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Saturday, July 15, 2006

The Market Bends with Uncertainty

ST PETERSBURG, Russia (Reuters) - Middle East conflict muscled its way onto the Group of Eight agenda on Saturday, setting the United States, a strong backer of Israel, against those who say the Jewish state has been too violent.


Residents of Beirut are resigning themselves to a protracted conflict as the Israeli offensive intensifies. Bombardment of the city and the airport as well as a coastal blockade have severely restricted the flow of supplies into the Lebanese capital.


Until even a week ago the conventional wisdom was that there is not going to be another major war in the Middle East involving Israel. Now even the most optimistic observers are no longer sure.


World oil prices hit a record 78 US dollars Friday amid concerns over the volatile situation in the Middle East, with futures at $80.


The escalating violence triggered another big dive by the U.S. stock market, where anxious investors eyed the possibility of higher energy prices cutting into consumer spending and corporate earnings, thereby slowing the economy. Sell-offs have hit 4 straight days now, with even the tech sector beginning to falter. Investors are doing there best to hang on, while witholding from reinvestments as they wait to see an indication of when the market will level off. Analysts expect that those who hang on will be rewarded in late summer/early fall, but international markets worldwide are feeling the uncertainty universally as erupting conficts threaten market stability.


Anxieties remain high over nuclear threat. Fear of nuclear eruption is at an all-time high.


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