Saudi Arabia contagion raises the rout of the Gulf

My Mushaima said Wednesday that demonstrators had "the right to appeal using the Iran" If the Saudi military units to interfere in the fight. Tanks were seen crossing the roadway of 17 miles from Saudi Arabia to Bahrain on Tuesday.

"These were supposed to be Bahrain tanks, returning from Kuwait: this is not a credible story," said Siras Abi Ali, an expert in the Gulf at the level of the risk analysis Exclusive group.

He said that the result at Bahrain will set the model for events across the border. "There is no positive consequence of this for Saudi Arabia." If Bahrain offer of concessions, the Shia Saudi demand similar concessions. Are they cracking down, they could uplift. These people do not want to live in the House of Saud, "he says.

Saudi Arabia activists have called on Facebook for a "day of Rage" on 11 March, despite the lashing sentence to protest Street. An appeal similar to arms in Syria fact long fire because people were afraid, and the security forces the stifled in the egg. "We will closely monitor how many people are, and how far to go, their requirements, see", said Mr. Abi Ali.

Saudi King Abdullah has little latitude. Its own legitimacy comes from members of the Wahhabi clergy, who refuse any compromise with the Shiites. It is 87 and in poor health, raising the prospect of a fight of favourable looming succession within the line hard Minister Prince Nayef. It would crush any protest. The monarchy sought to save time by spending an additional amount of $36bn (£ 22bn) on welfare and wages, but political patronage may hit the wrong note at this stage.

Whatever hope in the West, Mr. Abi Ali said the Middle East is now in the vortex of several revolts to create turmoil for years and destabilize the supply of oil for a long time. "The Arab world will begin to behave like the Swiss," he said.

Slide in the Libya in the civil war has already reduced deliveries of oil by 1 m barrels per day (BPD), cutting in the margin of safety of the world. The International Energy Agency (IEA) said that the Saudis had covered the short-fall even if Saudi Arabia heavy oil is a poor substitute for the "sweet" of the Libya crude oil.

However, analysts suspect the Kingdom had already increased profitability 9 m before barrels of disturbances in Libya and did not add much net offer. There is a debate is raging about whether if the Saudi oil giant aramco can increase yields by 3 m bpd if necessary, as claimed. While the two new fields came flow adding 2 m bpd since the oil shock of 2008, "attrition" on old fields has offset this. "We believe that they are nearly at full capacity,"said an analyst."."

Global reserve capacity may in fact be less than 4 m bpd and perhaps as low as 2 m. during this time, the demand for oil from China alone increased by 850 m bpd last year.

HELIMA Croft at Barclays Capital said the longer Libya, the most damaging crisis continues it would supply to long term. Foreign companies have evacuated staff and may be reluctant to restart operations until the dust settles.

The rebel leaders of Benghazi are considering to investigate oil contracts, reserving the right to renegotiate the conditions in accordance with the "will of the people in the street".

Ms. Croft said foreign oil companies will not sink large sums of money in Libya until it is clear, what will emerge from the cauldron of tribal divisions. A plan for $billion of investments of oil by BP, Shell, Oasis and others over the next three years is in ruins. "With the disintegration of a stable political regime in Libya, we consider the major part of projects as being extremely unlikely to proceed at the time, or even not at all," she said.

Fatih Birol, the IEA Economist ' schief, warned that investment in fresh fields across the Middle East "may be delayed for years." The era of cheap oil is gone. »

The Libyan crisis presented an oil crunch which was likely to occur within three years, given the relentless decline in non-OPEC output in the North Sea and the Mexico.

While the world can cope with the loss of Libyan crude for now, the stakes will be rise sharply, if a country more succumbs and explode off the coast of graphics if the monarchies of the Gulf are losing their grip.

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Mounted world as China stock market slide raises rates Asia following United States, less Europe

Nikkei average of Japan more 2pc slipped and briefly touched a low interday a month on Wednesday as investors rushed to take profits. Photo: Reuters

Japan focused on exports was the hardest hit by the Nikkei index in Tokyo tumbling 1. 7pc tp 9371 points.Australie the ASX slipped 0. 7pc and Hong Kong Hang Seng 0. 6pc.

Oil prices rose above $ 80 per barrel, after attempting to China to control inflation and a property bubble prospective he dragged more than 4pc Tuesday.

The dollar edged more after that Treasury Secretary Timothy Geithner is pulled out of a strong dollar fell against the yen, the euro and the pound sterling.

Buck the trend, with ABN Korea Southern progress 1pc and Shanghai Composite 0 6pc increasingly China markets.

"China's announcement was a great surprise to the market.Attenuated sense throughout Asia as investors worried that an increase in interest rates could pressure on economic growth in China, "says Masatoshi Sato, market analyst, Mizuho investors securities in Tokyo."

