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Ms. Lagarde told reporters that the world economy is experiencing a decline in confidence, driven by doubts about the ability of European and U.S. leaders to manage financial problems. She said European leaders should maintain a “crisis management mode” as they seek to address the debt crisis.

Her comments come a day before the ECB meets to decide on interest rates. Ms. Lagarde noted recent comments by the bank’s president, Mario Draghi, to do “whatever it takes” to save the euro.

“More can be done,” Ms. Lagarde said, adding that low inflation allows for more aggressive steps to strengthen the euro.

Mr. Draghi has said the ECB could intervene in bond markets and push down high borrowing rates that are threatening heavily indebted governments such as Spain and Italy with financial collapse. But he hasn’t said what the bank might do.


Drought: Half of counties now disaster areas

ST. LOUIS — More than half of U.S. counties now are classified by the federal government as natural disaster areas mostly because of the drought.

The U.S. Agriculture Department on Wednesday added 218 counties in a dozen states as disaster areas. That brings this year’s total to 1,584 in 32 states, more than 90 percent of them because of the drought.

The latest additions make drought-affected farmers and ranchers eligible for federal aid including emergency loans.

The USDA also announced ranchers may access some 3.8 million acres of conservation land for haying and grazing, and crop insurance companies have agreed to provide farmers a penalty-free grace period on insurance premiums in 2012.

Counties included in the announcement are in Arkansas, Georgia, Iowa, Illinois, Indiana, Kansas, Mississippi, Nebraska, Oklahoma, South Dakota, Tennessee and Wyoming.

From wire dispatches and staff reports