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BEAR HUGS ALL ROUND

When the crisis in U.S. subprime lending exploded in the second half of last year, the financial system ground to a halt. Credit availability evaporated and mistrust of lending counterparties spread fast, bringing massive volatility and a slowdown in growth in the United States that now threatens both Europe and Asia.

The Nasdaq Composite Index .IXIC is down 20 percent from its 2007 peak in October, while in Asia Japan's Nikkei .N225 and the broader TOPIX index are down by nearly 30 percent from their February 2007 peaks.

Even the Shanghai Composite Index .SSEC, which last year doubled in value, is down by about 25 percent from its life-time peak in mid-October last year, although analysts believe the ongoing economic boom in China should help that index recover.

"Just about anything you can think of has some sort of a major topping pattern (on the charts) that was building last year; most have tested or broken through some sort of key level," said Nicole Elliott, technical analyst at Mizuho Corporate Bank.

"The next move is a large move lower. It's just started this week, and it should be far steadier than the first drop, slower, and should continue for a lot longer," she said.

"It will take months. I don't think there will be a sudden 'whoosh' to get there, but on the other hand, when things unravel they usually do so fast."

A chart of the DJ Stoxx 600, which has gained 6 percent since hitting a 2-1/4 year low on Jan. 22, shows the index has fallen in four successive waves since last July and on each occasion has marked lower highs and lower lows.

"We are in a primary bear market trend and might even end up in a secondary bull market, but the primary trend is down," said Heino Ruland, a strategist at FrankfurtFinanz in Germany. Continued...

He said good results so far in the latest round of earnings might prompt market rebounds but cautioned against reading too much into them.

"Most people are going against (the idea of a bear trend). That is partly due to the typical behaviour of analysts who believe the companies they cover are effectively resisting the trend, which is nonsense," Ruland said.

Ruland also pointed to the crossing on Nov. 20, 2007, of the 38-day and the 200-day moving averages -- indicators used by chartists to determine the force of a rally or sell-off -- which some believe traditionally marks the start of a bear trend.

Although the Stoxx 600 38-day moving average has blipped below the 200-day on occasion in the past few years, it has not languished below it for this long since the crossing in July 2000, when the 2000-2003 bear market was getting underway.

It isn't just the technical picture that has darkened. Even though interbank lending rates have subsided from their multi-year highs late last year, there is still a long way to go before normality returns to the global lending markets.

It is this more than any other factor that will likely keep the bears out of hibernation for the coming months, experts say.

"Finance is the ultimate global industry," said Mizhuho's Elliott. "Literally at the push of a button, I can put money wherever I want into just about any instrument I can think of, and there is no cheap money any more. It's gone.

"Investors now should really not worry too, too much about investment returns, but rather they should spend their time and energy on capital preservation," she said. (Editing by Sophie Walker)

reliance listed on list price 450/-. bottomed 390/- now recovering now trading @ 430/-

GLOBAL MARKETS WEEKAHEAD-G7 does little to calm nerves
Sun Feb 10, 2008 1:39am EST

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TOKYO, Feb 10 (Reuters) - Currency and stock markets are likely to remain skittish this week after a Group of Seven meeting at the weekend offered no quick fix for the turbulence in credit markets.

The G7's message on currencies was much the same as at previous meetings and was expected to have little impact. The communique encouraged China to allow the yuan to appreciate more quickly.

The finance leaders from the world's top industrialised nations also urged banks to fully disclose losses and shore up balance sheets to help restore the normal functioning of markets. [ID:nT262281]

Analysts said such words by themselves were unlikely to dispel worries over financial institutions' losses from the turmoil in credit markets, which flared up last year due to rising defaults on U.S. subprime mortgages.

"The G7's joint statement contained nothing eye-catching and there were no surprises. It will probably be hard for equity markets to show an immediate positive reaction," said Tsuyoshi Segawa, an equity strategist for Shinko Securities.

Since investors did not have very high expectations of the G7 meeting to begin with, there was unlikely to be any sharp, knee-jerk reaction in either equities or currency markets.

But risk appetite was likely to remain subdued, and as a result the yen could rise towards three-year highs against the dollar in the weeks ahead, analysts said.

Reuters
Asian stocks fall on credit worries
Sunday February 10, 10:49 pm ET
By Tom Miles


HONG KONG (Reuters) - Oil and precious metals rose on supply concerns on Monday in thin holiday trade in Asia, while the few stock markets that were open, such as South Korea and Australia, unraveled on fear the credit crunch would spread further.



The price of wheat (WH8) jumped to a fresh record high as investors piled into commodities they think will withstand a global economic slowdown.

