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The hole in Spain’s economy is getting deeper.

The government reported Friday that unemployment rose to 24.4 percent in the first quarter _ compared with 22.9 percent in the fourth quarter _ and that more than half of Spaniards under 25 are now without jobs. The bleak employment report came one day after ratings agency Standard & Poor’s downgraded the country’s debt.

The Spanish economy is in recession for the second time in three years as the damage from a housing bust persists. Foreclosures are rising, Spain’s banks are in worse financial shape and the government’s deficit is hitting worrisome levels.

The first-quarter employment data showed that 365,900 people lost their jobs, bringing the number of unemployed Spaniards to 5.6 million. The unemployment rate for people under 25 climbed to 52 percent, up from 48.5 percent in the previous quarter.

“The figures are terrible for everyone and terrible for the government,” Foreign Minister Jose Manuel Garcia-Margallo told Spanish National Radio. “Spain is in a crisis of enormous magnitude.”

The total number of unemployed increased by 729,400 compared with the first quarter of 2011. The National Statistics Institute said Friday that Spain now has 1.7 million households in which no one has work.

The figures were another blow to the conservative government of Mariano Rajoy after Standard & Poor’s late Thursday became the first of the three leading credit rating agencies to strip Spain of an A rating. It cited a worsening budget deficit, worries over the banking system and poor economic prospects for its decision to reduce the rating by two notches from A to BBB+.

S&P even warned that a further downgrade is possible as it left its outlook assessment on Spain at “negative.”

Spain, the eurozone’s fourth-largest economy, is just now just three notches above so-called junk status. Earlier this week, the Bank of Spain confirmed that the country had entered a technical recession _ two consecutive quarters of negative growth.

The country’s economic problems have become the epicenter Europe’s debt crisis in recent weeks as investors worry over Spain’s ability to push through austerity measures and reforms at a time of recession and mass unemployment.

The cuts are aimed principally at slashing the government’s deficit from 8.5 percent of economic output to the maximum level set by the European Union of 3 percent by 2013. For this year the goal is 5.3 percent.

With the economy shrinking and the population restless, there are concerns that the government will not meet its targets and will be forced into seeking a financial rescue as Greece, Ireland and Portugal have done before.

The difference is that Spain’s economy is double the size of the combined economies of the three countries that have already been bailed out. The other eurozone countries would struggle to muster enough money to rescue it.

The government later Friday released a flurry of upbeat data on how it plans to turn the economy round between 2012-2015. Despite the dismal job numbers, it predicted a roughly balanced budget in 2016.

But there was more pain, too. Economy Minister Luis de Guindos announced an increase next year in indirect taxes. He said this measure will raise (EURO)8 billion ($11 billion) in new revenue to help chip away at a bloated deficit.

The conservative government has already raised income and property taxes, and announced cuts in spending on health care and education. The forecast is for the economy to shrink 1.7 percent this year.

Foreseeing the economic downturn, businesses have been laying people off at a faster rate than expected, said IESE Business School economics professor Antonio Argandona. New laws also make it easier for companies to shed workers at low cost.

Argandona said Spain is not now at risk of needing a bailout because its government is still solvent. But even if the economy returns to growth next year as forecast, the jobless rate will lag behind and unemployment could hit 26 percent, he added.

The mood among Spanish people out on the streets Friday was downcast.

“The situation is very bad. There’s no work,” said Enrique Sebastian,a 48-year-old unemployed surgery room assistant as he left one of Madrid’s unemployment offices.

“The only future I see is one with wages of (EURO)400 ($530) a month for eight-hour days. And that’s if you can find it,” said Sebastian.

Markets in Spain initially reacted negatively to the twin news but soon recovered their poise alongside the rest of Europe as the downgrade was largely viewed as a belated acknowledgment of the market realities.

The main IBEX index, having fallen more than 1 percent earlier, recovered and was up 1.2 percent in early afternoon trading. Meanwhile investors sold off Spanish bonds in a show of jitters. The interest rate, or yield, on the country’s ten-year bond was up 0.07 of a percentage point to 5.87 percent, having touched 6 percent earlier.

