US and Asian markets decline
New York: US stocks closed lower on Tuesday as surging oil prices and a announcement concerning uranium enrichment by Iran overshadowed strong quarterly results from aluminium giant Alcoa and chipmaker Micron Technology.

The Dow Jones Industrial Average fell 51.70 points to 11,089.63, while the tech-laden Nasdaq composite dropped 22.92 points to 2,310.35.

The broader Standard and Poor's 500 index was lower by 10.06 points at 1,286.56.

Brent North Sea crude in London closed at a record $69.37 a barrel, off an all-time high of $69.70 in intraday trade.

Most Indian ADRs were down in line with the Nasdaq fall.

Infosys, however, was up 0.30 per cent at $75.35, while Satyam Infoway was down 6 per cent at $13.27.

On the NYSE, Wipro declined 2.60 per cent at $14.12, Satyam Computer lost 3.70 per cent at $37.28, Tata Motors also was down 0.60 per cent at $20.85, Dr. Reddy's ended flat at $31.76, ICICI Bank was off 3.10 per cent at $27.08, HDFC Bank shed 2 per cent at $56.22 and Patni lost 1.80 per cent at $19.60.

Asia's major indices declined sharply on Wednesday as well, with Tokyo's Nikkei plunging 177.17 points at 17,240.96 and Hong Kong's Hang Seng index losing 162.63 points at 16,313.18.

Elsewhere, Singapore Straits Times was down 12.35 points at 2,542.31, Taipei Weighted index was up 33.39 points at 6,790.56, Kuala Lumpur Composite shed 2.27 points to 940.20, Seoul Kospi slipped 6.40 points at 1,379.68, Jakarta JSX Composite edged up 10 .12 points at 1,370.25, Bangkok SET was down 4.57 points at 752.83 and in Manila, the PSE was up 6.59 points at 2,223.97.
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2006, a year of challenges for global financial markets, says IMF report
Washington: After several years of low interest rates and ample liquidity, fresh and unexpected challenges may beset global financial markets in 2006, says a new report from the International Monetary Fund.

Although the global financial system has gathered strength and resilience in 2005, "a number of cyclical challenges appear to be gathering on the horizon, which necessitates a more nuanced view of the financial outlook for the remainder of 2006 and beyond," the study, called the Global Financial Stability Report, concluded.

Despite such worries, the baseline forecast of IMF researchers is on the whole positive. "The most likely cyclical setting for financial markets in 2006 could be defined as 'not bad, but not as good as the stellar year 2005,' the report concluded.

Developments in credit derivatives, which have distributed financial risks to a wide range of financial players instead of banks, increase the chance of "unpleasant surprises" from the less-regulated market players.

The IMF report also said that there should be some moderation in the pace of foreign accumulation of U.S. assets in 2006 because of stronger growth and higher interest rates in Europe and Japan. Foreign appetite for U.S. assets have been the key factor holding U.S. long-term interest rates low, cushioning the blow from the steady Federal Reserve rate hikes.

There is a small risk that the slower accumulation of dollar assets could trigger a sharp fall in the dollar and push up interest rates, although it is more likely foreign appetite will "go on for some time," the IMF said.

With respect to stock markets, the report says, "However, any [stock] market correction is unlikely to be very significant given that market valuations, measured by price-earnings ratios, are currently around their long-term averages in most countries -- meaning, they are not as stretched as they were in 2000 and therefore less vulnerable to a "bursting of the bubble."

The report said there is evidence that the global credit cycle is turning, with less favourable investment conditions expected at the year unfolds.
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U.S. Feb. trade deficit falls 4.1% as gap with China narrows
Washington, USA: The U.S. trade deficit narrowed somewhat to $65.7bn in February, led by a decline in Chinese imports. This fall off, however, may be a temporary phenomenon.

The trade gap narrowed by 4.1 per cent from a record $68.6bn in January, the commerce department said in Washington. The deficit with China was the smallest in almost a year, but may well be reflecting business shutdowns during the lunar New Year holiday.

A jump in oil costs to near-record highs and growing demand for Chinese goods suggest U.S. imports, which exceed the country's exports by 50 per cent, will again jump. China's President Hu Jintao plans to visit President George W. Bush next week amid Congressional efforts to penalize China for currency policies that lawmakers say help widen the trade gap.

Imports fell to $178.7 billion in February, reflecting lower demand for motor vehicles and aircraft. Even with the decline, both imports and exports were still the second-highest on record.

The trade deficit with China narrowed to $13.8 billion in February, the smallest since March 2005, from $17.9 billion in January. In the first two months of the year, the gap reached $31.8 billion, compared with $29.1 billion at the same point last year.

The Chinese export momentum regained force last month after the New Year holiday. China's trade surplus widened to $11.2 billion in March, the second-highest on record, according to figures released yesterday. Trade with the U.S. accounted for almost all of the gap. China's surplus with the U.S. widened 39 percent last month to $11 billion from $7.9 billion, China's customs bureau said today.
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