Platinum hit another record high at $1,887 an ounce and sister metal palladium raced to a six month high after power shortages disrupted mining in major producer South Africa.

With Japan, China and Taiwan closed for national holidays, Seoul and Australia set the tone, with the Korea Composite Stock Price Index (KSE:^KS11 - News) falling more than 3 percent by 0202

GMT.

"The KOSPI is actually doing better when compared to the other markets' losses during the holiday," said Kim Seong-joo, an analyst at Daewoo Securities. "The losses could have been steeper."

Indian shares seesawed in opening trade but managed to notch up a 0.4 percent gain.

The Dow Jones industrial average (DJI:^DJI - News) closed down 64.87 points, or 0.53 percent, at 12,182.13 on Friday, a fall of 4.4 percent over the week.

MSCI's measure of Asia Pacific stocks excluding Japan (^MIAPJ0000PUS - News) was down 1.4 percent by 0225 GMT.

"The slowing U.S. economy will hit emerging economies that rely heavily on exports and higher credit market risks also mean you should sell," Kim said.

AUSTRALIA DOWN

Australia's benchmark S&P/ASX 200 index (ASX:^AXJO - News) was also down by more than 2 percent by 0204 GMT, as investors sold banking stocks after the Reserve Bank of Australia raised inflation forecasts increasing chances of more interest rate increases.

Australia's central raised its inflation forecast to well above its comfort zone, underlining the risk of more interest rates increases.

"It certainly highlights the fact they're thinking seriously about going again in March," said Rory Robertson, interest rate strategist at Macquarie Bank. "Back to back hikes are unusual when rates are already at decade highs. But the RBA is more worried about inflation than it has been in a decade, and it seems determined to nip the problem in the bud."

National Australia Bank Ltd (ASX:NAB.AX - News), the nation's top lender by assets, lost 3.2 percent to A$32.36 and Commonwealth Bank of Australia Ltd (ASX:CBA.AX - News), the second-biggest lender, fell 3.4 percent to A$48.46.

PLATINUM HIGH

International investors are vigilant for further signs of a possible recession in the U.S. economy and a U.S. slowdown that could dent profits for Asia's exporters and weaken the dollar.

The dollar held steady after a weekend Group of Seven meeting acknowledged growing risks to the global economy and kept comments on currencies almost unchanged from the October statement.

The euro (EUR=) inched up against the dollar and the yen after European Central Bank President Jean-Claude Trichet warned the market not to bet on a cut in interest rates because of persistent inflation pressures in the euro zone.

"While there was no specific language change that could offer a major catalyst to FX markets, the overall tone from the G7 should continue to reinforce the cautious stance of investors," said currency analysts at Morgan Stanley in a research note.

Dollar-denominated commodities tend to make nominal price gains as the currency weakens but they have also risen on strong Asian demand and supply constraints.

Platinum (XPT=) hit another record high on Monday on the back of lingering supply concerns in South Africa, which produces four-fifths of the world's metal, while gold (XAU=) firmed near the record $936.50 an ounce it hit in early February.

Oil prices firmed in early Asian trade after soaring 4 percent on Friday, their biggest gain in nearly two months as production problems in the North Sea and Nigeria pushed aside fears that a U.S. recession would hurt fuel demand in the world's top consumer.

Venezuelan President Hugo Chavez on Sunday threatened to stop sending oil to the United States on Sunday after Exxon Mobil (NYSE:XOM - News) froze $12 billion of Venezuela's overseas oil assets as it pushes for compensation for a nationalised oil project.

"If you freeze us, if you really manage to freeze us, if you damage us, then we will hurt you. Do you know how? We are not going to send oil to the United States, Mr. Bush, Mr. Danger," Chavez said on his weekly TV show.

(Additional reporting by Rhee So-eui in SEOUL, Fayen Wong and Denny Thomas in SYDNEY, editing by Louise Heavens)

12:00 PM - The world is in the grip of a bear market and the Indian market is also showing signs of being bearish, says Rajesh Jain of Pranav Securities, on CNBC TV 18. Sensex is trading at 16753, down 711 points, Nifty is at 4901, down 219 points from the previous close. Reliance Power is trading at Rs 417, down 32 points on the BSE

It's mayhem monday-what a tanking sensex down 810 pts nifty-260,fckss.Where r the bulls ?Maybe the bull at the bse bldg has caused pain

our stock market is not self dependent.fii & fdi are withdraing from our market because in thier own country market is very atractive.so they prefer to stay in their own market.even our budget is due so till then.......................have a good.............?

Bse tanked at 1.35pm -999.97 pts,nifty-310.What a red letter day again

very disapoting day.even reliance power gone without power.