Global stocks tumble as oil rises on Mideast worries (Reuters)

HONG KONG (Reuters) – Oil rose toward a 2-1/2 year high and stocks fell on Wednesday as investors shunned risky assets on concern that escalating tension in Libya would spread in the Middle East and disrupt fuel supplies.

Brent crude's dizzying 15 percent jump in less than two weeks has fanned worry about a stifling impact on the economic recovery, sending investors into relative safe assets such as gold and government bonds in volatile trading.

Though Asian stocks have gyrated to the swings in oil, markets have been largely resilient this time around compared with January's sell-off when investors dumped shares because of worry about inflation.

While oil's jump has put monetary policy behind the curve in some countries, many Asian central banks have already tightened considerably since the recovery began and therefore policy is not excessively loose in the region, IHS Global Insight said.

Shares in most Asian markets fell after Wall Street's slide overnight and as the CBOE Volatility Index VIX (.VIX), the so-called fear gauge, jumped sharply.

Tokyo (.N225) lead the losers with stocks falling more than 2 percent on futures-led selling. Seoul (.KS11) and Taiwan (.TW11) were down nearly a percent each.

Yahoo Japan (4689.T) was the notable outperformer with shares surging by 4.5 percent after a Reuters report that Yahoo Inc (YHOO.O) was in advanced talks to wind down its joint venture in Japan with Softbank Corp (9984.T).

"The market is volatile as oil's persisting gains and civil unrest in the Middle East is negatively affecting investor sentiment," said Lee Sun-yeb, a market analyst at Shinhan Investment Corp.

"But as long as we do not see the turmoil spreading to other countries within the region, current volatility will be contained and will eventually recover," Lee added.

The broader MSCI index of Asia-ex Japan stocks (.MIAPJ0000PUS) was down more than a percent. It fell two percent in February.

In the credit space, Asian sovereign spreads weakened with the Philippines widening the most by 4 bps to 140/143 bps.

Markets will keenly watch developments in the Middle East, especially Saudi Arabia, where stock markets tanked by nearly 7 percent on Tuesday and CDS spreads jumped.

GOLD, BONDS GAIN

U.S. Treasuries, a safe-haven asset, held near one-month lows with 10-year yields stabilizing at 3.40 percent, well below a peak of 3.74 percent hit last month..

Japanese government bonds too rose, with futures snapping a three-day losing streak.

Gold held just below a record high of $1,434 an ounce while spot silver hit a 31-year high.

In the currency markets, the euro dipped slightly after failing to break through a key resistance level, though further declines for the common currency may be limited a day before a European Central Bank (ECB) meeting.

Given euro zone inflation holding well above the ECB's target, markets expect the central bank to ramp up its anti-inflation talk with U.S. Federal Reserve Chairman Ben Bernanke's comments reinforcing market speculation that the ECB would raise rates before the Fed.

In Asian FX, the won is among the leading underperformers with the stock market working through a major support level.

The New Zealand dollar fell sharply after Prime Minister John Key said he expected the Reserve Bank of New Zealand (RBNZ) would cut interest rates next week after the devastating earthquake in Christchurch.

The Aussie/kiwi was last at NZ$1.3616 after hitting a high of NZ$1.3667, levels not seen since August 1992.

(Additional reporting by Jungyoun Park in SEOUL, Mantik Kusjanto in WELLINGTON, Krishna Kumar in SYDNEY, Jonathan Rogers at IFR; Editing by Robert Birsel)

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As Mideast seethes, 3 dead in Bahrain bloodshed (Reuters)

MANAMA (Reuters) – Unrest spread across the Middle East and North Africa on Thursday as Bahrain launched a swift military crackdown on anti-government protesters and clashes were reported in Libya and Yemen.

Troops in armored vehicles took control of the Bahraini capital after police firing buckshot and teargas drove out protesters hoping to emulate demonstrators who toppled veteran leaders in Egypt and Tunisia.

It was the worst violence in the Gulf island kingdom in decades and a sign of the nervousness felt by Bahrain's Saudi-allied Sunni al-Khalifa royal family, long aware of simmering discontent among the country's majority Shi'ites.#

Three people were killed, 231 were injured and opposition leaders said dozens were detained and about 60 were missing.

"They are killing us!" one demonstrator told Reuters.

After the violence in Bahrain, hundreds of Yemenis clashed again during a seventh day of anti-government protests on the other side of the Arabian peninsula, and in North Africa there were reports of new unrest in Libya.

A Libyan "Day of Rage" promoted on social media websites for Thursday started with little sign of activity in the capital, where supporters of Muammar Gaddafi, in power for 42 years, staged a rally in his support.

