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Friday, February 5, 2010


Asian markets fall as risk aversion increases
Asian share markets declined Friday, weighed down by losses on Wall Street and mounting concern about sovereign debt in Europe. Japan's Nikkei 225 dropped 2.9%, Australia's S&P/ASX 200 fell 2.3% and South Korea's Kospi Composite gave up 3.1%. Taiwan's Taiex plunged 4.3%, China's Shanghai Composite shed 1.9% and Hong Kong's Hang Seng Index gave up 3.3%. New Zealand's NZX 50 slid 1.4%, and stocks in the Philippines dropped 2%. The Wall Street Journal (05 Feb.)

Concern about European debt triggers stock market losses worldwide
Growing concern about debt in Europe's weaker economies set off a stock market decline throughout the world. Traders worried about the possible fallout if Greece, Spain, Portugal and Ireland cannot bring their government borrowing under control. For the first time in the history of the credit-risk indicator, the SovX credit default swap index for 15 Western European countries topped the reading for the benchmark U.S. index for investment-grade companies. The Times (London) (05 Feb.)

Europe's sovereign-debt crisis is seen as threat to global recovery
A global economic recovery is being put at risk by possible sovereign-debt defaults by Greece, Spain, Portugal and other European countries. "The question now is, how big is this fire going to be?" said Uri Landesman, ING's head of global growth. "What is panic, and what is legitimate? We don't know at this point." France and Germany, the eurozone's two biggest economies, have returned to growth, but many others in the region remain stuck in a slump and are borrowing to finance their budget deficit. The Globe and Mail (Toronto) (05 Feb.)

Retail chains post surprise 3.3% increase in January sales
Sales at major retail chains in the U.S. increased 3.3% in January compared with the same month last year, according to data collected by Thomson Reuters from 29 companies. Analysts were expecting a 2.5% gain. Most retail experts consider January the weakest month for retail sales. Los Angeles Times (05 Feb.)

Official says Fed might reverse course, bring back MBS purchases
The U.S. Federal Reserve is leaving the door open for restarting its program to support the mortgage market, if the economy weakens or interest rates increase sharply, Federal Reserve Bank of New York President William Dudley said. As things stand, the central bank's purchases of mortgage-backed securities are scheduled to end March 31. "Obviously, if mortgage rates were to back up a lot and if that had a big consequence for the economy, then we very well could rethink the issue about whether we wanted to buy more mortgages," Dudley said. The Washington Post (05 Feb.)

Analysis: Petroleum giants bet on natural gas for future profit
Despite a forecast that the price of natural gas will be weak for three or four years, major oil companies are shifting to gas in a big way, according to The Economist. Gas accounts for about 40% of energy sold by Royal Dutch Shell, with percentages for BP and Total only slightly less. To boost its supply of gas, ExxonMobil paid $30 billion late last year for XTO Energy, which extracts gas from shale beds. This is not only about global warming -- major integrated petroleum companies are finding it increasingly difficult and expensive to obtain crude oil, The Economist notes. The Economist (04 Feb.)

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