Summary Box: Stocks end 3rd straight month higher (AP)

OIL HOLDS STEADY: Stocks rose Monday as oil prices stabilized. Oil settled at a little less than $97, down from a high of $103 last Thursday.

THE INDEXES: The Dow Jones industrial average rose 95.89 to 12,226.34. The S&P 500 rose 7.34 to 1,327.22. The Nasdaq composite rose 1.22 to 2,782.27.

MONTHLY STREAK: All three indexes ended the month higher. The Dow rose 2.8 percent, the S&P gained 3.2 percent, and the Nasdaq rose 3 percent. The S&P 500 is on a three-month stretch of gains, its longest since April 2010.

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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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Stocks slide as jump in oil prices renews worries (AP)

By MATTHEW CRAFT and DAVID K. RANDALL, AP Business Writers Matthew Craft And David K. Randall, Ap Business Writers – Tue Mar 1, 5:46 pm ET

NEW YORK – Stocks suffered steep losses as oil prices surged on Tuesday, renewing worries that higher fuel prices could hobble the economic recovery.

Oil rose $2.66 to settle at $99.63 a barrel amid unrest in Iran and Libya. Iran clamped down on anti-government protesters and forces loyal to Libya's leader Moammar Gadhafi launched counter-attacks against rebels expanding control over the country.

Prices jumped 13 percent last week with a rise in turmoil across North Africa and the Middle East. That pushed gas prices up 20 cents per gallon. As a result, Americans are now paying roughly $75 million more per day to fill their gas tanks than a week ago.

Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that a sustained increase in crude prices could pose a risk to the recovery. But he predicted only a temporary increase in inflation, not runaway prices. The Fed chief also said he expected the economy to grow this year, although not enough to lower the 9 percent unemployment rate.

The Commerce Department reported that builders began work on fewer homes, offices and commercial projects in January. The annual rate was near its decade low, set in August.

The Dow Jones industrial average lost 168.32 points, or 1.4 percent, to 12,058.02.

The Standard & Poor's 500 index fell 20.89, or 1.6 percent, to 1,306.33. The Nasdaq composite fell 44.86, or 1.6 percent, to 2,737.41.

Three stocks fell for every one that rose on the New York Stock Exchange. Consolidated trading volume came to 4.8 billion shares.

Fifth Third Bancorp dropped 4.5 percent after the regional bank said that the Securities and Exchange Commission was investigating its accounting and reporting of commercial loans.

Natural gas driller Range Resources Corp. lost 7 percent after the company's fourth-quarter revenue figures came in below analysts' expectations. Natural gas prices have been in a slump for the past year as a result of an oversupply in the market.

AutoZone Inc. rose 2 percent after the auto-parts retailer said its second-quarter income rose 20 percent as its revenue increased.

On Monday, stable oil prices and more signs of a stronger economy helped lift. All three major stock indexes ended February higher, marking their third straight month of gains. The S&P 500 index had its best start to any year since 1998.

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Summary Box: Stocks fall as Libya worries continue (AP)

LIBYA: Clashes in Libya continued, leaving traders concerned about the impact on the global oil market. Oil fell for the first time in nine days after a rally that has sent it 18 percent higher since February 15th.

UNEMPLOYMENT APPLICATIONS FALL: Applications for unemployment benefits fell, pushing the four week average of new claims down to its lowest level in two and a half years.

THE INDEXES: The Dow Jones industrial average fell 37.28 points to 12,068.50. The Standard & Poor's 500 index fell 1.30 to 1,306.10. The Nasdaq composite gained 14.91 points to 2,737.90.

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Global stocks recover after oil price decline (AP)

LONDON – Stocks recovered their poise Friday following the previous day's sharp drop in oil prices on hopes that Saudi Arabia could make up for any shortfall in crude production from Libya.

The catalyst to Thursday's decline in oil prices was the expectation that Saudi Arabia, the world's biggest crude exporter, could pump more oil out to make up for lost supplies from Libya, which is effectively split into two after a popular uprising.

Under normal circumstances, Libya produces about 1.6 million barrels of crude per day, but its output has been heavily affected by the violence that has caused nearly 300 deaths, according to a partial count by Human Rights Watch.