But a resident of the eastern city of Benghazi told Reuters there were clashes on Thursday in the nearby town of Al Bayda between government supporters and relatives of two young men killed during a protest a day earlier.

In Iraq, one person was killed and 33 wounded when police opened fire on anti-government protesters in the northern city of Sulaimaniya, medical sources and witnesses said.

"Profound social and economic issues throughout the Middle East and North Africa will continue to serve as a driving force for further unrest," said political risk analyst Anthony Skinner at the Maplecroft consultancy. "Protests in Bahrain and Libya reflect the ease with which protests have spread in the region."

Such worries helped push Brent crude prices to a 28-month high of $104 a barrel at one point on Thursday and were a factor in gold prices extending early gains to four-week highs.

SUICIDE TRIGGER

It was two months to the day on Thursday since a young Tunisian, Mohamed Bouazizi, triggered the wave of protests by setting himself alight on December 17 outside a government office in the rundown city of Sidi Bouzid. He was venting frustration at grinding poverty, official corruption and police brutality.

Since Tunisia's aging strongman Zine al-Abidine Ben Ali fled a month later, followed a week ago by Hosni Mubarak in Egypt, opposition groups in a dozen or more countries have lived in hope the Arab world might experience a "domino effect" of the kind that swept communists from power in eastern Europe in 1989.

Oil and gas riches, as well as formidable police forces, give rulers the means to fend off challenges. But the way in which Ben Ali and Mubarak were overthrown after their armies refused to crush popular uprisings has given many pause.

Leaders from the Gulf to the Atlantic have announced a variety of measures to ease rising food prices and unemployment and to enhance political participation.

The oil-rich United Arab Emirates said on Thursday it would treble the number of people the rulers would choose to vote for members of an advisory body that serves as a form of parliament.

But Middle Eastern leaders have also tightened security.

The army in Bahrain, a country of 1.3 million people out of whom 600,000 are native Bahrainis, issued a warning to people to stay away from the center of the capital and said it would do whatever was needed to maintain security.

At Pearl Square, abandoned tents, blankets and rubbish were scattered about and the smell of teargas wafted through the air.

Helicopters clattered over the city, which is a regional hub for banks and home to the U.S. Fifth Fleet.

SECTARIAN DIMENSION

The protesters want the Sunni ruling family to relinquish its control over top government posts and address grievances held by the country's majority Shi'ites who complain of economic hardships, lack of political freedoms and discrimination in jobs in public service and the military in favor of Sunnis.

The sectarian aspect of the violence in Bahrain could fuel discontent among the Shi'ite minority in neighboring Saudi Arabia, the world's biggest oil exporter.

"This is real terrorism," said Abdul Jalil Khalil of Bahrain's Shi'ite party Wefaq, which said it would withdraw from a parliament which has very limited powers. "Whoever took the decision to attack the protest was aiming to kill."

Western powers have been caught in a dilemma between backing rulers whom they see as bulwarks against anti-Western Islamists and at the same time being seen to promote democracy.

In Bahrain, Saudi and Western officials fear majority rule could help their adversaries in Shi'ite-ruled Iran.

British Foreign Secretary William Hague warned against any interference in Bahrain by other nations and U.S. Secretary of State Hillary Clinton expressed "deep concern" at events there.

In Yemen, where dozens were wounded in the capital Sanaa during rock-throwing clashes between protesters and government loyalists, demonstrators want rid of President Ali Abdullah Saleh, who has ruled for 32 years but is seen by Washington as a key ally in its fight against al Qaeda Islamists based in Yemen.

(Writing by Alastair Macdonald and Philippa Fletcher; editing by Samia Nakhoul)

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As Mideast seethes, 3 dead in Bahrain bloodshed (Reuters)

MANAMA (Reuters) – Unrest spread across the Middle East and North Africa on Thursday as Bahrain launched a swift military crackdown on anti-government protesters and clashes were reported in Libya and Yemen.

Troops in armored vehicles took control of the Bahraini capital after police firing buckshot and teargas drove out protesters hoping to emulate demonstrators who toppled veteran leaders in Egypt and Tunisia.

It was the worst violence in the Gulf island kingdom in decades and a sign of the nervousness felt by Bahrain's Saudi-allied Sunni al-Khalifa royal family, long aware of simmering discontent among the country's majority Shi'ites.#

Three people were killed, 231 were injured and opposition leaders said dozens were detained and about 60 were missing.

"They are killing us!" one demonstrator told Reuters.

After the violence in Bahrain, hundreds of Yemenis clashed again during a seventh day of anti-government protests on the other side of the Arabian peninsula, and in North Africa there were reports of new unrest in Libya.

