Copper futures dropped on Friday on concerns over Chinese growth and as the U.S. dollar strengthened, while crude oil extended recent losses and a global gauge of equities drifted lower.
Stocks were little changed on Wall Street, with low volume due in part to a snowstorm that blanketed the U.S. Northeast -including financial hubs New York and Boston.
Federal Reserve Chairman Ben Bernanke said the U.S. central bank is committed to highly accommodative policy even after deciding last month to trim its bond-buying stimulus.
European shares rose, bucking a wave of risk aversion that swept across Asia, where stocks slid after a measure of activity in China's services sector slipped in December to a four-month low.
At the closing bell in New York, the Dow Jones industrial average .DJI rose 28.64 points, or 0.17 percent, at 16,469.99. The S&P 500 .SPX dipped 0.62 points, or 0.03 percent, at 1,831.36. The Nasdaq Composite .IXIC fell 11.16 points, or 0.27 percent, at 4,131.91.
The benchmark FTSEurofirst 300 index .FTEU3 rose 0.5 percent, and MSCI's index of equities in 45 countries .MIWD00000PUS was down 0.16 percent.
Three-month copper dropped 1.1 percent to $7,315 a tone in its largest daily drop since December 2.
"Chinese worries are playing into recent commodity weakness," said Jim Russell, senior equities strategist at U.S. Bank Wealth Management. "There is concern on the outlook for 2014, many think it will represent a step down in growth rate in China as compared to recent years."
He said strength in the U.S. dollar .DXY was also weighing on parts of the commodities complex, including oil.
Expectations for a rise in Libyan supply and speculation of a buildup in U.S. stockpiles kept pressure on oil prices after they tumbled Thursday. U.S. crude fell for a fourth consecutive day and hit a one-month low, and Brent dipped after posting its largest daily drop since late June.
"The sentiment is still bearish for sure, and I think Libya is still going to be the key driving factor," said Amrita Sen, chief analyst at consultants Energy Aspects.
U.S. crude was recently down 1.4 percent at $94.15 a barrel, and Brent fell 0.8 percent to $106.95.
Spot gold rose for a fourth session to hit a two-week high as weaker equities spurred demand for the metal as a safe-haven asset. It was recently up 1 percent at $1,236.29 per ounce.
U.S. Bank's Russell said that after a 28 percent drop last year some traders see value in gold, but "we think headwinds remain in place."
GREENBACK HOLDS RECENT GAINS
The yen was little changed near five-year lows against the dollar. The greenback last traded flat against the Japanese currency, at 104.78 yen, with a five-year high of 105.44 yen set Thursday in sight.
The euro, the top-performing major currency of 2013, shed 0.6 percent against the yen, to 142.38 yen, following Thursday's more than 1 percent slide.
Against the dollar, the euro lost 0.6 percent to $1.3591.
"You have a holiday week, which is always going to be pretty light on volume, and with most of the Northeast digging itself out of the snowstorm that has made activity especially light, even for a holiday week," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C.
The greenback added 0.3 percent against a basket of currencies .DXY.
U.S. Treasuries prices ticked down, with benchmark 10-year yields hovering near 3 percent, with no major economic releases due and investors cautious heading into a busy week that includes the release of December's payrolls report.
The 10-year yield traded in its tightest range in three weeks.
David Cameron says successful deal would add up to £100bn to the EU economy and £85bn to US economy
Plans for an ambitious transatlantic trade deal have been launched by the European Union and the United States.
Negotiations will begin in Washington next month amid hopes of a speedy agreement that will help the world economy grow more rapidly.
Announcing the launch of talks, David Cameron said a successful deal would add up to £100bn ($157bn) to the EU economy and up to £85bn ($134bn) to the US economy.
"This is a once-in-a-generation prize and it must be seized," the prime minister said.
UK sources said that it was hoped the negotiations could be wrapped up within 18 months, but US president Barack Obama warned that there would be difficulties to overcome.
"This is a priority for the United States" the president said. "We will give negotiators a strong mandate but we will have to intervene to break through logjams."
France has already insisted that cultural industries are excluded from the negotiations, fearful that it would increase the influence of Hollywood.
Obama said: "We must resist the temptation to downsize our ambitions and avoid the difficult issues just get a deal."
José Manuel Barroso, president of the European commission, said: "Negotiations might not always be easy but they will be worth it. We will find solutions to thorny issues, we will keep our eyes on the prize and we will succeed. We intend to move forward fast."
Cameron has made trade liberalisation one of the main themes of the G8 summit and said that a deal would mean extra jobs, lower prices and more choice. UK officials said an agreement could boost British trade by £10bn – worth £380 for each household.
The prime minister said it would be the biggest bilateral trade deal in history and "have a greater impact than all the other trade deals on the table put together", creating up to two million jobs.
He added: "The whole point is to fire up our economies and drive growth and prosperity around the world. To do things that make a real difference to people's lives. And there is no more powerful way to achieve that than by boosting trade."