In London, a barrel of Brent crude was up 15 cents at $111.51 a barrel, still $8 or so below its high point on Thursday. Meanwhile, the equivalent New York rate was down 7 cents at $97.23 a barrel, again around $5 down from the previous day's peak.

The knock-on effect on stocks has been positive as investors appeared releived that the recent sharp rise in oil prices has come to a halt, however briefly — the fear is that sky-high oil prices will choke the fragile economic recovery around the world.

In Europe, Germany's DAX closed up 0.8 percent at 7,185.17 while the CAC-40 in Paris rose 1.5 percent to 4,070.38. Britain's FTSE 100 index of leading British shares ended 1.4 percent higher at 6,001.20 after trading resumed following an earlier technical glitch that closed the market for about four hours.

In the U.S., the Dow Jones industrial average was up 0.4 percent at 12,114 around midday New York time while the broader Standard & Poor's 500 futures rose 0.8 percent to 1,316.

Libya was likely to continue to dominate sentiment as the trading week comes to a nervous end.

With reports indicating an escalation in the violence in the capital city of Tripoli, and large parts of the country under the control of opposition groups, there are fears that longtime leader Moammar Gadhafi may be preparing for a bloody showdown.

Autocratic leaders in Tunisia and Egypt have already had to quit this year following massive popular uprisings.

The biggest worry in the markets is not Libya but whether the crisis spreads through the Persian Gulf's bigger energy producers. Already Bahrain's government is facing daily protests and there are fears that Saudi Arabia's royal family may be next in line to face the wrath of its people. The announcement of a massive $36 billion package of benefits earlier this week was seen as an attempt by Saudi King Abdullah to ease popular discontent.

"If the political unrest was to spread to the world's largest oil producer, markets would have to discuss the possibility of a new oil crisis and its consequences for the global economy," said Ashley Davies, an analyst at Commerzbank.

If the crisis spreads there, experts say oil prices could reach $200 a barrel, potentially tipping the world economy back into recession.

The fragility of the global recovery was underlined by the fact that Britain contracted by a greater than anticipated 0.6 percent in the final three months of 2010, while the annualized growth rate in the U.S. for the same period was revised down to 2.8 percent from the initial estimate of 3.2 percent.

As elsewhere, the main focus in the currency markets was on events in Libya and the easing in the oil price from its most elevated levels gave the dollar a lift despite the lower-than-expected U.S. growth figures.

Elsewhere, the euro was 0.4 percent lower at $1.3756 while the dollar fell 0.2 percent to 81.75 yen.

In Asia, Japan's Nikkei 225 stock average rose 0.7 percent to close at 10,526.76 and South Korea's Kospi also added 0.7 percent, to 1,963.43. Hong Kong's Hang Seng index jumped 1.8 percent to 23,012.37.

The benchmark Shanghai Composite Index was virtually unchanged at 2,878.57, and down 0.7 percent for the week, while the Shenzhen Composite Index edged up less than 0.1 percent to 1,280.30 in lackluster trading.

____

Pamela Sampson in Bangkok contributed to this report.

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Stocks recover as crude oil prices stabilize (AP)

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Global stocks recover after oil price decline (AP)

LONDON – Stocks recovered their poise Friday following the previous day's sharp drop in oil prices on hopes that Saudi Arabia could make up for any shortfall in crude production from Libya.

The catalyst to Thursday's decline in oil prices was the expectation that Saudi Arabia, the world's biggest crude exporter, could pump more oil out to make up for lost supplies from Libya, which is effectively split into two after a popular uprising.

Under normal circumstances, Libya produces about 1.6 million barrels of crude per day, but its output has been heavily affected by the violence that has caused nearly 300 deaths, according to a partial count by Human Rights Watch.

In London, a barrel of Brent crude was up 15 cents at $111.51 a barrel, still $8 or so below its high point on Thursday. Meanwhile, the equivalent New York rate was down 7 cents at $97.23 a barrel, again around $5 down from the previous day's peak.

The knock-on effect on stocks has been positive as investors appeared releived that the recent sharp rise in oil prices has come to a halt, however briefly — the fear is that sky-high oil prices will choke the fragile economic recovery around the world.