A Libyan "Day of Rage" promoted on social media websites for Thursday started with little sign of activity in the capital, where supporters of Muammar Gaddafi, in power for 42 years, staged a rally in his support.

But a resident of the eastern city of Benghazi told Reuters there were clashes on Thursday in the nearby town of Al Bayda between government supporters and relatives of two young men killed during a protest a day earlier.

In Iraq, one person was killed and 33 wounded when police opened fire on anti-government protesters in the northern city of Sulaimaniya, medical sources and witnesses said.

"Profound social and economic issues throughout the Middle East and North Africa will continue to serve as a driving force for further unrest," said political risk analyst Anthony Skinner at the Maplecroft consultancy. "Protests in Bahrain and Libya reflect the ease with which protests have spread in the region."

Such worries helped push Brent crude prices to a 28-month high of $104 a barrel at one point on Thursday and were a factor in gold prices extending early gains to four-week highs.

SUICIDE TRIGGER

It was two months to the day on Thursday since a young Tunisian, Mohamed Bouazizi, triggered the wave of protests by setting himself alight on December 17 outside a government office in the rundown city of Sidi Bouzid. He was venting frustration at grinding poverty, official corruption and police brutality.

Since Tunisia's aging strongman Zine al-Abidine Ben Ali fled a month later, followed a week ago by Hosni Mubarak in Egypt, opposition groups in a dozen or more countries have lived in hope the Arab world might experience a "domino effect" of the kind that swept communists from power in eastern Europe in 1989.

Oil and gas riches, as well as formidable police forces, give rulers the means to fend off challenges. But the way in which Ben Ali and Mubarak were overthrown after their armies refused to crush popular uprisings has given many pause.

Leaders from the Gulf to the Atlantic have announced a variety of measures to ease rising food prices and unemployment and to enhance political participation.

The oil-rich United Arab Emirates said on Thursday it would treble the number of people the rulers would choose to vote for members of an advisory body that serves as a form of parliament.

But Middle Eastern leaders have also tightened security.

The army in Bahrain, a country of 1.3 million people out of whom 600,000 are native Bahrainis, issued a warning to people to stay away from the center of the capital and said it would do whatever was needed to maintain security.

At Pearl Square, abandoned tents, blankets and rubbish were scattered about and the smell of teargas wafted through the air.

Helicopters clattered over the city, which is a regional hub for banks and home to the U.S. Fifth Fleet.

SECTARIAN DIMENSION

The protesters want the Sunni ruling family to relinquish its control over top government posts and address grievances held by the country's majority Shi'ites who complain of economic hardships, lack of political freedoms and discrimination in jobs in public service and the military in favor of Sunnis.

The sectarian aspect of the violence in Bahrain could fuel discontent among the Shi'ite minority in neighboring Saudi Arabia, the world's biggest oil exporter.

"This is real terrorism," said Abdul Jalil Khalil of Bahrain's Shi'ite party Wefaq, which said it would withdraw from a parliament which has very limited powers. "Whoever took the decision to attack the protest was aiming to kill."

Western powers have been caught in a dilemma between backing rulers whom they see as bulwarks against anti-Western Islamists and at the same time being seen to promote democracy.

In Bahrain, Saudi and Western officials fear majority rule could help their adversaries in Shi'ite-ruled Iran.

British Foreign Secretary William Hague warned against any interference in Bahrain by other nations and U.S. Secretary of State Hillary Clinton expressed "deep concern" at events there.

In Yemen, where dozens were wounded in the capital Sanaa during rock-throwing clashes between protesters and government loyalists, demonstrators want rid of President Ali Abdullah Saleh, who has ruled for 32 years but is seen by Washington as a key ally in its fight against al Qaeda Islamists based in Yemen.

(Writing by Alastair Macdonald and Philippa Fletcher; editing by Samia Nakhoul)

View the original article here

As Mideast seethes, three dead in Bahrain bloodshed (Reuters)

MANAMA (Reuters) – Unrest spread across the Middle East and North Africa on Thursday as Bahrain launched a swift military crackdown on anti-government protesters and clashes were reported in Libya and Yemen.

Troops in armored vehicles took control of the Bahraini capital after police firing buckshot and teargas drove out protesters hoping to emulate demonstrators who toppled veteran leaders in Egypt and Tunisia.

It was the worst violence in the Gulf island kingdom in decades and a sign of the nervousness felt by Bahrain's Saudi-allied Sunni al-Khalifa royal family, long aware of simmering discontent among the country's majority Shi'ites.#

Three people were killed, 231 were injured and opposition leaders said dozens were detained and about 60 were missing.