Bank of China said that it will be Wednesday increase loan Yuan a year to 5 5 31pc 56pc and yuan year drops 2 5pc 2 25pc rates.

The increase in interest rates was the first to China since 2007.

Chinese economy has increased 10 3pc in the second quarter and its growth has propelled the resumption of the economy of a deep recession, while the United States and Europe struggle to return to economic works foot.

The US Federal Reserve should largely in an attempt to revive the flagging economy in November by launching a program to purchase more .the Treasury bonds ' objective would be to drive down interest rates on mortgages, loans and other debts and encourage Americans to spend.

Mervyn King, Governor of the Bank of England has also fed hopes to facilitate greater quantitative (ve) Tuesday when he says political currency continues to be a "powerful weapon" in support of recovery.

New York by the tumbling points 165.07, Dow Jones industrial average or 1. 5pc 10,978.62, fall below 11,000 for the first time in a little over a week .the ' broader S & P 500 index lost 18.81 points, or 1. 59pc 1,165.90 points.

Rich technology Nasdaq composite index shed 43.71 points, or 1 76pc 2,436.95 points, as Apple is 2 7pc on earnings as forecast estimate and IBM dropped 3 4pc due to a decline in new contracts.

In Europe, FTSE 100 has fallen from London, 0 6pc, DAX 0 the Germany 4pc France ACC 0 7pc.

FTSE 100 Great Britain has been opened 10 - 19 points lower on Wednesday, mirroring the weakness of global investors concerned about interest rates Chinese and cooled US mortgage bonds also viewed UK policy.

The minutes of the Bank of England is published at 9.30 a.m. and Chancellor announced review of expenditures at 1230.

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German-Irish brinkmanship raises EMU stakes

 The EU's new criteria for bank stress tests to be agreed this week adds another risk. 

Ireland's new leader Enda Kenny faces a daunting task as he tries to change the terms of his country's €67bn (£57bn) EU-IMF package, either by cutting the penal rate of interest or changing the remit of the rescue fund to help Ireland claw its way out of a debt trap.

The three parties in Chancellor Angela Merkel's coalition have issued a paper ruling out use of the bail-out machinery to purchase the bonds of eurozone states in trouble, or engineer a "soft" debt-restructuring by lending to these countries so that they can buy back their own debt cheaply from the market.

They oppose any form of eurobond that puts Germany on a slippery slope towards a 'Transferunion', and have demanded a Bundestag vote on the accord reached by Mrs Merkel at next week's EU summit.

A group of 189 German professors has stiffened the Bundestag further by warning of "fatal consequences for the whole process of European integration" if the EU crosses the Rubicon to a de facto debt union.

"I cannot remember any occasion when lawmakers have set guidance like this before: Merkel has very little leeway," said Hans Redeker, currency chief at BNP Paribas. "There is going to be disappointment at the summit and that will make life even harder for the EMU periphery."

Mr Redeker said the EU's new criteria for bank stress tests to be agreed this week adds another risk. If the tests are seen as a sham, like last time, they will sap confidence: If too tough, they will revive fears over the capital levels of weaker lenders.

The EU dispute comes as the latest oil spike queers the pitch for vulnerable countries on Europe's fringes. A report by Ernst & Young warns that if oil stays near $120 for the rest of this year, it will cut EMU growth to just 1.1pc this year and 1.2 next.

"We think the peripheral countries would suffer most. Spain, Greece, and Portugal face a double whammy since they have no room to offset the oil shock by slowing the pace of fiscal consolidation," said the author, Marie Diron. Oil at $150 would tip the eurozone back into recession, with the risk of cross-border bank contagion and default by at least one country.

German finance minister Wolfgang Schauble is hoping for a "grand bargain" in which weaker EMU states agree to stringent discipline in exchange for a boost to the bail-out fund, hoping this will assuage critics at home.

However, Germany's plans for budget vetting and intrusive reforms set off a storm at an EU leaders dinner earlier this month, with some calling it a diktat that trampled on sovereign prerogatives. Mr Schauble has dug in his heels, insisting that "the German government is not willing to make any compromise on this issue."

The European Commission has sought to defuse the crisis by drafting its own compromise plan, but any dilution will inflame critics in Germany. Bundesbank chief Axel Weber has already attacked the EU proposals for a more 'pro-active' rescue fund as a move to eurobonds "through the back door", shifting debt costs onto EU taxpayers.

If anything, hard-liners are gaining strength in Germany, Holland, and Finland, where the eurosceptic True Finn party is surging in polls. All three states oppose a cut in the penal rate on bail-out packages, fearing moral hazard and the risk that others will be tempted to tap the fund.

Ireland is paying 5.9pc on the EU chunk of its loans, far above the EU funding cost of 2.6pc. Jens Larsen, Europe strategist at RBC and a former IMF director, said the policy makes no sense.