In Europe, Germany's DAX closed up 0.8 percent at 7,185.17 while the CAC-40 in Paris rose 1.5 percent to 4,070.38. Britain's FTSE 100 index of leading British shares ended 1.4 percent higher at 6,001.20 after trading resumed following an earlier technical glitch that closed the market for about four hours.

In the U.S., the Dow Jones industrial average was up 0.4 percent at 12,114 around midday New York time while the broader Standard & Poor's 500 futures rose 0.8 percent to 1,316.

Libya was likely to continue to dominate sentiment as the trading week comes to a nervous end.

With reports indicating an escalation in the violence in the capital city of Tripoli, and large parts of the country under the control of opposition groups, there are fears that longtime leader Moammar Gadhafi may be preparing for a bloody showdown.

Autocratic leaders in Tunisia and Egypt have already had to quit this year following massive popular uprisings.

The biggest worry in the markets is not Libya but whether the crisis spreads through the Persian Gulf's bigger energy producers. Already Bahrain's government is facing daily protests and there are fears that Saudi Arabia's royal family may be next in line to face the wrath of its people. The announcement of a massive $36 billion package of benefits earlier this week was seen as an attempt by Saudi King Abdullah to ease popular discontent.

"If the political unrest was to spread to the world's largest oil producer, markets would have to discuss the possibility of a new oil crisis and its consequences for the global economy," said Ashley Davies, an analyst at Commerzbank.

If the crisis spreads there, experts say oil prices could reach $200 a barrel, potentially tipping the world economy back into recession.

The fragility of the global recovery was underlined by the fact that Britain contracted by a greater than anticipated 0.6 percent in the final three months of 2010, while the annualized growth rate in the U.S. for the same period was revised down to 2.8 percent from the initial estimate of 3.2 percent.

As elsewhere, the main focus in the currency markets was on events in Libya and the easing in the oil price from its most elevated levels gave the dollar a lift despite the lower-than-expected U.S. growth figures.

Elsewhere, the euro was 0.4 percent lower at $1.3756 while the dollar fell 0.2 percent to 81.75 yen.

In Asia, Japan's Nikkei 225 stock average rose 0.7 percent to close at 10,526.76 and South Korea's Kospi also added 0.7 percent, to 1,963.43. Hong Kong's Hang Seng index jumped 1.8 percent to 23,012.37.

The benchmark Shanghai Composite Index was virtually unchanged at 2,878.57, and down 0.7 percent for the week, while the Shenzhen Composite Index edged up less than 0.1 percent to 1,280.30 in lackluster trading.

____

Pamela Sampson in Bangkok contributed to this report.

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Stocks recover as crude oil prices stabilize (AP)

NEW YORK – Stocks rose Friday as oil prices stabilized following a recent jump. The escalating turmoil in Libya still left major indexes down about 2 percent for the week.

Oil prices settled at $97.88, down from a high of $103 Thursday but still up 13 percent over the last week. Oil prices have been rising, sending stocks lower, as concerns rose that violence would spread throughout North Africa and the Middle East, affecting oil production for big OPEC producers like Iran and Saudi Arabia.

Those concerns eased late Thursday after the International Energy Agency said the impact was far less than analysts had estimated and that any shortfall could be easily made up by tapping oil reserves in other countries.

Boeing Co. rose 2.2 percent after the Air Force awarded the company a $35 billion contract Thursday, one of the largest ever made by the military, for nearly 200 airborne refueling tankers.

DreamWorks Animation SKG Inc. fell 2.8 percent after the entertainment company reported revenue and earnings that were far below what analysts were expecting. Poor box office results from the Will Ferrell movie "Megamind" were partly to blame.

The Dow Jones industrial average rose 61.95, or 0.5 percent, to close at 12,130.45. It was the first rise for the Dow after three days of losses.

The Standard & Poor's 500 index rose 13.78, or 1.1 percent, to 1,319.88. The Nasdaq composite rose 43.15, or 1.6 percent, to 2,781.05

All three indexes are still down for the week, largely a result of the fighting in Libya.

Libya is Africa's largest producer of oil but only ranks 15th among the world's oil exporters. Traders have been concerned that fighting could not only threaten Libya's oil production but also spread to other countries in the region such as Saudi Arabia.

Higher oil prices also weigh on the U.S. economy by increasing the costs of moving goods and filling up gas tanks. A sustained $10 increase in the price of oil translates into a 0.2 percent cut in economic growth over 12 months, according to a recent estimate by economists at Goldman Sachs.