The US president said: "The US-EU relationship is the largest in the world. We trade about $1tn in goods and services each year, we invest nearly $4tn in each others' economies and all that supports around 10 million jobs on each side of the Atlantic. This potential ground-breaking partnership would deepen those ties."
Although much transatlantic trade is already tariff-free, there are a number of sectors – such as financial services – where officials believe there is scope for liberalisation.
Washington and Brussels have warmed to the idea of a trade and investment partnership following the prolonged impasse in global free-trade talks, now into their 12th year.
Droughts, floods, sea-level rises and fiercer storms likely to undermine progress in developing world and hit food supply
Millions of people around the world are likely to be pushed back into poverty because climate change is undermining economic development in poor countries, the World Bank has warned.
Droughts, floods, heatwaves, sea-level rises and fiercer storms are likely to accompany increasing global warming and will cause severe hardship in areas that are already poor or were gradually emerging from poverty, the bank said in a major new report.
Food shortages will be among the first consequences within as little as two decades, along with damages to cities from fiercer storms and migration as people try to escape the effects.
In sub-Saharan Africa, increasing droughts and excessive heat are likely to mean that within about 20 years the staple crop maize will no longer thrive in about 40% of current farmland. In other parts of the region rising temperatures will kill off or degrade swaths of the savanna used to graze livestock, according to the new report, Turn down the heat: climate extremes, regional impacts and the case for resilience.
In south-east Asia, events such as the devastating floods in Pakistan in 2010, which affected 20m people, could become "commonplace" while changes to the monsoon could bring severe hardship to Indian farmers.
Warming of at least 2°C – regarded by scientists as the limit of safety beyond which changes to the climate are likely to become catastrophic and irreversible – is all but inevitable on current levels, and the efforts of governments are limited to trying to prevent temperature rises passing over this threshold. But many parts of the world are facing severe challenges as a result of climate change already, according to the World Bank, and this will intensify as temperatures rise.
Jim Yong Kim, president of the World Bank, warned that climate change should not be seen as a future problem that could be put off: "The scientists tell us that if the world warms by 2°C – warming which may be reached in 20 to 30 years – that will cause widespread food shortages, unprecedented heatwaves, and more intense cyclones.
"In the near-term, climate change – which is already unfolding – could batter the slums even more and greatly harm the lives and hopes of individuals and families who have had little hand in raising the Earth's temperature."
The development bank is stepping up its funding for countries to adapt to the effects of climate change, and is also calling for rich countries to make much greater efforts at cutting greenhouse gas emissions.
Rachel Kyte, vice president of the World Bank, said the bank had doubled its aid for adaptation from $2.3bn (£1.47bn) in 2011 to $4.6bn last year, and called for a further doubling. She said the bank was working to tie its disaster aid and climate change adaptation funding closer together.
Aid from the bank to help poor countries cut their own greenhouse gas emissions and pursue environmentally sustainable economic development stands at about $7bn a year, and is backed by about $20bn from regional development banks and other partners.
The report's authors used the latest climate science to examine the likely effects of global warming of 2°C to 4°C on agriculture, water resources, coastal ecosystems and fisheries, and cities, across sub-Saharan Africa, south Asia and south-east Asia.
Kyte said the effects would be to magnify the problems that developing regions are already facing. More people would be pushed into slums, with an increased risk of disease. "We are looking at major new initiatives [in] cities; cities need billions of investment in infrastructure, but many developing cities are not really creditworthy," she said.
She pointed to Jakarta, where rising sea levels and decades of pumping out freshwater from underground sources beneath and around the city were increasing its vulnerability to flooding. Choices would need to be made soon in many cities on how to protect against the likely effects but Kyte warned that the plans must be future-proof, citing Ho Chi Minh City in Vietnam, which is facing the need to rethink its flood preparations despite spending $2bn on them.
Green campaigners emphasised the need to try to avoid 2°C of warming, which scientists stay is still just about possible if countries up their ambitions to cut greenhouse gas ambitions in the very near future. Stephanie Tunmore, climate campaigner at Greenpeace International, said: "Fossil fuels are being extracted in burned in the name of development and prosperity, but what they are delivering is the opposite.
"Some major impacts from climate change are already unavoidable and rich countries must urgently support the poor and vulnerable to adapt. But massive increases in the future costs of adaptation and damage can only be avoided by investing in a clean energy future now."
The World Bank itself has come under fire in the past for funding coal-fired power plants in some developing countries. However, the Bank has said this was the result of old policies and is being phased out.
Nikkei's 6% decline triggers falls on other Asian bourses and European markets but nerves later steadied by US jobs figures
A plunge in shares in Tokyo prompted jitters in the world's emerging markets yesterday as investors expressed fresh concern about the Japanese government's recovery plan and the possible phasing out of America's stimulus programme.
Japan's leading stock market index, the Nikkei, fell by more than 6%, extending the fall in recent weeks to more than 20%, the official definition of a bear market.
The decline – accompanied by a rise in the Japanese yen on the foreign exchanges – triggered falls on other Asian bourses and led to early falls on European markets. But nerves were later steadied by stronger than expected jobs and retail sales figures from the US and the FTSE 100 in London ended the day five points higher at 6304.
