Oil falls to below USD 42 a barrel in Asia

Oil prices fell below USD 42 a barrel on Friday in Asia after Russia and Ukraine said a dispute over natural gas payments wouldn't affect shipments to Western Europe.

Light, sweet crude for February delivery fell USD 3.05 to USD 41.55 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Singapore.



Trading was closed on Thursday for New Year's Day.


The contract rose USD 5.57 on Wednesday, the last trading day of 2008, to settle at USD 44.60 after Russia threatened to cut off natural gas supplies to Ukraine.



Russia followed through with that threat on Thursday, though both countries pledged they would keep supplies to the rest of Europe flowing.



Russia's gas monopoly Gazprom shut off gas supplies after talks broke down over Ukraine's payments for past shipments and a new price contract for 2009.



Gazprom said it had boosted natural gas deliveries through other pipelines to Western Europe.


The European Union depends on Russia for about a quarter of its gas, with some 80 per cent of that delivered through pipelines controlled by Ukraine.


Concerns that the week-old conflict between Israel and Hamas in Gaza could disrupt supplies in the oil-rich Middle East helped keep prices from falling further.



Israeli troops massed on the Gaza border on Thursday in preparation for a possible ground offensive.


Oil prices began 2009 the same way they spent the most of the second half of 2008, going down.



Crude peaked at USD 147.27 a barrel in July before plummeting to as low as USD 33.87 on 19th Dec.

Slovakia becomes eurozone member

Slovakia has become the 16th member of the eurozone - the second former communist country to join the grouping.

Up to 100,000 people gathered in the capital Bratislava's main square for a midnight ceremony with fireworks.

Slovak Prime Minister Robert Fico was one of the first to withdraw the new currency, taking 100 euros from a cash machine in the parliament building.

The Slovak koruna (crown) will remain in circulation alongside the euro until 16 January.

Cash machines were meant to be issuing euros from Thursday, while some banks planned to open, despite the New Year's Day holiday, to swap korunas for euros.

But the new currency was taking a while to filter through.

"None of my clients has paid with euros yet, everybody's using korunas," Marek, a 30-year-old taxi driver in Bratislava, told the AFP news agency.

At Bratislava's railway station, Richard Nedo, a 20-year-old waiter at an internet cafe, said: "Since we opened at 6am, we have had 10 customers but only three of them - foreign tourists - paid with euros. Slovaks are still using korunas."

Stability hopes

Slovakia sees its adoption of the euro as a shield from the turbulence that has hit currencies in neighbouring ex-Soviet bloc countries.

The koruna has been pegged at a rate of 30.126 to the euro since July, while Poland's zloty has lost 24% against the euro, the Czech koruna 11% and the Hungarian forint 13%, Bloomberg news reports.

A recent poll in Slovakia's Hospodarske Noviny daily showed 58% of respondents in favour of the euro, compared with 43% positive a year ago.

Euro "starter packs" have already been distributed in Slovakia and a big campaign has been under way to familiarise the nation of 5.4 million with the new currency.

Slovakia has enjoyed rapid economic growth since joining the European Union in 2004.

But the euro's strength may make life harder for Slovakia's exporters - particularly its big car industry - in the current economic downturn, correspondents say.

Slovakia's cabinet is counting on 4.6% economic growth, down from a peak of 10.4% in 2007, Reuters reports.

The small Alpine nation of Slovenia, formerly part of Yugoslavia, was the first ex-communist country to join the euro in its own right, two years ago.

However, the former East Germany - now part of Germany - has been involved in the euro project since the beginning.

Markets start year on upbeat note

World stock markets have started the year on a positive note, gaining ground after shares saw record falls in 2008.

London's FTSE 100 index rose 0.72% in early trade, while German and French stock indexes climbed more than 1%.

Hong Kong's Hang Seng index rose 4% and Indian shares climbed 0.9% in anticipation of a stimulus plan.

However, analysts said early gains might not be sustainable, with many market participants still on holiday and trading volumes likely to be low.

Bang or whimper?

"Many will be wanting to start the first trading session of 2009 with a bang," said Jimmy Yates, a dealer at CMC Markets.

But any meaningful direction may be hard to come by as both the economic and corporate calendars are looking very quiet," he added.

The FTSE 100 was up 31.91 points at 4,466.08 points in early morning trade on Friday. The index suffered its worst year on record in 2008 - a fall of 31.3%.

Germany's Dax index climbed 1.17% to 4,866.71 points and France's Cac 40 index was up 1.26% at 3,258.61.

In Asia, South Korea's main stock index closed up 2.9% at 1,157.40 points.

However, Australian stocks fell 0.2%.

Markets in Japan and China were closed for a public holiday.

Record falls

Global markets saw record falls in 2008 as the financial turmoil and economic slowdown ended the stock market boom.

Shanghai was one of the worst-hit major markets, ending the year 65% lower, which was also a record loss.

In New York, the Dow Jones lost almost 34% of its value in 2008, its worst year since 1931.

The year saw the credit crisis push several major economies into recession, with banks particularly badly hit - many requiring government bail-outs.

Whether the stock markets fall further in 2009 is a matter of debate.

Many investment strategists have written off any chance of a major rebound in at least the first six months of the new year, when company earnings could prove especially bleak.