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MANILA, Philippines — Asia is set for a mild economic recovery from the global financial crisis in 2010 after bottoming out this year, the Asian Development Bank's chief economist said. However, sustained economic growth will take longer to achieve because Western industrialized countries, the main markets for Asian exports, will continue to struggle with "the worst recession since World War II," Jong-Wha Lee said.

The ADB forecasts 3.4 percent growth for developing Asia in 2009, down from 6.3 percent in 2008. The bank expects Europe's economy to shrink 4 to 5 percent this year, and the U.S. economy to contract by 3 percent.

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LONDON — The availability of credit in the U.K. increased modestly in the second quarter, although default rates and losses also rose and were expected to swell further in coming months, the Bank of England said. In its quarterly report on credit conditions, the central bank said the supply of secured credit to households had increased but that unsecured credit — such as credit cards — was less available.

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TOKYO — Slumping banks dragged Japanese stocks lower as investors doubted whether latest merger deal between Shinsei Bank Ltd. and Aozora Bank Ltd. would prove fruitful. The benchmark Nikkei 225 stock average lost 0.6 percent to 9,876.15. Elsewhere in Asian markets, Hong Kong's Hang Seng fell 200.68 points, or 1.1 percent, to 18,178.05, while South Korea's Kospi closed flat in back-and-forth trade. Taiwan's benchmark rose 1.4 percent. Markets in Australia and Shanghai also gained.

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BERLIN — Governments must follow through on pledges to reform the global financial system, German Chancellor Angela Merkel said, addressing parliament ahead of next week's Group of Eight summit in Italy. She insisted that signs the crisis is easing cannot mean a return to "business as usual."

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DUBAI, United Arab Emirates — A state investment fund in the Emirates capital Abu Dhabi says it has raised $5 billion in loans, a sign that banks remain willing to lend to the oil-rich Arab Gulf despite the global slump.

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STOCKHOLM — Sweden's central bank surprised markets by cutting its key interest rate by a quarter of a percentage point to 0.25 percent, saying the economic downturn appears to be deeper than previously forecast.

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MADRID — The number of people filing claims for unemployment benefits in Spain fell for the second straight month in June, the government said. The decline left the total at 3,564,889 and marked the first time since mid-2007 that the figure has gone down two months in a row. Spain's unemployment rate of 17.4 percent is the highest in the EU.