Economic reforms announced by the Japanese prime minister Shinzo Abe late last year prompted a hefty rise in share prices and a fall in the value of the yen. But in recent weeks, markets have started to voice doubts about the ability of Tokyo to use a bond-buying programme and fiscal expansion to lift the country out of deflation.
Thursday's uneasy mood was not helped when the World Bank revised down its forecasts for global growth this year from 2.4% to 2.2%. Markets are now waiting to see whether next week's meeting of the Federal Reserve will provide clues as to when America's central bank might start to slacken the pace of its quantitative easing programme.
Julian Jessop, chief global analyst at Capital Economics, said: "Only a few weeks ago, the complaint was that the spill-over of liquidity from the advanced economies threatened to destabilise markets in the developing world. Now it seems as if the one thing worse than more QE is less QE. More seriously, emerging market equities have again demonstrated how hard it is for them to decouple from developed markets, particularly during a wider sell-off."
Meanwhile, Portugal's deep recession and rising political tensions risk undermining the country's bailout programme, despite a fresh easing of its deficit targets, according to the International Monetary Fund.
In its latest progress report on Portugal, the IMF confirmed that it has agreed Lisbon's tough deficit reduction goals should be loosened – by 1 percentage point in 2013, and 1.5 percentage points in 2014 – as the economy slows.
"In view of the significant deterioration in the macro-fiscal outlook, there was agreement that the fiscal deficit path under the programme needed to be recalibrated," the IMF's report said.
Portugal's debt-to-GDP ratio is now expected to peak at 124% next year, two percentage points higher than at the IMF's last review earlier this year.
That decision has been seen as part of a gradual shift away from doctrinaire austerity within the "troika" – the coalition of the IMF, the European Commission and the European Central Bank that has overseen eurozone bailouts.
But despite the more accommodating stance towards rescued governments, Portugal's deficit targets remain tough, and the IMF is concerned that the public could reject the austerity measures being demanded of their government.
"The hitherto sturdy social and political consensus that has buttressed strong programme implementation has weakened significantly," it warned.
The IMF stressed that the outlook for Portugal's economy remains "sombre". The economy contracted by 3.25% last year, and it is now expected to shrink again, by 2.25%, this year, partly driven by the slowdown across the rest of the euro area.
"Strong export growth, which has hitherto helped offset the contraction in domestic demand, has of late started to decrease reflecting weakening demand from the rest of the euro area".
It added that unemployment, which is already at 18%, is likely to continue rising until at least 2014. Portugal will receive the next tranche of its bailout, worth €657m, as a result of the IMF's review.
Europe and the US have a long history of trade spats – from GM seeds to chlorinated chickens – but both sides insist parochial concerns should not be allowed to derail an agreement
The UK could be the biggest winner in Europe from a transatlantic trade deal between the European Union and the US.
Prime minister David Cameron said on Monday that an EU-US pact would "turbocharge the transatlantic economy" by delivering up to £10bn a year to the UK, or £380 to every British household.
Luckily for Cameron, the UK could outshine the rest of Europe, with a 10% boost to economic output per head and 400,000 jobs in the long-term, according to the Bertelsmann Foundation, based in Germany.
The crisis-hit economies of southern Europe, Portugal, Italy, Greece and Spain, would also do well with above-average gains to employment. France, which trades less with the US, is among the countries with the least to gain, raising questions about French approval of the deal. All EU member states and the European parliament will have to approve the deal, which negotiators hope to conclude by the end of 2014.
The idea of a grand transatlantic trade pact has been in existence for a few decades, but has only become a priority following a slump in world trade, loss of faith in the prospects for a global trade deal through the Doha round, and an economic crisis that has laid low many European economies.
Although tariffs between the EU and the US are low (less than 3% on average), the volume of goods exchanged across the Atlantic – one third of global trade – means that a free-trade area would be a significant bloc. The EU is also keen to say goodbye to swingeing duties on high-value European produce, such as cheese and champagne.
The bulk of the talks will focus on bringing EU-US regulations into line. This could mean that American medicines that have passed US safety regulations would not face a second barrage of checks once they arrive in Europe. Or a British airline flying from London to Los Angeles would be allowed to pick up passengers in New York – a practice currently banned because European airlines are not allowed to run domestic flights in the US.
From genetically-modified seeds to chlorinated chickens, the EU and the US have a long history of trade spats. Both sides insist that 'parochial' concerns should not be allowed to derail what could be the biggest trade agreement ever. The UK government has said that an EU-US trade deal could boost Europe's economy by £100bn and the US by £80bn. The Bertelsmann Foundation thinks that the US is likely to be the biggest winner, with a long-term boost to its gross domestic product per capita of 13.4%, compared to 5% for the EU.
An EU-US free trade agreement would also create other winners and losers. European and US negotiators have been talking up £100bn in gains for the rest of the world, as an uptick in trade fires demand for raw materials from all corners of the globe. But traditional trading partners, such as Canada and Mexico and some north African countries, could lose out from easier transatlantic trade, according to Bertelsmann, although the world as a whole should gain.