Though the yield is below the 7 percent rate widely considered unsustainable in the long-run, it has edged up over the past month from below 5 percent in a clear sign investors are fidgety over its economic prospects.

Gayle Allard, a labor market expert at IE Business School, said that while a jobless rate of 24.4 percent is terrible, Spain is traditionally a high unemployment country. Three times in the past 30 years it has exceeded 20 percent, Allard said.

“It is something that, somehow, they live with. Things go underground. I don’t know what they do. They hide money in good years and they pull it out in bad years,” Allard said.

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Pylas contributed from London. Ciaran Giles and Jorge Sainz contributed from Madrid.

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Budget Minister Cristobal Montoro said Spain would damage European and global growth if it misses budget-deficit targets and threatened to take over the accounts of regions that don

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Service producers are taking over from manufacturing as the driver of the almost three-year-old U.S. expansion.

The end of the recession in June 2009 triggered the biggest surge in production in a decade, propelled by rising demand from overseas and the need to replenish inventories and upgrade equipment. That is now giving way to increasing sales at places like restaurants, transportation companies and temporary-help agencies, leading to gains in employment that have bolstered the world

More than 1,000 indigenous protesters reached Ecuador’s capital Thursday after a two-week march from the Amazon to oppose plans for large-scale mining on their lands.

The protesters were joined by thousands of anti-government protesters in Quito, and some of the demonstrators clashed with police outside the National Assembly. Police repelled rock-throwing young men using tear gas and charging at the demonstrators on horseback.

Police said at least four officers suffered minor injuries in the violence.

The indigenous protesters were joined by students, activists and government opponents who criticized President Rafael Correa for signing off on plans for mining projects including open pit mines that are to extract copper and other minerals from the traditional lands of the Shuar Indians in southern Ecuador.

Thousands of Correa’s supporters gathered in parks and plazas for a counter-demonstration to show their support for the government’s policies, some of them in front of the president’s palace.

Correa’s supporters chanted: “The coup-plotters won’t pass! They’ll bump into the people!”

The leftist president addressed a crowd of supporters at a park, saying the government is willing to talk with indigenous leaders despite the disagreements.

“We’ve told them: They want to talk, perfect, but with the good-intentioned, good people. For that, they don’t need marches. We’re always open to dialogue,” Correa said. He called the protesters “counterrevolutionaries.”

“If they want to beat us, they should do it in elections,” Correa said in a radio interview.

The president said the government took measures to ensure security and the right of his opponents to protest peacefully. Hundreds of police officers stood watch at both demonstrations.

“But if there is an act of violence… clearly it will be from infiltrated opposition groups,” Correa said, adding that he thought the indigenous protesters had failed to rally much of a crowd.

Correa, whose spending on social programs has helped boost his approval ratings above 70 percent, has supported large-scale mining projects saying they represent a financial boon for the country guaranteed cash advance.

The march was organized by the Confederation of Indigenous Nationalities, the country’s indigenous umbrella group.

Delfin Tenesaca, one of the group’s leaders, said that if the president is truly willing to have a dialogue, he should receive the protesters. “He should also eliminate all mining contracts in order to respect the constitution, which prohibits all types of mining in parks, ecological reserves and water sources,” Tenesaca said.

The indigenous group’s president, Humberto Cholango, told reporters: “We want peace and no more insults by the president.”

“We want Ecuador to know that there are people here who are willing to question and tell the president his mistakes,” Cholango told the Ecuadorean television channel Ecuavisa.

The protest march began on March 8 in the Amazon town of El Pangui, about 350 kilometers (215 miles) south of Quito. The marchers took a winding route, hiking about 700 kilometers (435 miles) to reach the capital.

Near the starting point of the march, the government has authorized open pit mines. Under a contract signed by the president this month, Chinese-owned Ecuacorriente will begin stripping copper as early as next year from a hillside in Shuar country whose reserves are estimated at 2.1 billion kilograms (4.7 billion pounds).

The Indians hold title to their traditional lands, but the government maintains mining rights and isn’t legally bound to obtain the communities’ consent to begin mining projects.