"This shouldn't be a mechanism to punish countries, but to help them turn around the ship. I think a 4pc rate would be reasonable. But what matters most is giving the European Financial Stability Facility a wider remit so that it can intervene in secondary bond markets. If there is no deal, we could see renewed contagion," he said.

Andreas Rees, Unicredit's Europe economist, said Ireland should have "no problem" paying 5.9pc. This rate lifts Irish debt service costs to 4pc of GDP, compared to 10pc in the 1980s.

Mr Kenny's problem is that this hawkish view reflects broad German opinion. His other problem is what happens as recovery pushes up bond yields across the board, lifting rates on Ireland's loan package pari passu.

His trump card is to threaten 'haircuts' on senior bank creditors if the EU refuses to compromise, a move that might set off EMU-wide contagion and inflict big losses on German Landesbanken. To play to such a card would enrage Europe, but not to play it might test patience of an aggrieved Irish nation.

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IMF raises spectre of civil wars as global inequalities worsen

Dominique Strauss-Kahn, the IMF's chief, said the economic rebound across the world is built on unstable foundations, with many rich nations still strapped in job slumps while the rising powers of China, India and Brazil already facing the threat of overheating. "It is not the recovery we wanted. It is a recovery beset by tensions and strain, which could even sow the seeds of the next crisis," he said.

"Global unemployment remains at record highs, with widening income inequality adding to social strains," he said, citing turmoil in North Africa as a prelude to what may happen as 400m youths join the workforce over the next decade. "We could see rising social and political instability within nations – even war," he said.

The IMF has published a paper entitled Inequality, Leverage and Crisis arguing that the extreme gap between rich and poor – with echoes of the US in the late 1920s – was an underlying cause of the Great Recession from 2008-2009.

The paper, by the Fund's modelling unit, warned of "disastrous consequences" for the world economy unless workers regain their "bargaining power" against rentiers. It suggests radical changes to the tax system and debt relief for workers.

Mr Strauss-Kahn said the toxic global imbalances that caused the financial crisis are re-emerging, naming China and Germany as the two arch-sinners that rely on export surpluses to power growth at the expense of the US and other deficit countries.

"The most important question is to deal with the recurrent problem of some countries' large external surpluses," he said, warning that failure to curb excesses will lead to global clashes and rising protectionism in trade and finance.

In a veiled warning to China and other countries holding down their currencies for commercial advantage, the IMF chief said "exchange-rate adjustment should not be resisted". Nor should capital controls be imposed to stop the inflow of funds.

The comments appear to align the IMF behind Washington in the simmering dispute over the declining dollar. China and Brazil have accused the US of covert currency warfare through quantitative easing, but the claim is slippery since the US has a huge structural trade deficit.

Mr Strauss-Kahn also hinted that parts of Asia are exceeding the safe speed limit for growth and needed to "tighten" further before inflation gets out of control. "There are risks of overheating, and even a hard landing," he said.

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Volatile day raises doubts in term of bull of the FTSE

It was in evidence on Tuesday as the FTSE 100 closed 0.98 points to 5974.76 following a volatile trading day. The broader 250 FTSE fell 4.35 11743.52 as traders and analysts speculated whether the so-called "great bull run" had hit the wall.

"With the prospect of higher interest rates, higher inflation, a rising unemployment and slowdown in global growth, the negatives are much too much to ignore, more earnings for shares may be difficult to obtain, which means", warned Angus Campbell at Capital spreads. "After such a huge rally, investors are naturally cautious and until in 2011 both UK indices have ground stop."

Political unrest across the Middle East continued to spook investors.

Fall of the price of oil reaches the value of gold, which had benefited from a flight to safety Monday. Randgold resources, including the mines of the precious commodity, fell 400 p to £ 44.80 while hardened African Barrick Gold p 20½ at 547½.

Group Weir was one or other of the big losers of the day despite a 58pc jump better than expected in the benefits of the reporting year. The British engineer titles, which have increased by more than 100pc of last year, fell 84 p to £ 16.95 on making profits as strong recoveries in the shale oil and gas and mining markets fuelled demand for pumps and valves of the company.

Among the smaller caps, rate shares dropped 44.1 - 20pc - 176.4% after the author of the set - top box has warned that one of its American customers had delayed a large order to 2012, reducing its forecast of growth of sales of 2011.

bt Group and Vodafone were among the winners of the day, rising 7.3 percent 191.1 and 3.15 181,85 p. The pair rose after Morgan Stanley analysts placed a rating of "upgrade" on the telecommunications sector.

Analysts, said: "in the reduction of rates (MTR) mobile endpoints, roaming, unbundling and deflation in all DSL products faces." The prospects are more calm now, by reductions in MTR the final furlong, EU lower exposure and fixed prices inflate homelessness. Data mobile are not driving the European sector, but it have impact in the United States and in emerging markets, to which EU companies are subject. Download us our attractive sector view. »

Old mutual led a rally in the financial sector after the Anglo-sud African insurer beat analyst expectations with a 14pc rising profits and said it was close to the sale of his business life U.S.. Shares in the Group spent 4.4 to 137.7 p, then that peers including Aviva also increased.