Treasurys inched up Friday on reports the economy grew more slowly than first thought in the last three months of 2010. The yield on the 10-year Treasury note edged down to 3.42 percent from 3.46 percent late Thursday.

The Commerce Department said the economy expanded at an annual rate of 2.8 percent in the October-December quarter. That's weaker than the previous estimate of 3.2 percent. In an attempt to close budget gaps, state and local governments have cut spending much more deeply than previously thought.

Despite this week's slide, the S&P 500 is up 2.6 percent in February and 4.9 percent for the year. Stronger earnings from a wide range of companies, including Archer Daniels Midland Co. and Dell Inc., have helped drive stocks higher.

Five stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume was 3.9 billion shares.

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Libyan unrest weighs on stocks, oil up further (AP)

LONDON – The turmoil in Libya heaped further pressure on stocks around the world Wednesday as investors worry that the global economic recovery may be derailed by the sharp rise in oil prices and swelling inflation.
Concerns that the country is descending into civil war were heightened by comments Tuesday from longtime leader Moammar Gadhafi that he would fight to his "last drop of blood," while urging supporters to strike back against protesters to defend his embattled regime.
The rhetoric, alongside mounting evidence of bloodshed around the country, got investors fretting over how the crisis will end and what the impact on the North African country's oil production will be.
Libya is the world's 18th largest oil producer, pumping out around 1.8 million barrels a day, or a little under 2 percent of global daily output. The OPEC country also sits atop the biggest oil reserves in the whole of Africa.
As a result, oil prices have risen even further following Tuesday's surge higher.
Benchmark crude for April delivery was up 35 cents at $95.77 a barrel — the highest since October 2008 — in electronic trading on the New York Mercantile Exchange. The contract jumped $5.71, or 6.4 percent, to settle at $95.42 on Tuesday.
In London, Brent crude for April delivery rose $2.61 to $108.38 a barrel on the ICE Futures exchange.
Higher oil prices were hurting stocks.
"Soaring energy prices are a clear consequence of events in Libya and the surrounding countries so this is also going to start sapping economic confidence," said Ben Potter, research analyst at IG Markets.
In Europe, the FTSE 100 index of leading British shares was down 0.7 percent at 5,957, while the CAC-40 in Paris fell 0.1 percent to 4,047. Germany's DAX was 0.5 percent lower at 7,279.
Wall Street was poised for a modest rebound after heavy losses Tuesday — Dow futures were up 23 points at 12,206 while the broader Standard & Poor's 500 futures rose 1.4 point to 1,315.90.
On Tuesday, the Dow slid 1.4 percent while the S&P fell 2 percent.
Elsewhere, the main point of interest was the release of the minutes to the last meeting of the Bank of England's rate-setting meeting. They showed another three-way split, but with Spencer Dale joining the camp of those wanting to raise the benchmark rate from the current record low of 0.5 percent.
That means only two more of the nine-member panel have to swing behind calls for an interest rate rise for borrowing costs to increase.
"This reinforces market expectations of a rate hike by the middle of this year and possibly by as early as May," said Michael Hewson, market analyst at CMC Markets.
The release of the minutes gave the British pound a limited bounce as the details of the vote had been widely anticipated.
By mid afternoon London time, the pound was 0.4 percent higher on the day at $1.6232.
Elsewhere in the currency markets, the euro was trading 0.3 percent higher on the day at $1.3725, supported by figures showing that industrial orders in the 16 countries that were using the euro in December unexpectedly spiked by a monthly rate of 2.1 percent. The expectation in the market was that orders would fall by a 0.9 percent monthly rate.
Earlier in Asia, Japan's Nikkei 225 stock average shed 0.8 percent to close at 10,579.10, while South Korea's Kospi dropped 0.4 percent to 1,961.63. Hong Kong's Hang Seng index fell 0.4 percent to 22,906.90.
New Zealand's main stock index rose 0.4 percent to 3,372.07 after falling the day before when a powerful earthquake devastated the city of Christchurch. Prime Minister John Key declared a state of national emergency and said 75 people were confirmed to have been killed in what was one of the country's worst natural disasters.
In mainland China, shares edged higher as investors snapped up bargains following a sell-off the day before. The benchmark Shanghai Composite Index edged up 0.3 percent to 2,862.63 while the Shenzhen Composite Index rose 0.9 percent to 1,273.92. Shares in paper processing, biotechnology and information technology led the gains.
____
Pamela Sampson in Bangkok contributed to this report.
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Global stocks fall further on oil, inflation concerns (Reuters)