While contracts specify that 10 percent of the royalties should benefit local communities, activists say that can’t compensate for harm to Amazon forests and watersheds.

The protesters, from various indigenous groups, also express concern about plans for more oil drilling in the country and a proposed gold mining project in the Amazon that aims to tap an estimated 6.4 million ounces of recoverable gold reserves, currently worth $10.6 billion.

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ST. LOUIS • City water workers have long worried that their bosses were looking to sell one of the city’s richest assets – its water – and their jobs along with it.

To that end, the city has hired water engineers Black & Veatch, for $245,100, according to the contract. The company will not, however, do the work itself, or at least not under this contract. Instead, it has been hired to help the city find another company to do the work.

But the contract outlines what Black & Veatch have to provide the city, and the first descriptions of the work to come are due – about now.

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At the start of each workday, Sanjiv Das reads the comments from CitiMortgage customers to employees who are trying to answer a question or fix a problem through one of the company’s websites.

A website CitiMortgage launched in December allows customers facing foreclosure or having difficulty making mortgage payments to post questions or comments to the company’s support team.

“There’s instantaneous feedback on what’s working and not working,” Das, CitiMortgage’s president and CEO, said in an interview. “Sometimes it’s painful.”

Painful certainly describes the condition of U.S. residential housing market and mortgage industry since Das was named to lead CitiMortgage in July 2008.

Based in O’Fallon, Mo., CitiMortgage is the mortgage lending subsidiary of Citigroup Inc., parent of the nation’s third-largest bank.

The subsidiary also has been buffeted by accusations of wrongdoing and increased regulatory oversight.

Despite the troubles, Das says CitiMortgage remains an important piece of Citigroup.

“Now it’s all about execution,” he said about moving CitiMortgage forward. “The team is in place. The structures are in place, and the strategy is in place.”

And righting the ship has meant more local jobs.

Das came from Morgan Stanley, where he was a managing director of its Institutional Securities Group. Das previously worked for Citi for eight years in the 1990s, overseeing product development and marketing, among other duties.

He returned to Citi to lead its mortgage business on the eve of the financial collapse of 2008.

“We knew we were in the eye of the storm,” Das said. “We didn’t know how big the storm would be.”

As the economy soured, Citigroup, its parent company, lost a combined $40 billion in 2008 and 2009. The credit crisis prompted Citigroup to accept $45 billion through the federal government’s Troubled Asset Relief Program, which it has since repaid.

The housing market has yet to recover, and Citigroup executives expect mortgage delinquencies to rise slightly this year.

While CitiMortgage’s parent reported a $11.3 billion profit last year, challenges remain.

On Tuesday, Citigroup received disappointing news in the Federal Reserve’s annual stress test results for 19 major U.S. banks.

The Fed wouldn’t allow Citigroup to increase payouts to investors. It said this would cause the bank to fail the test, which evaluated whether the financial institution has enough capital to withstand another crisis.

Other clouds facing the company include allegations of misdeeds related to its mortgage business and foreclosure practices dating back several years.

Last month, Citigroup agreed to pay $158 million to settle a civil fraud lawsuit against CitiMortgage for what the U.S. attorney’s office in New York called “reckless” mortgage practices over several years.

The U.S. attorney’s office alleged CitiMortgage pressured its quality control staff to reduce or downgrade findings of defects in government-backed loans, which led to losses. As part of the settlement, CitiMortgage admitted that it failed to comply fully with government requirements on FHA loans.

Also last month, CitiMortgage was one of five of the country’s largest mortgage servicers that agreed to a $25 billion settlement related to allegations of deceptive foreclosure practices lodged by the federal government and the attorneys general of 49 states.

The other banks included in the settlement are Bank of America, Wells Fargo, JP Morgan Chase and Ally Financial Inc.

The mortgage servicers, including CitiMortgage, “were engaged in widespread questionable foreclosure practices involving the use of foreclosure ‘mills’ and a practice known as ‘robosigning’ of sworn documents in thousands of foreclosures throughout the United States,” according to the U.S. Department of Housing and Urban Development.