Prudential, which will be Wednesday deliver its first results of the exercise given his agreement of. 5bn (£ 22bn) of $35 for AIA collapsed last summer, also presented in the ranking, from 13½ to 714 p.

Elsewhere, shares of Cairn energy advanced 6.8 at 448 p after Bank of America, Merrill Lynch upgraded its rating of the Explorer of oil "buy" from "neutral", with a price target increased from 520 p, 485 p.

In a note, Merrill said that it expected the uncertainty on the Elimination of the Cairn India Vedanta Resources to facilitate. "While we do not exclude that the agreement could close after the April 15 deadline, we are optimistic that it will end in the short term," the broker added.

Heritage oil also found under the spotlight, from 7½ to 282 p on speculation that BG Group explores bid for the assets of the Iraqi gas company.

Heritage oil company's shares have plunged since January, when he said that he had found gas in the region of Kurdistan of Iraq - disappointing investors who had hoped for a discovery of oil. Reports in Africa suggest that the company is also close to resolving a dispute tax troublesome in Uganda.

Back among the smaller caps, Ashtead acquired 16.7 to 203,2 after his British industrial equipment rental company
third-quarter loss before tax of £ 1. 7 m.

Evolution of securities raised its price target for the company, which employs diggers from small tools equipment, to 225 percent of 200 p. "in July, our forecast pre-tax 2011 held at 12 million pounds sterling." Yesterday, it was 20 million pounds, after today's announcement, it is likely to rise to £ 25 m to £ 30 m, "evolution of values securities analyst and Philip Sparks said in a note."

Betfair also rose 67½ to 955 p after you have copied rivals Ladbrokes and William Hill by moving parts of its business in Gibraltar. The move, which has been taken to benefit from a lower tax environment in the region, just a few months after that Betfair has completed its controversial London listing last October.

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Mounted world as China stock market slide raises rates Asia following United States, less Europe

Nikkei average of Japan more 2pc slipped and briefly touched a low interday a month on Wednesday as investors rushed to take profits. Photo: Reuters

Japan focused on exports was the hardest hit by the Nikkei index in Tokyo tumbling 1. 7pc tp 9371 points.Australie the ASX slipped 0. 7pc and Hong Kong Hang Seng 0. 6pc.

Oil prices rose above $ 80 per barrel, after attempting to China to control inflation and a property bubble prospective he dragged more than 4pc Tuesday.

The dollar edged more after that Treasury Secretary Timothy Geithner is pulled out of a strong dollar fell against the yen, the euro and the pound sterling.

Buck the trend, with ABN Korea Southern progress 1pc and Shanghai Composite 0 6pc increasingly China markets.

"China's announcement was a great surprise to the market.Attenuated sense throughout Asia as investors worried that an increase in interest rates could pressure on economic growth in China, "says Masatoshi Sato, market analyst, Mizuho investors securities in Tokyo."

Bank of China said that it will be Wednesday increase loan Yuan a year to 5 5 31pc 56pc and yuan year drops 2 5pc 2 25pc rates.

The increase in interest rates was the first to China since 2007.

Chinese economy has increased 10 3pc in the second quarter and its growth has propelled the resumption of the economy of a deep recession, while the United States and Europe struggle to return to economic works foot.

The US Federal Reserve should largely in an attempt to revive the flagging economy in November by launching a program to purchase more .the Treasury bonds ' objective would be to drive down interest rates on mortgages, loans and other debts and encourage Americans to spend.

Mervyn King, Governor of the Bank of England has also fed hopes to facilitate greater quantitative (ve) Tuesday when he says political currency continues to be a "powerful weapon" in support of recovery.

New York by the tumbling points 165.07, Dow Jones industrial average or 1. 5pc 10,978.62, fall below 11,000 for the first time in a little over a week .the ' broader S & P 500 index lost 18.81 points, or 1. 59pc 1,165.90 points.

Rich technology Nasdaq composite index shed 43.71 points, or 1 76pc 2,436.95 points, as Apple is 2 7pc on earnings as forecast estimate and IBM dropped 3 4pc due to a decline in new contracts.

In Europe, FTSE 100 has fallen from London, 0 6pc, DAX 0 the Germany 4pc France ACC 0 7pc.

FTSE 100 Great Britain has been opened 10 - 19 points lower on Wednesday, mirroring the weakness of global investors concerned about interest rates Chinese and cooled US mortgage bonds also viewed UK policy.

The minutes of the Bank of England is published at 9.30 a.m. and Chancellor announced review of expenditures at 1230.

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