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Oil prices settled near 81 U.S. dollars on Wednesday as a falling dollar offset more-than-expected buildup in crude inventory.

The euro rose against the dollar on Wednesday after Greece announced a 6.5-billion-dollar plan to reduce its deficit, easing investors' concerns about the European debt crisis. A falling greenback usually increases the appeal of crude futures as an alternative investment.

Investors basically shrugged off the report of a jump in crude inventory. The U.S. Energy Department Energy Information Administration said that, during the week ended on Feb. 26, crude stockpiles rose by 4.1 million barrels, far more than the 1.4- million-barrel increase market had expected.

Light, sweet crude for April delivery gained 1.19 dollars to settle at 80.87 dollars a barrel on the New York Mercantile Exchange.

In London, Brent crude for April settlement rose 1.17 dollars to 79.35 dollars a barrel on the ICE Futures Exchange.

"It's when the tide goes out that you find out who has been swimming naked," the legendary investor Warren Buffet aptly remarked when the global economic crisis hit.

This is as true for countries as it is for companies. Following Ireland, Greece is now the second euro-zone member to have gotten into massive payment difficulties due to the crisis.

Ireland was able to resolve its problems by itself, through a restructuring policy that was painful yet unflinching. It could do so because its economy, apart from its excessive debt burden following the collapse of an asset bubble, was basically sound.

The situation in Greece is different. A restructuring of the economy will be much more difficult, because it will have to be more far-reaching. The fiscal deficit resulted not just from internal financial imbalances, but also from a system that for too long time has been in denial of reality, allowing the country to live beyond its means.

Nevertheless, the European Union can neither allow Greece to slide into national bankruptcy nor hand it over to the International Monetary Fund, since other euro-zone members - namely, Portugal, Spain, and Italy - would probably be next in line to be attacked by the markets.

Budget deficits

In that case, the euro would be in danger of failing, for the first time seriously imperiling the entire project of European integration. The real problem at the heart of the Greek crisis is so grave because it involves the fundamental weakness of the euro: its lack of support by a government policy.

The caps on member states' budget deficits and public debt imposed by the Maastricht criteria have proven relatively early on to be of limited use in the real world, and the same is true for the monitoring tools linked to these limits.

In any case, the Maastricht rules were never designed for a perfect storm like the one triggered by the collapse of Lehman Brothers in September 2008. The euro, which turned out to be the critical tool for defending European interests in this crisis, will now be subjected to an endurance test directed at the soft political heart of its construction.

South Korean shares closed down Thursday as investors sought to take profits from the previous sessions' rallies, analysts said.

The benchmark Korea Composite Stock Price Index (KOSPI) inched down 4.24 points, or 0.26 percent, to end at 1,618.20, the bourse operator Korea Exchange (KRX) said.

Despite a three-session straight gain, investors remained cautious before China's future policy from the upcoming National People's Congress and a U.S. job report, media reports said.

A decline in the Chinese markets, which went down more than 1 percent, added to market sentiment, added the report.

During the whole session, foreigners stayed net buyers, together with institutions, while individuals continued to make a net sell-off.

Steel and financial shares mostly saw a gain, compared with insurance shares which shed 2.33 percent on average.

Market giants, such as POSCO and Shinhan Financial Group saw a rise in share prices with 1.69 percent and 1.05 percent, respectively, while Samsung Electronics and LG Electronics declined 1.30 percent and 2.30 percent.

The junior bourse KOSDAQ dropped 2.04 points, or 0.40 percent, to end at 507.59, said the KRX.

The derivatives markets also moved down, with the KOSPI 200 Futures market gaining 0.70 point, or 0.33 percent, to close at 211.25, according to the bourse operator.

In the meantime, the local currency continued to move up against the U.S. dollar, with the forex rate hitting 1,144.60 won against one U.S. dollar, up 1.90 won from the previous session.

The stronger won came as investor demand for risk-free assets continued to decline with brisk market conditions, analysts explained.

Bond yields closed higher with the yield on the benchmark three- year Treasury note moving down 0.01 percentage point to finish at 4.08 percent.

Shares of China's Industrial Bank Co. closed down 2.38 percent at 34.8 yuan on its lower target for lending increases in 2010.

The lender targeted its growth rate of its outstanding loans for 2010 at 22 percent, compared with the 40.5 percent rise in 2009, due to tighter credit control by the central government as the country faces increasing inflationary pressures, said the bank in a statement filed to the Shanghai Stock Exchange late Wednesday.

