BUSINESS&SPORTS B SATURDAY, JANUARY 29, 2011
THE MARKETS
INTERNATIONAL EDITION
DOW 30
11,823.70
-166.13
S&P 500
1,276.34
-23.20
Russian petroleum lures oil companies
NASDAQ
2,686.89
-68.39
BY ANDREW E. KRAMER
3.33
-0.05
$89.34
+$3.85
10-YR NOTE CRUDE OIL
Egypt protests hit world markets
New York Times Service
MOSCOW — ExxonMobil once was poised to acquire a stake in Russia’s largest private oil company, only to have the deal fall apart when the Kremlin arrested the owner and the company went bankrupt. A few years ago BP was squeezed out by its Russian partners, and
its top executive was forced into hiding. Yet both Exxon and BP are back big in Russia. So are some other large oil companies, which find the allure of Russian petroleum too strong to resist, whatever the political risks of dealing with the government or becoming partners with the country’s notoriously tough billionaires.
On Thursday, ExxonMobil, the United States’ largest oil company, signed a deal with the Russian state oil company, Rosneft, to explore offshore in the Black Sea. That came just two weeks after BP agreed to a share swap with Rosneft to form a joint venture to explore off the country’s ice-bound northern coast. Russia being Russia, though, BP
is already in trouble over the new deal. On Thursday, its wealthy Russian partners in a separate, private venture filed an injunction in a London court to block BP’s $16 billion Rosneft agreement. Despite the risks, Russian oil is where the action is for the West. The country is now the world’s • TURN TO OIL, 2B
BY DAVID K. RANDALL AND MATTHEW CRAFT Associated Press
NEW YORK — Escalating protests in Egypt jarred world financial markets on Friday. Stocks fell while the dollar, Treasurys and gold rose as investors sought to reduce their exposure to risk. The Egyptian government’s response to widespread street protests unnerved investors. The military was deployed in an effort to quell the protests and the headquarters of the ruling party was on fire. Thousands of people defied a curfew, and Internet and cellphone service has been cut off. “The safety trade is back,” said Jeffrey Frankel, president of broker Stuart Frankel. “Gold is up. Oil is up. Anything related to overseas is getting hit.” Prices of Treasury bonds, considered one of the safest assets, rose sharply. The yield on the benchmark 10-year Treasury note fell to 3.33 percent from 3.38 percent late Thursday. Bond yields fall when their prices rise. The dollar rose 0.5 percent against an index of six other currencies as investors sought safety. Gold rose 1.7 percent to settle at $1,340.70 and crude oil rose 4.3 percent to $89.34 a barrel. The Egyptian stock market isn’t open on Fridays. The market’s main index fell 10.5 percent Thursday. The MSCI World Market index, the broadest measure of the world’s stock markets, slumped 1.4 percent. “Traders are watching this flare-up in the Middle East and using it as a reason to take profits,” said Doug Godine, managing director at Signal Hill, an investment bank. Of the 30 large company stocks that make up the Dow Jones industrial average, 28 fell. The two exceptions, Procter & Gamble and DuPont, were flat. The Dow fell 166.13 points, or 1.4 percent, to close at 11,823.70. The Dow lost 0.4 percent for the week after eight straight weeks of gains. The Standard & Poor’s 500 index fell 23.20, or 1.8 percent, to 1,276.34. All 10 company groups within the S&P index fell. The S&P fell 0.5 percent for the week. The Nasdaq composite fell 68.39, or 2.5 percent, to 2,686.89. The index was not updated nearly an hour after the market opened due to technical problems. The Nasdaq lost 0.1 percent for the week. Five stocks fell for every one that rose on the New York Stock Exchange. Volume was high at 1.35 billion shares. Ford Motor Co sank 13 percent after its earnings fell short of Wall Street’s projections. Amazon.com fell 7 percent after reporting that higher costs cut down its profit margins. Microsoft Corp. lost 4 percent after it said that the profitability of its Windows division was falling. A lower than expected report on the U.S. economy helped lead to a market sell-off as well. The Commerce Department reported that U.S. gross domestic product grew at an annual rate of 3.2 percent between October and December. That was below the 3.5 percent that analysts had forecast.