LONDON (Reuters) – World stocks fell further from a recent 30-month high on Wednesday while the euro rose as unrest in Libya drove oil higher and fanned concerns about inflation that could hamper a global economic recovery.
Wall Street suffered its worst day since August on Tuesday as the turmoil in oil exporter Libya gave investors an excuse to sell stocks and consolidate positions after a rally that has driven world stocks 6 percent higher this year.
The spike in oil prices comes at a time when many fast-growing emerging economies already face rising price pressure and the need to raise interest rates.
European Central Bank officials also stressed they stand ready to fight inflation with tighter monetary policy on Tuesday, prompting interest rate futures to bring forward expectations for a quarter point interest rate hike to August.
"There is very little reason for people to be adding to risk at the moment. The Middle East is going to cast a pall over the markets until they can see any proper direction," said Justin Urquhart Stewart, director at Seven Investment Management. The MSCI world equity index (.MIWD00000PUS) was down 0.25 percent at 340.74, falling more than 2 percent from Monday's peak. The Thomson Reuters global stock index (.TRXFLDGLPU) was down 0.15 percent on the day.
The FTSEurofirst 300 index (.FTEU3) fell 0.4 percent. Oil companies with operations in the Middle East fell, including BP (BP.L) and Royal Dutch Shell (RDSa.L), down 0.8 and 0.7 percent respectively.
Emerging stocks (.MSCIEF) lost half a percent.
SUPPLY CUT?
Popular protests have toppled entrenched leaders in Egypt and Tunisia, but Libya's defiant leader Muammar Gaddafi said he would not be forced out by the unrest sweeping Africa's third-largest oil producer.
At last three oil companies have halted output in Libya, which pumps 1.6 million barrels per day, or nearly 2 percent of global supply.
U.S. crude rose as high as $96.08 a barrel, the highest level since October 2008. Brent crude rose 84 cents to $106.62 a barrel. On Monday, Brent hit a 2-1/2-year high of $108.70.
The euro rose 0.4 percent to $1.3718. Luxembourg's Yves Mersch and Nout Wellink of the Netherlands both said on Tuesday the ECB was ready to fight inflation by increasing interest rates when needed -- adding to a series of warnings from the bank's policymakers this year.
"The associated warning about the risks of distortions from excessively low interest rates might not have been a clarion call for higher rates, but again highlight the clear divergence with the approach of the Fed," said David Watt, strategist at RBC Dominion Securities.
"These comments overshadowed concerns about the EU periphery."
The dollar (.DXY) fell 0.3 percent against a basket of major currencies.
The bund futures were steady on the day.
(Additional reporting by Brian Gorman; editing by Patrick Graham)
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Stocks fall as oil jumps on Libya tensions (AP)

By CHIP CUTTER and DAVID K. RANDALL, AP Business Writers Chip Cutter And David K. Randall, Ap Business Writers – 1 min ago

NEW YORK – Stocks are falling for a second day after oil prices hit two-year highs and computer giant Hewlett-Packard said its revenue growth is slowing.

Oil prices jumped 2.5 percent as clashes continued between Libyan leader Moammar Gadhafi's forces and anti-government protesters. Libya accounts for 2 percent of the world's daily oil output.

Hewlett-Packard sank 10 percent after announcing a disappointing revenue forecast for the rest of the year. It was the worst performing stock in the Dow Jones industrial average. Chevron Corp. rose the most in the Dow, and other oil stocks also rose.

The Dow is down 49 points, or 0.4 percent, to 12,163 in midday trading Wednesday.

The S&P 500 is down 5, or 0.4 percent, to 1,310. The Nasdaq composite is down 24, or 0.9 percent, to 2,731.

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Libyan turmoil hits stocks as oil surges (AP)

LONDON – Mounting concerns over Libya's violent crisis battered stocks once again Tuesday and sent oil prices surging, while the earthquake in the New Zealand city of Christchurch pushed the country's currency sharply lower.

