bail out.

Indeed, it may be too big to save. But at the same time, it may be too big to fail lest its collapse cripple the monetary union. Amid all this, of course, and key to the future of the 17-member group, is just how the Germans are wiling to put up with.

While Spanish fears have subsided, Europe remains very much in focus today as Ireland holds a referendum on whether to join the European Union's fiscal compact. Polls suggest the Irish will approve the pact.

"Today is one of those ‘calm after the storm’ days, as everyone dusts themselves down and tries to work out their next moves," said David Jones, chief market strategist at IG Index.

"Spanish and Italian yields have edged lower, while the dollar index is slightly down this morning. Nonetheless sentiment remains fragile, since Spain is still only a few basis points away from a bailout. A referendum in Ireland today will keep markets cautious, although it seems that the Irish people will do as they are bid by the EU and vote ‘yes,’ removing at least one point of uncertainty."

CGI's big deal It's a big day for Canada's CGI Group Inc. , with a huge acquisition, the largest in its history, and a big vote of confidence from the Caisse de dépôt et placement du Québec.

The Montreal-based IT company announced it has struck a deal to acquire Logica, a huge European business and tech service company, for 105 pence a share, or a total £1.7-billion, roughly $2.8 billion (Canadian).

Separately, the Caisse said it's pumping $1-billion into CGI.

"This investment is fully aligned with our strategy, which aims to encourage the growth of Quebec companies abroad while generating attractive long-term returns for our depositors," said Caisse chief Michael Sabia.

"On the strength of more than 70 successful acquisitions, CGI’s management team is now writing a new chapter in the company’s history: This acquisition more than doubles its size and positions it very favourably in the markets."

CIBC profit climbs Canadian Imperial Bank of Commerce today posted a 6-per-cent jump in first-quarter profit, boosted by its retail and business banking operations.

CIBC earned $811-million, or $1.90 per share, in the quarter, compared to $767-million, or $1.80, a year earlier, The Globe and Mail's Grant Robertson reports.

Revenue rose 2 per cent to $3.08-billion.

Excluding one-time items, the bank earned $2 a share, beating analysts forecasts for the quarter. On average, analysts expected CIBC to report adjusted earnings of about $1.86 a share. CIBC kept its quarterly dividend the same at 90 cents.

National Bank of Canada also posted a big gain in profit, and hiked its quarterly dividend to 79 cents from 75 cents.

India growth slows India's economic growth is slowing at a faster pace than projected.

Gross domestic product expanded at a year-over-year rate of 5.3 per cent in the first quarter of the year, according to government data, down from 6.1 per cent in the fourth quarter of last year.

"Manufacturing was particularly weak, contracting from a year ago, while the utilities and construction sectors were softer as well," said Benjamin Reitzes of BMO Nesbitt Burns.

"Overall, the economy grew at its slowest pace in over seven years (or since 2004Q4). India’s mass of regulations and a lack of political will to reform are clearly holding the country back. Indeed, given the uncertain and generally soft outlook through the rest of this year, regulatory reform is likely India’s best chance at reigniting growth."

U.S. growth slips Growth in the U.S. was slower in the first quarter than initially reported.

The U.S. Commerce Department today revised down its earlier estimate to an annual pace of 1.9 per cent, from its earlier measure of 2.2 per cent, as growth in consumer spending slipped a bit.

Today's reading shows again has growth has tapered after the bounce of late last year.

"The sub-2-per-cent overall print confirms that the U.S. is going through a soft patch (Q2 won't be stellar either based on the the monthly reports to date)," said senior economist Krishen Rangasamy of National Bank Financial.

U.S. first-quarter growth revised down to 1.9%

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