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JUAN KARITA/AP
DISPLEASURE: Demonstrators protest fuel hikes in La Paz, Bolivia, in December 2010. President Evo Morales’ approval rating plummeted to 36 percent after his attempt to lift subsidies on gasoline, sugar and flour.
LOSING GROUND
FIVE YEARS ON, MORALES’ BOLIVIAN REVOLUTION FALTERS BY CARLOS VALDEZ Associated Press
MORALES
LA PAZ, Bolivia — The fiery coca growers’ union leader who rode discontent over his predecessor’s pro-business policies to Bolivia’s presidency is suddenly grappling with a sharp drop in popularity. Ironically, Evo Morales’ troubles are related to his handling of the economy. The very “originarios,” or native people, who ensured the reelection of Bolivia’s first indigenous leader a year ago with 64 percent of the vote are now echoing the complaints
of his longtime critics: Morales has bungled the economy, alienated foreign investors and favored political cronies over technocrats, they say. “The president thought that by putting ponchos and polleras [the petticoat-layered skirts indigenous women favor] in his Cabinet the country would run better, but that’s not the case,” Jimena Mendoza, 40, said as she queued up recently for sugar at a state-run store. In an Ipsos poll released earlier this month, Morales’ approval rating plummeted to 36 percent — a low point after five years in power. The plunge followed Morales’ attempt to lift subsidies on gasoline,
sugar and flour just after Christmas. In response, protesters had flooded into the streets, hurling stones at the headquarters of unions closely allied with the president and stoking street bon fires with portraits of him. Morales backed down — the 78 percent gas price increase was simply untenable. But the damage was done, as reflected in the poll of 1,080 people in four cities Jan. 6-11 that had a 3 percentage point error margin. The protest’s epicenter was El Alto, the teeming La Paz satellite that is a magnet for indigenous poor migrants from the countryside. • TURN TO BOLIVIA, 2B
Obama ‘overstated’ India’s progress Gross sees dangers in debt-limit debate BY MARK MAGNIER
Los Angeles Times Service
ducing world-class engineers. But a review this month of a threeyear government program called INSPIRE, which offered scholarships to about 10,000 top science students, found 85 percent of the scholarships went unused. The suspected reason: Students are increasingly bypassing science for business in search of a quick buck. Prime Minister Manmohan Singh of India, an economist by training, this month criticized the grip that he said vested interests
have on scientific innovation in India. “Liberate Indian science from the shackles and deadweight of bureaucratism and in-house favoritism,” he said. India’s high-tech corridors may be world class, but life in many rural areas, where 70 percent of its citizens live, lag far behind. Late last year, Subho Ray, the head of a Mumbai-based Internet
NEW DELHI — During his State of the Union address this week, U.S. President Barack Obama urged people to reboot the country’s struggling economy through innovation, education, a streamlined government and a can-do spirit, citing impressive achievements in India and China. But some in India say they’re living in a country nowhere near • TURN TO INDIA, 2B as accomplished as the one outsiders might imagine after hearing Obama. Although it has a wellspring of talent propelling its growth, India is also grappling with persistent problems that include chronic poverty, government bureaucracy and the difficulties of educating the masses in a country of 1.1 billion people. “President Obama has been way too generous praising innovation in India, or China for that matter,” said Suhel Seth, managing partner of Counselage India, a New Delhi-based consultancy helping companies crack the Indian market. “India needs to shore up in all the areas the U.S. is talking about. — It’s risk-averse with a culture of CHARLES DHARAPAK/AP copying. That’s why many of our VALUING YOUNG MINDS: U.S. President Barack Obama and first finest minds work abroad.” India has many outstanding lady Michelle Obama greet children of construction workers minds and a reputation for pro- in New Delhi during their visit to India in November 2010.
BY MATTHEW CRAFT Associated Press
The world’s largest bond investor says the fight over raising the country’s borrowing limit threatens to throw the debt market into a tailspin. “It’s the wrong way to do it,” says Bill Gross, manager of the $241 billion Pimco Total Return Fund, the largest mutual fund. “Obviously, I’m all for a move to a balanced budget over GROSS time. But this is like imposing the death penalty for shoplifting.” In arguments over lifting the federal government’s $14.3 trillion debt limit, both sides have used bond investors as a bogeyman. Congressional Republicans say • TURN TO GROSS, 2B
1/29/2011 4:45:47 AM