With deep rifts opening up in Moammar Gadhafi's regime, air force pilots defecting and a bloody crackdown in the capital of Tripoli, investors are fretting over how the crisis will end and what the impact on the North African country's oil production will be.

Libya is the world's 18th largest oil producer, pumping out around 1.8 million barrels a day, or a little under 2 percent of global daily output. The OPEC country also sits atop the biggest oil reserves in the whole of Africa.

With so much uncertainty surrounding a large chunk of the world's daily oil production, oil prices surged. Benchmark crude for March delivery was up $7.88 a barrel, or 9.1 percent, to $94.08 a barrel in electronic trading on the New York Mercantile Exchange.

"The Middle East will remain the market's focus today with moves in the oil price probably the best single indicator of the market's assessment of the wider implications of events there," said Adrian Foster, an analyst at Rabobank International.

With the oil price rising at such a rapid rate, stocks are inevitably under severe pressure.

Rising crude prices are a particular worry for investors as they reinforce fears of inflation and raw materials costs. They also stoke worries of a big drop in global demand levels, as experienced in previous oil price shocks in 1973-4, 1979 and 2008.

Given that unappetizing backdrop, investors' appetite for risk in other markets fell sharply. When risk appetite is low, investors usually look for shelter in the perceived safe havens of the U.S. dollar and gold at the expense of more risky investments such as stocks.

In Europe, the FTSE 100 index of leading British shares was down 1.1 percent at 5,946 while Germany's DAX fell 0.5 percent to 7,283. The CAC-40 in Paris was 1.4 percent lower at 4,041.

Wall Street was also poised for a retreat at the open as traders come back from a three day holiday weekend — Dow futures were down 1 percent at 12,257 while the broader Standard & Poor's 500 futures fell 1.4 percent to 1,324.

In the currency markets, the euro was down 0.6 percent at $1.3567 while the dollar fell 0.2 percent to 82.88 yen even after an announcement from Moody's Investor Services that it was putting Japan's credit rating on watch for a possible downgrade.

The impact of the Moody's statement was short-lived as the agency is merely lagging its rival Standard & Poor's, which earlier this year did actually downgrade its rating on Japan by one notch below Moody's Aa2 rating.

"The impact of developments in the Africa and Middle East on the yen have far outweighed any impact from Moody's announcement overnight to place Japan's credit rating on negative watch," said Lee Hardman, currency economist at the Bank of Toky0-Mitsubishi UFJ.

Even though Japan has massive public debts, it is widely considered to be one of the safest places for investors to park their cash in troubled times.

A powerful earthquake in the New Zealand city of Christchurch also rattled markets in the region. The quake occurred in the middle of the workday, toppled tall buildings and churches, crushed buses and killed at least 65 people in one of the country's worst natural disasters.

Following the quake, the New Zealand dollar slid to $0.7507 from $0.7636 before while New Zealand's benchmark index fell 0.7 percent to 3,358.71.

Elsewhere in Asia, the Nikkei 225 stock average shed 1.8 percent to close at 10,664.70. Hong Kong's Hang Seng lost 2.1 percent to 22,990.81 and South Korea's Kospi dropped 1.8 percent to 1,969.92.

Mainland China shares saw their biggest loss in over a month — the benchmark Shanghai Composite Index dived 2.6 percent to 2,855.52 while the Shenzhen Composite Index skidded 2.7 percent to 1262.82.

Comments by China's central bank governor, Zhou Xiaochuan, expressing Beijing's determination to rein in inflation renewed worries over the likelihood of further moves by the government to cool price increases.

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Pamela Sampson in Bangkok contributed to this report.

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European stocks fall as China tightens, traders eye G20 (AFP)

LONDON (AFP) – Europe's stock markets and the euro fell on Friday as investors reacted to fresh monetary tightening in China ahead of an eagerly-awaited Group of 20 finance meeting in Paris.

London's FTSE 100 index of top shares sank 0.48 percent to 6,058.08 points in late morning deals.

Frankfurt's DAX 30 dipped 0.12 percent to 7,396.24 points, the Paris CAC 40 retreated 0.18 percent to 4,144.93 and the Stoxx 50 index of top eurozone companies was off 0.26 percent to 3,056.55.

