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Global stocks rattled by Bhutto murder, weak data

28 December, 2007

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Asian stock markets fell in early deals Friday following heavy losses on Wall Street as the murder of Pakistani opposition leader Benazir Bhutto sparked jitters about global security, dealers said.

Bhutto's assassination, together with weak US economic data, sent nervous investors fleeing to safe haven investments, dealers said.

Her death Thursday in Pakistan raised geopolitical concerns about stability in the nuclear-armed country, they added.

Gold and oil prices rose in Asian trade with crude futures climbing back towards the 100 dollars-per-barrel mark.

"Bhutto's death could raise the geopolitical tension which would sustain the rise in oil prices," said Prayoga Triyono, a fund manager at Henan Putirai Asset Management in Jakarta.

Tokyo closed down 1.65 percent on the final session of 2007, rounding off a tough year that saw the benchmark Nikkei-225 index slump 11.1 percent as fears over a US housing slump and related credit crunch battered global markets.

"Investors feel nervous about (Bhutto's murder) as it added to uncertainty," said Osamu Takashima, chief analyst at Bank of Tokyo-Mitsubishi UFJ.

Elsewhere, Hong Kong dropped 1.6 percent, Shanghai dipped 0.11 percent, Seoul gave up 0.7 percent and Sydney shed 0.4 percent.

"It's very thin trading. We took our lead from Wall Street but any news at the moment, negative or positive, really sways investors," said Juliette Saly, an equities analyst at CommSec.

The Dow Jones Industrial Average closed down 192 points, or 1.4 percent, at 13,359.61 on Thursday as investors reacted nervously to Bhutto's assassination.

Pakistan is a key ally of the US in its so-called "war on terror" and has received billions of dollars in aid.

Bhutto, the first woman to lead a Muslim nation, was campaigning to return to power in next month's elections when she was shot by an assassin who then blew himself up.

The Karachi Stock Exchange is closed for three days as the nation observes a period of mourning for the slain politician.

Adding to the gloom, the US government said orders for durable goods rose by just 0.1 percent in November, far short of expectations.

"The recent economic data in the US showed that there are still no signs of a recovery," said Alex Tam, research analyst at CSC Securities in Hong Kong. "That's keeping the bulls out of the market."

Some weak Japanese data released before the market opened also weighed on sentiment in Tokyo, said Yumi Nishimura, manager for equity marketing at Daiwa SMBC Securities.

The government said household spending in Japan dropped 0.6 percent in November while industrial output fell 1.6 percent and inflation accelerated to the fastest pace in almost a decade.

On the foreign exchange market, the dollar slipped against the yen as market players reacted nervously to the weak US economic data and Bhutto's murder, dealers said.

The dollar dipped to 113.48 yen in Tokyo midday trade from 113.67 late Thursday in New York, where the greenback had already weakened.

The euro eased to 1.4607 dollars from 1.4622 and to 165.74 yen from 166.27.

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