NEW OPPORTUNITIES

While declining to comment on specific allegations, Das said CitiMortgage is working hard to comply with the new regulations it must follow stemming from the consent orders it signed with the government.

“Regulatory pressures have been top-of-mind,” he said. “It’s caused us to build out (our operations) to make sure foreclosure and loss mitigation is now very, very robust in terms of dealing with operational controls.”

What that means for O’Fallon’s headquarters and a CitiMortgage office in Dallas is new employees added over the last year to handle the extra oversight, Das said.

As mortgages and refinancings dropped in early 2011, CitiMortgage laid off 400 employees in four states, including dozens locally, to pare costs. Now, with the added staff to meet the new regulatory requirements, CitiMortgage’s workforce is 3,800 employees locally, which includes some contract employees, and 2,800 employees in Dallas.

The O’Fallon facility focuses on the front end of the mortgage business, including processing mortgage refinancings. Refinancings make up the majority of its current business.

Das’ office is in New York, but he said CitiMortgage’s headquarters remains firmly planted in the St. Louis region.

“It’s anchored in O’Fallon,” Das said. “We have a great tradition of being in Missouri. We have employees with long tenures here.”

A CitiMortgage initiative launched last summer included creating a support team of several hundred CitiMortgage employees — split between here and Dallas — that provides a single point of contact for customers.

If a homeowner has a question about a mortgage refinancing, each time they call Citi, the same representative who took their call in the past answers the phone, said Mark Danahy, CitiMortgage’s managing director based in O’Fallon.

Danahy was hired last July from PHH Mortgage, one of the largest U.S. originators of residential mortgages, as part of Das’ reorganization of top senior management at CitiMortgage.

“We have significantly transformed our connectivity with customers,” Das said. “Customers can literally speak to us online. On blogs, we’re answering customers’ questions.”

Das is now looking ahead at what’s next for CitiMortgage. He said he sees growth opportunities internationally where Citi’s credit card and other bank customers are already located. CitiMortgage’s international business has grown to equal its business in North America.

“With the rapid economic growth in Asia and Latin America … we can offer a full package of consumer services from credit cards to home loans,” he said. “The team is in place, the structures are in place, and the strategy is in place.”

Tom Lewandowski, a financial services equity analyst at Edward Jones, which has a “buy” stock rating on Citigroup, said Citi’s global reach should provide opportunities for CitiMortgage to grow outside of the U.S.

“If you look at Citi and its peers, you won’t find a more global business,” Lewandowski said. “I think growing in emerging markets is a good strategy in the long term.”

But some analysts aren’t convinced CitiMortgage has yet turned the corner.

“The settlement does not protect the banks from other enforcement actions, including securitization-related litigation or claims by borrowers,” Morningstar analyst Jim Sinegal wrote in a research note last month about the $25 billion settlement. “We do not expect these risks to subside anytime soon, creating headline risk for all of the major banks, and potentially significant financial risk for the most vulnerable institutions.”

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Inflation is back on the European Central Bank

Germany was left to dig deeper to combat the euro-area debt crisis after the Group of 20 nations told Europe to come up with more financial firepower before they consider lending outside support.

The decision by G-20 officials to rebuff European calls for assistance in their crisis-fighting effort pending an increase in its own financial backstop puts the onus on Germany, already the biggest national contributor to bailouts, to overcome its resistance to doing more.

With a parliamentary vote on a second Greek aid package looming in Berlin today, Chancellor Angela Merkel

Rising demand for automotive-related products helped Viasystems Group Inc., a provider of printed circuit boards, to a fourth-quarter profit of $15.5 million, or 74 cents per share, compared with $9.5 million, or 44 cents a share, a year ago. Sales grew 10.3 percent, to $269 million, from the corresponding period the previous year. Demand for the Clayton-based company’s products by automotive users continued an upward trend from last year.

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Just hours after Greece gave in to painful new job and spending cuts, European ministers declared Thursday that Athens didn’t go far enough and demanded more within a week in exchange for a euro130 billion ($170 billion) bailout to stave off bankruptcy.