Net profits of the Fuzhou-based bank in 2009 climbed 16.6 percent on the back of surging loans, up 40.5 percent from a year earlier to 701.6 billion yuan, according to the statement.

The bank attributed its net profit rise mainly to a 3.85 percent rise of interest income and a 8.15 percent decline of business expenditure as the result of cut backs.

China's banks lent a record 9.59 trillion yuan (1.4 trillion U.S. dollars) last year, almost double that of the previous year, to support the government's economic stimulus package amid the global downturn.

In January, Liu Mingkang, chairman of the China Banking Regulatory Commission, demanded lenders to keep credit growth at reasonable pace in 2010 and vowed to tighten supervision on property loans, given the increasing risk of asset bubbles.

China's new yuan-denominated lending in January stood at 1.39 trillion yuan, down 14.2 percent from a year earlier, the People's Bank of China, the central bank, said last Month.

Shares of Chongqing Changan Automobile Co., Ltd (Changan), one of the renowned carmakers in China, closed lower Thursday at 12.49 yuan (1.83 U.S. dollars), down 1.65 percent, than the previous close despite its report of soaring vehicle sales in the first two months.

In a statement to the Shenzhen Stock Exchange earlier in the day, the Chongqing-headquartered company said its vehicle sales volume in February rose 74 percent to 159,060 units. Sales for the first two months of this year jumped 98 percent to 357,439 units.

The increase in sales was driven by the country's car boom, according to the statement. Changan, a partner of Ford Motor Co. and Mazda Motor Corp. in China, has yet to issue its 2009 annual business report.

Hong Kong stocks Thursday ended down 301.01 points, or 1.44 percent, weighed by loss on Chinese mainland market which tumbled 2.4 percent.

The benchmark Hang Seng Index opened 0.51 percent higher at 20, 983.81. It reached the day-high of 21,000.13 before closing at the day-low of 20,575.78. Turnover totaled 62.68 billion HK dollars, compared with Wednesday's 59.9 billion HK dollars.

The Hang Seng China Enterprises Index dropped 273.19 points, or 2.27 percent, to close at 11,775.06.

Three of the four sub-indices lost. The finance sub-index dropped 1.8 percent, followed by the commerce and industry, losing 1.4 percent, and the properties, edging up 0.70 percent. The utilities sub-index went up 0.38 percent.

Heavyweight HSBC dipped 0.49 percent to close at 81.05 HK dollars. Its local unit Hang Seng Bank edged up 0.09 percent at 108.80 HK dollars. China Mobile down 2.41 percent to 72.85 HK dollars.

Chinese mainland lenders lost. Bank of China plunged 3.47 percent to 3.89 HK dollars. China Construction Bank fell 2.93 percent to 5.96 HK dollars. Bank of Communications dropped 3.5 percent to 8.27 HK dollars. ICBC down 2.54 percent to 5.75 HK dollars.

As for local developers, Cheung Kong, the flagship of Hong Kong 's richest man Li Ka-shing, fell 0.52 percent to 95.70 HK dollars. SHK Properties ended 1.18 percent higher at 109.30 HK dollars. Henderson Land lost 0.47 to 52.85 HK dollars.

PetroChina slightly lost 1.79 percent to 8.77 HK dollars, offshore oil producer CNOOC dropped 0.65 percent to 12.16 HK dollars. Sinopec went down 1.14 percent to 6.09 HK dollars.

Li & Fung added 1.19 percent to 38.40 HK dollars. Ping An retreated 1.07 percent to 60.20 HK dollars. (7.8 HK dollars =1 U.S. dollar)

Britain's central bank on Thursday kept the short-term interest rates unchanged at a record low 0.5 percent and the scale of the its asset purchases programme at 200 billion pounds (314 billion U.S. dollars).

The Bank of England (BOE) said in a statement its Monetary Policy Committee voted to maintain the official bank rate paid on commercial bank reserves and the stock of asset purchases financed by the issuance of central bank reserves.

The BOE made the decision as the British economy slowly recovers from a deep recession.

According to the British government, gross domestic product (GDP)increased by 0.3 percent in the fourth quarter of 2009 over previous quarters. However, it was still 3.3 percent lower than the fourth quarter of 2008.

The BOE cut its interest rates to a historical-low of 0.5 percent in March of 2009 in an attempt to boost the recession-hit economy.

