THE NEWS WRAP: FBI launches 9/11 phone hacking probe

In a further escalation of the News Corporation scandal the FBI has launched an investigation into claims that the News of the World attempted to hack into the phones of victims of the 9/11 attacks.

According to reports in the UK’s Daily Mirror, a private investigator refused to undertake the phone hacking when approached by the News of the World. The FBI will lead the investigation from its New York office. 

Prime Minister Julia Gillard said she will consider backing calls for an inquiry into the Australian media in the wake of the controversy. 

US Fed chairman warns of ‘calamitous’ debt default

US Federal Reserve chairman Ben Bernanke has warned that a United States debt default would be “calamitous” for global economies.

Bernanke said over-zealous cuts to public spending could derail the US economic recovery, adding that a debt default would create “a very severe financial shock that would have effects not only on the US economy but the global economy”.

His warning comes amid continued negotiations between president Barack Obama and Republican leaders on raising the US $14.3 trillion debt ceiling.

Google posts Q2 earnings leap

Google posted far better second-quarter financial results than analysts had expected, helping to push the search giant’s stock up by 11% yesterday.

The company earned $2.5 billion during the quarter, a 36% increase over last year’s $1.84 billion result.

Overnight

The Dow Jones Industrial Average fell 54.49 points to 12,437.12. The Australian dollar was up almost one US cent, to 107.31 US cents.