Hope from indications of ongoing economic recovery (ISFM) (28-02-2011)

The ongoing turmoil ion Libya is still causing concern, particularly in Europe, with pressure growing from foreign government on the country’s longtime leader Moammar Gadhafi to step aside as the uprising continues to claim lives and threaten the region’s fragile balance.

Asian markets were largely unaffected by this crisis today, especially after an announcement by Tokyo that Japanese industrial production rose for a third straight month in January as overseas demand for Japanese goods continued to grow, indicating rising interest by foreign customers.

Apart from the general unrest, the primary market impact on the world economy has been on oil prices, which shot higher over the past couple of weeks as investors worried about supplies and contagion throughout the Middle East, in particular to Saudi Arabia.

Share prices in Europe began the day lower, but later turned positive as banking stocks were on the rise, as investors went shopping for bargains. A major loser was HSBC Holdings, which fell sharply after the bank’s earnings disappointed.

Among other issues in the region, the government debt crisis in Europe seems to have taken a step back as investors have been focusing on the Arab world turmoil, but it will probably take center stage again as the new Irish government will more than likely renegotiate the terms of the country’s bailout package.

For now, currency traders are focusing on Thursday's monthly policy meeting of the European Central Bank. By midmorning London time, the euro was trading 0.7 percent higher at $1.3839.

Back on Wall Street, U.S. stocks were modestly higher at the open as the price of oil declined and a Federal Reserve official offered an optimistic take on the recovery.

Source: ISFM