Chinese authorities are making policies that would give overseas investors access to China's stock index futures trading, said a senior trader here Thursday.

Overseas investors would be able to engage in the stock index futures trading under the status of Qualified Foreign Institutional Investors (QFII), said Zhu Yuchen, general manager of the China Financial Futures Exchange and a deputy to the 11th National People's Congress.

The overseas investors should comply with the overall investment quota of 30 billion U.S. dollars under the QFII program, he said.

According to Zhu, China is to launch index futures for the Shanghai Stock Exchange 50 and the Growth Enterprise Market in the future.

Rules that would allow funds to enter the stock index futures market are also in the making and are expected to be publicized soon, he said.

The China Securities Regulatory Commission approved the launch of stock index futures, along with margin trading, on Jan. 8, and launched the trading accounts on Feb. 22.

The regulator said in January that it would take about three months to prepare for the official start of stock index trading, and Zhu said the time table had not changed.

The European Central Bank (ECB) decided to keep its main interest rate steady at a historical low of 1.0 percent on Thursday, as the ongoing Greek fiscal crisis disturbed the ECB's "exit strategy."

The Frankfurt-based bank also kept the interest rates on the marginal lending facility and the deposit facility at the level of 1.75 percent and 0.25 percent, respectively. These unchanged monetary policies were in line with earlier market expectations.

"The economic recovery in the euro area is on track, although it is likely to remain uneven," Jean-Claude Trichet, chief of the ECB, said in a statement during a press conference.

Trichet quoted data agency Eurostat's released figures, saying that the euro area real GDP (gross domestic product) in the fourth quarter 2009 slightly gained 0.1 percent from the third quarter, which also grew 0.4 percent in quarter-on-quarter terms.

"The latest data support the assessment that in the medium term, the inflationary pressures associated with monetary developments are low," he said. "The current key ECB interest rates remain appropriate."

Although the ECB's governing council reiterated its willingness to gradually implement liquidity-absorbing measures, analysts believed the soaring budget gap of Greece and some other EU countries would delay the ECB's actions.

On Wednesday, the Greek government unveiled its revised budget cut plans, pledging to slash some 4.8 billion euros (6.5 billion U. S. dollars) by suspending pensions, cutting public labor wages and raising taxes, after its public deficit had reached 12.7 percent of GDP, four times of the accepted eurozone limit.

Economists said the Greek debt crisis has shaken market faith in the euro and hampered the already-fragile recovery of the European economy, with fears that the possible collapse of Greece would trigger a chain reaction, especially when some other European countries, such as Spain and Portugal, were also in poor financial balance.

"A strong focus on expenditure reforms is needed," Trichet stressed. "High levels of public deficit and debt place an additional burden on monetary policy and undermine the Stability and Growth Pact as a key pillar of Economic and Monetary Union."

Greek Prime Minister George Papandreou is to meet German Chancellor Angela Merkel on Friday, when the two leaders, as widely expected, might discuss the EU's economic aid for Athens.

However, both Germany and Greece denied any possible aid. Papandreou released a statement on Thursday, saying that "Greece is not asking for a penny from German taxpayers. We are asking for political support, not financial aid."

New orders for manufactured goods in U.S. factories rose by 1.7 percent in January, the ninth increase in the past 10 months, the Commerce Department reported Thursday.

The 1.7 percent gain is slightly below the 1.8 percent increase that economists had been expecting.

Orders for durable goods, big-ticket items expected to last at least three years such as computers, cars and machinery, rose by 2.6 percent in January.

The figures were led by big gains in orders for commercial aircraft, which surged 118.6 percent. Excluding transportation, orders were up a much more modest 0.1 percent.

Orders for nondurable goods, including food, paper products, petroleum and coal products, rose by 0.9 percent in January following a gain of 1.3 percent in December.

U.S. manufacturers have been battered by the financial crisis and economic recession as demand has shrunk both in the United States and in their major overseas markets.

Economists said the new report showed the factory sector was bouncing back from the worst recession since the Great Depression in the 1930s.

U.S. gross domestic product (GDP), the broad measure of the overall economy, grew 5.9 percent in the fourth quarter 2009, according to the latest revised data released by the Commerce Department.

More economists believe the U.S. economy is on track for recovery, although the growth pace may slow down when the government stimulus policies begin to wane in the second half of this year.