China's central bank announced Friday it would raise the amount of money banks must keep in reserve as it struggles to keep inflation under control in the world's second biggest economy.

The reserve requirement ratio will be raised by 50 basis points from February 24, the People's Bank of China (PBoC) said.

"China seems to be becoming increasingly concerned with its property market spiralling out of control as it applies the brake to bank lending yet again," ETX Capital trader Manoj Ladwa said.

The announcement from China, which has a voracious appetite for commodities, hit London's FTSE particularly hard because of its high gearing towards the mining and resources sector, according to Ladwa.

Shares in Anglo American dived 3.02 percent to 3,208.50 pence, despite news that net profits almost tripled to $6.54 billion (4.82 billion euros) last year, boosted by high commodity prices and emerging markets demand.

Earlier this week, the world's top miner BHP Billiton said its half-year net profits soared 72 percent to $10.52 billion while giant Rio Tinto said its annual net profits almost tripled to $14.32 billion.

However in Friday trade, BHP lost 3.30 percent to 2,402 pence and Rio Tinto shed 1.13 percent to 4,395 pence.

Meanwhile, in foreign exchange deals, the euro slid to $1.3554 as finance ministers gathered in Paris to hammer out common criteria for measuring global economic imbalances.

French President Nicolas Sarkozy has vowed to reform the world monetary system and commodities markets during his year at the G20 helm, saying he aims to defend poor economies from currency and trade turbulence.

"The G20 meeting ... is also expected to ratify the agreement earlier this week by (eurozone zone ministers) to double the EFSF bailout fund to 500 billion euros, though Germany will no doubt want some onerous strings attached," noted CMC Markets analyst Michael Hewson.

"Overshadowing all of this has been increased tensions across the Middle East," he added.

Financial markets were on edge this week after violent protests from Bahrain to Libya, with tensions also heightened by Iran's reported efforts to send naval ships into the Mediterranean.

Demonstrators in various Arab states have drawn inspiration from pro-democracy protests that led to the recent oustings of leaders in both Tunisia and Egypt.

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US stocks hesitant ahead of 3-day weekend (AFP)

NEW YORK (AFP) – US stocks wobbled Friday as investors faced a long holiday weekend with no economic releases for guidance and fresh unrest in the Middle East.

The Dow Jones Industrial Average gained 15.33 points (0.12 percent) to 12,333.47 in early trades, while the broad-market S&P 500 fell 0.21 point (0.02 percent) to 1,340.22.

The tech-rich Nasdaq Composite rose 1.32 points (0.05 percent) to 2,832.90.

"The S&P 500 hit a 32-month high Thursday. Equity market returns remain supported by improving economic trends and a strong corporate sector," said Kimberly DuBord at Briefing.com.

Amid a lack of economic releases and a bare calendar Monday, when markets are closed for a public holiday, investors appeared bound to extend the rally, shrugging off warnings the market is overextended.

"Despite the gains, valuations remain attractive and, given the wealth of cash on corporate balance sheets raising the specter of dividend hikes and share buybacks, stocks continue to charm investors," DuBord said.

Investors also kept an eye on spreading unrest in the oil-rich Middle East after uprisings ousted the Tunisian and Egyptian presidents in recent weeks. Protesters trying to topple more of the region's rulers staged fresh mass demonstrations Friday and buried the victims of crackdowns by embattled regimes.

On Thursday Wall Street equities markets rose to new two-year highs, buoyed by a report from the Philadelphia branch of the central bank a surge in regional manufacturing activity.

The Dow added 0.24 percent, the S&P 500 rose 0.31 percent and the Nasdaq climbed 0.21 percent to close at its highest level since October 31, 2007.

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Summary Box: Manufacturing report lifts stocks (AP)

BIG JUMP: The Federal Reserve Bank of Philadelphia said its index of manufacturing in the mid-Atlantic region nearly doubled between January and February, helping to push the broad stock market higher.

JOBS SLUMP: The Labor Department said that applications for unemployment benefits rose 25,000 from the previous week, a bigger bump than economists had expected.

THE INDEXES: The Dow Jones industrial average rose 30 points to 12,318.The Standard & Poor's 500 index rose 4 to 1,340. The Nasdaq composite rose 6 to 2,831.

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