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Morning business round-up: Microsoft partners Baidu

What made the business news in Asia and Europe this morning? Here's our daily business round-up:

Baidu, the biggest web company in China, has said it will partner with Microsoft to provide English-language search results.

English-search queries will be directed from Baidu to Microsoft's Bing search engine, the Chinese company said in a statement late on Monday.

The move is aimed at increasing Microsoft's small web presence in China, the biggest internet market in the world. Baidu currently has 75% of the market.

Staying in China, bad debts held by local governments are a far bigger problem than first estimated, ratings agency Moody's has warned.

Chinese banks had lent 8.5tn yuan ($1.3tn) to the local governments in 2010 in an attempt to boost growth.

However, the agency said the debt burden could be 3.5tn yuan larger than auditors had estimated. It warned that bad debt could reach between 8% and 10% of the total loans.

Meanwhile, Christine Lagarde, France's former finance minister, takes over as head of the International Monetary Fund on Tuesday.

The first woman to head the IMF, she was picked by the body's 24-member board.

The post became vacant after the resignation of Dominique Strauss-Kahn following his arrest in New York in May. He denies sexual assault charges.

Moving to Europe, growth in the eurozone services sector slowed again in June to hit an eight-month low, while business confidence slipped to its lowest level in two years, a survey suggests.

The closely-watched Markit PMI Services index fell to 53.7 from 56.0 in May. Any reading above 50 indicates growth.

Growth in France eased "sharply", while the services sector contracted in Italy, Markit said. Business confidence fell in Germany, France, Italy and the Irish Republic.

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Meanwhile, Germany's Constitutional Court is hearing a challenge to the country's participation in bail-outs of Greece, the Republic of Ireland and Portugal.

A Berlin professor argues that the process violates constitutional provisions and should be blocked.

Germany's finance minister rejected the claim, saying all rescue packages had been made on solid legal ground.

Finally, the Reserve Bank of Australia has left interest rates unchanged at 4.75% amid growing signs of a slowdown in the economy.

Figures released on Monday showed that retail sales dipped in May as consumers tried to pay off their mortgages.

Our Business Daily podcast today looks at why investors are piling into Asian clean technology.

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