"They are killing us!" one demonstrator told Reuters.

After the violence in Bahrain, hundreds of Yemenis clashed again during a seventh day of anti-government protests on the other side of the Arabian peninsula, and in North Africa there were reports of new unrest in Libya.

A Libyan "Day of Rage" promoted on social media websites for Thursday started with little sign of activity in the capital, where supporters of Muammar Gaddafi, in power for 42 years, staged a rally in his support.

But a resident of the eastern city of Benghazi told Reuters there were clashes on Thursday in the nearby town of Al Bayda between government supporters and relatives of two young men killed during a protest a day earlier.

In Iraq, one person was killed and 33 wounded when police opened fire on anti-government protesters in the northern city of Sulaimaniya, medical sources and witnesses said.

"Profound social and economic issues throughout the Middle East and North Africa will continue to serve as a driving force for further unrest," said political risk analyst Anthony Skinner at the Maplecroft consultancy. "Protests in Bahrain and Libya reflect the ease with which protests have spread in the region."

Such worries helped push Brent crude prices to a 28-month high of $104 a barrel at one point on Thursday and were a factor in gold prices extending early gains to four-week highs.

SUICIDE TRIGGER

It was two months to the day on Thursday since a young Tunisian, Mohamed Bouazizi, triggered the wave of protests by setting himself alight on December 17 outside a government office in the rundown city of Sidi Bouzid. He was venting frustration at grinding poverty, official corruption and police brutality.

Since Tunisia's aging strongman Zine al-Abidine Ben Ali fled a month later, followed a week ago by Hosni Mubarak in Egypt, opposition groups in a dozen or more countries have lived in hope the Arab world might experience a "domino effect" of the kind that swept communists from power in eastern Europe in 1989.

Oil and gas riches, as well as formidable police forces, give rulers the means to fend off challenges. But the way in which Ben Ali and Mubarak were overthrown after their armies refused to crush popular uprisings has given many pause.

Leaders from the Gulf to the Atlantic have announced a variety of measures to ease rising food prices and unemployment and to enhance political participation.

The oil-rich United Arab Emirates said on Thursday it would treble the number of people the rulers would choose to vote for members of an advisory body that serves as a form of parliament.

But Middle Eastern leaders have also tightened security.

The army in Bahrain, a country of 1.3 million people out of whom 600,000 are native Bahrainis, issued a warning to people to stay away from the center of the capital and said it would do whatever was needed to maintain security.

At Pearl Square, abandoned tents, blankets and rubbish were scattered about and the smell of teargas wafted through the air.

Helicopters clattered over the city, which is a regional hub for banks and home to the U.S. Fifth Fleet.

SECTARIAN DIMENSION

The protesters want the Sunni ruling family to relinquish its control over top government posts and address grievances held by the country's majority Shi'ites who complain of economic hardships, lack of political freedoms and discrimination in jobs in public service and the military in favor of Sunnis.

The sectarian aspect of the violence in Bahrain could fuel discontent among the Shi'ite minority in neighboring Saudi Arabia, the world's biggest oil exporter.

"This is real terrorism," said Abdul Jalil Khalil of Bahrain's Shi'ite party Wefaq, which said it would withdraw from a parliament which has very limited powers. "Whoever took the decision to attack the protest was aiming to kill."

Western powers have been caught in a dilemma between backing rulers whom they see as bulwarks against anti-Western Islamists and at the same time being seen to promote democracy.

In Bahrain, Saudi and Western officials fear majority rule could help their adversaries in Shi'ite-ruled Iran.

British Foreign Secretary William Hague warned against any interference in Bahrain by other nations and U.S. Secretary of State Hillary Clinton expressed "deep concern" at events there.

In Yemen, where dozens were wounded in the capital Sanaa during rock-throwing clashes between protesters and government loyalists, demonstrators want rid of President Ali Abdullah Saleh, who has ruled for 32 years but is seen by Washington as a key ally in its fight against al Qaeda Islamists based in Yemen.

(Writing by Alastair Macdonald and Philippa Fletcher; editing by Samia Nakhoul)

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As Mideast seethes, 3 dead in Bahrain bloodshed (Reuters)

By Cynthia Johnston and Frederik Richter Cynthia Johnston And Frederik Richter – Thu Feb 17, 8:24 am ET

MANAMA (Reuters) – Police in the Gulf island kingdom of Bahrain attacked demonstrators camped out in the capital on Thursday, killing three, in a move to stifle pro-democracy protests inspired by similar movements across the Middle East.

