Global Market Cues:

UBS confirms sub-prime loss woes:

The loss is the first in UBS's history

Swiss financial giant UBS has confirmed that it made a loss in 2007 after exposure to the crisis-hit US housing market hit earnings.

It made a full-year loss of 4.4bn Swiss Francs ($4bn; £2.02bn) during 2007, compared with a net profit of 12.3bn Swiss Francs in 2006.

The US sub-prime problems have hit the balance sheets of banks worldwide.

UBS management warned that it expected 2008 to be a difficult year for the firm and the industry as a whole.


Japan enjoys strong growth rate

There are concerns that a US slowdown will hit Japanese exports

Strong export demand and business investment saw Japan's economy grow at an annualised rate of 3.7% in the last three months of 2007, figures show.

The size of the growth surprised analysts, who had been expecting a growth rate of about 1.4%.

However, there are warnings that a slowdown in the US - Japan's key export market - will dent 2008 growth.

The better-than-expected growth figure boosted Japanese shares, with the Nikkei 225 index closing up 4.3%.

"Amid the recent slack economic data and fears of a recession, today's GDP data helped ease worries," said the head of the equity department of Daiwa Securities, Kazuhiro Takahashi.

Despite the growth, the Bank of Japan is widely expected to keep interest rates on hold at 0.5% on Friday, with rates forecast to be pegged, or possibly cut, during 2008.

The Cabinet Office figures showed that, compared with the previous quarter, the economy grew by 0.9% between October and December.

A 2.9% rise in business investment during the quarter, after a 1.1% increase between in July and September, was one of the main reasons for the growth, analysts said.

UK unemployment falls by 61,000

Economists say it takes time for slowing growth to hit the job market

UK unemployment fell by 61,000 to 1.61 million in the three months to the end of December, government figures show.

The Office for National Statistics (ONS) also said the number of people claiming jobseeker's allowance in January fell by 10,800 to 794,600.

Average earnings rose at an annual rate of 3.8% in December, down slightly.

The figures come amid signs that the UK economy is slowing down, and after the Bank of England recently cut its main interest rate to 5.25% from 5.5%.

Price worries slow German growth

German shoppers are worried about more price rises

Germany's economy slowed in the final quarter of 2007, as higher prices led to shoppers tightening their belts.

The economy grew by 0.3% from October to December, down from growth of 0.7% in the previous quarter, and further slowing is expected in early 2008.

Rising consumer prices, together with expectations of further inflation, hit household spending, analysts said.

Compared with the same period a year earlier, the German economy grew by 1.6% in the fourth quarter.

US retail sales in surprise rise

Sales at department stores fell by 1.1% in January.

US retail sales rose 0.3% in January official figures show, bolstered by sales of new cars and petrol.

The sales rise, which had not been expected, followed a 0.4% decline in December, data from the Commerce Department showed.

Analysts had predicted a 0.2% decline in January.

The US Federal Reserve has lowered interest rates in past months to boost economic activity and analysts said the figures would not delay further cuts.

"The data is clearly a surprise to the upside," said Omer Eisner of Reusch International.

"I don't think it changes the outlook for further rate cuts. But in the near term, it does ease some recession concerns."

When volatile petrol sales are stripped out, overall retail sales rose by 0.1%, the Commerce Department said.

IEA cuts forecast for oil demand

The slowing US economy is expected to cut the demand for oil

The International Energy Agency (IEA) has cut its forecast for global oil demand, due to slowing economies.

The IEA, which advises wealthy countries on energy policy, reduced its estimate for demand this year by 200,000 barrels per day.

It said an economic slowdown in the US, the world's biggest oil user, would take pressure off the market.

In a separate report, the US Energy Information Agency said US crude stocks rose last week, but less than forecast.

Oil prices have fallen 7% since hitting a record in early January.

The IEA thinks there is a chance of a prolonged weakness in the oil market.

"Just as the demand shock of 2004 shaped the oil market for the next three years, so too could the pending slowdown," the agency said.

The IEA report said the market can expect support from China where demand is forecast to jump 5.8% this year.

Banks to ask U.S. govt to take bad loan risk: report

The banking industry is proposing to members of the U.S. Congress and the White House that some of the risk of troubled mortgages should be shifted to the federal government, according to a report in the Wall Street Journal on Thursday.

Paulson says U.S. economy should dodge recession

The United States is experiencing a "significant" housing market downturn but the economy is fundamentally sound and should avoid recession, Treasury Secretary Henry Paulson will tell Congress on Thursday.

"The U.S. economy is fundamentally strong, diverse and resilient, yet after years of unsustainable home price appreciation, our economy is undergoing a significant and necessary housing correction," Paulson said in remarks prepared for delivery at a congressional hearing, on Wednesday.