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Morning business round-up: Merkel bids to allay fears

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

German Chancellor Angela Merkel has sought to calm nerves over a possible Greek default, saying the eurozone bloc must stick together.

The collapse of Greece and its exit from the euro would have a domino effect, she told German radio.

Her comments came after reports that Germany was preparing for Greece to potentially leave the euro.

Fears of a Greek default caused sharp falls in shares on Monday, with markets remaining unsettled on Tuesday.

Meanwhile, Italy's borrowing costs have hit a new high, reflecting a continuing lack of confidence in the nation's finances.

Italy raised 3.85bn euros (£3.3bn) in five-year bonds - but the interest rate rose to 5.6%, up from 4.93%.

Before the fund raising, reports said that the Italian finance ministry had met delegates from China's largest sovereign wealth fund, CIC.

This sparked speculation that CIC might invest some of its vast wealth in Italian assets and bonds.

Staying in Europe, the rate of inflation in the UK, as measured by the consumer price index, rose slightly to 4.5% in August, up from 4.4% in July.

The Retail Prices Index (RPI) measure increased to 5.2% from 5%.

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In company news, Philips, Europe's biggest consumer electronics producer, has said it is deepening its cost cutting programme in the face of weak global demand.

The Dutch company said it was looking for 800m euros ($1.1bn, £688m) of cost cuts by 2013, having previously had a target of 500m euros.

Philips has been affected by higher raw material costs and tough competition from Asian rivals.

European carmaker Opel, owned by US automotive giant General Motors, is considering launching a luxurious crossover vehicle to make the brand more upmarket.

Such a vehicle could be more luxurious than the current Opel/Vauxhall flagship model, the Insignia, according to chief executive Karl-Friedrich Stracke.

Combined with a keen eye on cost, this should help raise both Opel's market share and profits, he said.

The latest edition of the Business Daily programme from the BBC World Service looks at India's lucrative surrogacy industry, where poor women are paid to bear babies for childless Western couples.

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