"They are killing us!" one man told Reuters as police firing buckshot and teargas moved on Pearl Square in Manama overnight, putting to flight some 2,000 people, including women and children, who had spent three days there hoping to emulate the successful protest camp on Cairo's Tahrir Square.

Having seen protests in Tunisia and Egypt gradually build momentum and topple veteran rulers there, Bahrain's Saudi-allied royal family, long aware of simmering discontent, appear to have decided to nip in the bud the latest challenge to their rule.

Dozens of people were detained, opposition leaders said.

After bloodshed in Bahrain, hundreds of Yemenis clashed again on the other side of the Arabian peninsula, and in North Africa there were reports of new unrest in Libya on Wednesday.

A Libyan "Day of Rage" promoted on social media websites for Thursday started with little sign of activity. Supporters of Muammar Gaddafi, in power for 42 years, did stage a rally.

There has also been trouble on the streets of Iraq and Iran

"Profound social and economic issues throughout the Middle East and North Africa will continue to serve as a driving force for further unrest," said political risk analyst Anthony Skinner at the Maplecroft consultancy. "Protests in Bahrain and Libya reflect the ease with which protests have spread in the region."

Discontent over youth unemployment was exacerbated in many countries by the knowledge that oil revenues were "being embezzled by ruling political and business elites", he added.

SUICIDE TRIGGER

It was two months to the day on Thursday since a young Tunisian, Mohamed Bouazizi, triggered the wave of protests by setting himself alight on December 17 outside a government office in the rundown city of Sidi Bouzid. He was venting frustration at grinding poverty, official corruption and police brutality.

Since Tunisia's aging strongman Zine al-Abidine Ben Ali fled a month later, followed a week ago by Hosni Mubarak in Egypt, opposition groups in a dozen or more countries have lived in hope the Arab world might experience a "domino effect" of the kind that swept communists from power in eastern Europe in 1989.

Oil and gas riches, as well as formidable police forces, give rulers the means to fend off challenges. But the way in which Ben Ali and Mubarak were overthrown after their armies refused to crush popular uprisings has given many pause.

Leaders from the Gulf to the Atlantic have announced a variety of measures to ease rising food prices and unemployment and to enhance political participation.

The oil-rich United Arab Emirates said on Thursday it would treble the number of people the rulers would choose to vote for members of an advisory body that serves as a form of parliament.

But Middle Eastern leaders have also tightened security.

In Libya, human rights activists said 14 dissidents had been detained and there were unconfirmed reports that two people were killed on Wednesday in clashes in Bayda. The previous day, there had been fighting in Benghazi.

The army in Bahrain, a country of 1.3 million people, issued a warning to people to stay away from the center of the capital and said it would do whatever was needed to maintain security.

At Pearl Square, abandoned tents, blankets and rubbish were scattered about and the smell of teargas wafted through the air.

Helicopters clattered over the city, which is a regional hub for banks and home to the U.S. Fifth Fleet.

SECTARIAN DIMENSION

The sectarian aspect of violence in Bahrain, whose majority Shi'ite population is ruled by a Sunni Muslim royal house, could fuel discontent among the Shi'ite minority in neighboring Saudi Arabia, the world's biggest oil exporter.

"This is real terrorism," said Abdul Jalil Khalil of Bahrain's Shi'ite party Wefaq, which said it would withdraw from a parliament which has very limited powers. "Whoever took the decision to attack the protest was aiming to kill."

U.S. President Barack Obama said this week: "The world is changing ... If you are governing these countries, you've got to get ahead of the change, you can't be behind the curve."

But Western powers have been caught in a dilemma between backing rulers whom they see as bulwarks against anti-Western Islamists and at the same time being seen to promote democracy.

In Bahrain, Saudi and Western officials fear majority rule could help their adversaries in Shi'ite-ruled Iran.

In Yemen, where dozens were wounded in the capital Sanaa during rock-throwing clashes between protesters and government loyalists, demonstrators want rid of President Ali Abdullah Saleh, who has ruled for 32 years but is seen by Washington as a key ally in its fight against al Qaeda Islamists based in Yemen.

Authoritarian governments have reason to fear. Young people can watch uprisings on satellite television or the web and can talk on social networks hard for secret police to control.

In Iran, supporters and opponents of the hard line Islamic system clashed in Tehran on Wednesday during a funeral procession for a student shot in a rally two days earlier, state broadcaster IRIB reported. Monday's rally, in support of the people of Egypt and Tunisia, was biggest unrest since 2009.

In Iraq, three people were killed and dozens wounded in the southern city of Kut on Wednesday as protesters demanding better services fought with police and set buildings ablaze.

(Writing by Alastair Macdonald; editing by Angus MacSwan)

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