Japan quake shakes markets

Disaster struck Japan on Friday. AFP/CNA reports:

The strongest quake ever recorded in Japan Friday unleashed a monster tsunami that claimed hundreds of lives, and a minister warned there could be a discharge of radiation from a nuclear plant...

At least 337 people were killed in the earthquake and subsequent tsunamis, police and press reports said.

Market reaction to the quake itself was mostly negative but US stocks actually managed to rise on the day. Bloomberg reports:

Oil fell, helping reverse a slide in global stocks, as crude demand weakened after Japan’s worst earthquake on record forced refineries to close. The yen gained as investors bought the domestic currency as a haven.

Oil slumped 1.5 percent to $101.16 a barrel at 4 p.m. in New York and earlier fell 3.6 percent for its biggest drop since November. The MSCI World Index erased a loss of as much as 0.5 percent and the Standard & Poor’s 500 Index gained 0.7 percent to 1,304.28 as higher-than-estimated profit forecasts from Steel Dynamics Inc. and Pall Corp. lifted commodity and industrial shares. Japan’s Nikkei 225 Stock Average slid 1.7 percent. The yen rose 1.3 percent versus the dollar, the most since August.

Even as new concerns arise, old ones aren't going away.

Portugal’s 10-year benchmark bond dropped for the fifth day, with the yield 10 basis points higher at 7.60 percent. The extra yield, or spread, investors demand to hold the debt instead of bunds rose 14 basis points to 439 basis points, while the Greek 10-year spread over German debt widened 9.5 basis points to 960 basis points.

The positive performance of US stock markets was helped by some positive economic data on Friday. From Bloomberg:

U.S. retail sales increased in February by the most in four months as Americans took advantage of more seasonable weather to buy cars, clothes and electronics.

Purchases climbed 1 percent after a revised 0.7 percent rise in January that was more than double the previous estimate, Commerce Department figures showed today in Washington. February sales matched the median forecast in a Bloomberg News survey...

Sales excluding autos increased 0.7 percent, matching the median forecast in the Bloomberg survey, today’s report showed...

Purchases excluding autos, gasoline and building materials, which are the figures used to calculate gross domestic product, increased 0.6 percent for a second month in February.

Less encouraging though was a sharp fall in consumer confidence.

Separately, the Reuters/University of Michigan gauge of consumer sentiment dropped to 68.2 from a final February reading of 77.5. The gauge was forecast to decline to 76.3, according the median estimate in a Bloomberg survey...

The 9.3-point slump in sentiment was the biggest since October 2008, the last time average gasoline prices topped $3.50 a gallon.

There were few signs of cooling in China though from data reported earlier in the day. Again from Bloomberg:

China’s inflation and industrial production exceeded forecasts in February, underscoring the challenge for Premier Wen Jiabao as he seeks to prevent price increases from stirring social unrest.

Consumer prices rose at an annual 4.9 percent pace in February and output increased 14 percent in the first two months of 2011, the statistics bureau said in Beijing. Producer prices jumped 7.2 percent last month, the most since September 2008...

The pace of China’s inflation was unchanged from January and compared with the 4.8 percent median forecast in a Bloomberg News survey of 22 economists. The government aims to limit full- year consumer-price gains to about 4 percent.

Fixed-asset investment grew 25 percent in the first two months of 2011 from a year earlier, the data showed. Retail sales rose a less-than-forecast 16 percent in January and February combined. Industrial output rose 15 percent last month from a year earlier.