The ministers gave the debt-ridden country until the middle of next week to find an extra euro325 million ($430 million) in savings, pass the cuts through a divided parliament, and get written guarantees that they will be implemented even after the elections of a new government in April, said Jean-Claude Juncker, the Luxembourg prime minister who chaired Thursday’s meeting of finance chiefs of the 17 euro countries.

The new austerity plan, which makes sharp cuts to the minimum wage and thousands of public-sector jobs, ignited fresh criticism from unions and the country’s deputy labor minister, who resigned in protest after Greece agreed to the deal. Even debt inspectors conceded that the new measures would keep the country in a recession for a fifth straight year.

But Greece’s finance minister warned that the alternative will likely be worse.

“Unfortunately the choice we face is one of sacrifice or even greater sacrifice _ on a scale that cannot be compared,” Evangelos Venizelos told reporters, after the meeting with ministers from the 16 other countries that use the euro.

Other European officials warned that more severe steps still might be necessary.

“Greece still has its homework cut out,” Jan Kees de Jager, the Dutch finance minister, said after the meeting. “A lot of measures need to be clarified and taken.”

A European official said earlier he still saw 10 to 15 issues before the deal could be concluded, including doubts that Greece could lower its debt level down to 120 percent of its annual economic output by 2020 and that labor market reforms would restore the country’s competitiveness. The official spoke on condition of anonymity because of the sensitivity of the negotiations.

On top of that, the ministers were seriously considering a plan proposed by France and Germany to force Greece to set up a separate account dedicated to repaying its debt, said Olli Rehn, the EU’e economic affairs commissioner.

Such an account would be an unprecedented intrusion into the fiscal affairs of a sovereign state in Europe. The plan underlines the frustration that has built up in the eurozone over Greece’s slow reforms over the past two years.

Rehn, calling it a “relevant possibility,” did not say whether only money from the bailout would be channeled into the account, or whether it would also contain Greek tax revenue.

Greece is under immense pressure to reach a rescue deal. On March 20, it has to redeem euro14.5 billion ($19.3 billion) in bonds _ money which it doesn’t have. The country’s total debt is euro350 billion ($464 billion) _ equivalent to 160 percent of its annual economic output _ and unsustainable even for a healthier economy easy payday loans.

Greek Prime Minister Lucas Papademos earlier Thursday said that all major party leaders in the country’s coalition government had backed the latest round of cuts, including a 22 percent cut in the minimum wage, firings of 15,000 civil servants and an end to dozens of job guarantee provisions.

The support of all major parties was a key demand from Greece’s international creditors _ but European ministers indicated that they still needed written assurance from the political leaders before Wednesday, when the ministers planned to meet again.

Once all the demands have been fulfilled, the eurozone will give Greece the green light to start implementing a separate bond swap deal with banks and other private investors designed to slice some euro100 billion ($132 billion) off Greece’s debt load.

Rehn indicated that the eurozone was relatively content with that deal, but reserved final approval until Wednesday. The swap deal will see investors exchange their old bonds for new ones with half the face value, lower interest rates and longer repayment deadlines. It has to be launched quickly since it is expected to take several weeks to complete.

A forced bankruptcy would likely lead to Greece’s exit from the euro common currency, a situation European officials say would hurt other weak countries like Portugal, Ireland and Italy. Financial analysts fear an uncontrolled default could trigger a chain reaction similar to the financial meltdown that followed the 2008 collapse of U.S. investment bank Lehman Brothers.

Greece is expected to rush the new austerity measures through parliament by late Sunday, but Papademos’ government is facing growing dissent from the majority Socialist party, which has seen public support in opinion polls drop to single figures.

Unions called for a 48-hour strike for Friday and Saturday in opposition to the new cuts, while Yiannis Koutsoukos, the deputy labor minister who quit Thursday, accused debt inspectors of using “shameless and blackmailing tactics” with the government.

And conservative leader Antonis Samaras insisted that Papademos call a spring general election _ a move that could make it more difficult for coalition parties to work together.

Almost two years of austerity have taken their toll on Greece. Unemployment reached a record 20.9 percent in November, up from 13.9 percent a year earlier, with more than 1 million people without a job. In the 15-24 age group, unemployment has spiked to 48 percent.

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