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Thursday, April 7, 2011

<<Aiii>> (BN) U.S. Stocks, Japan ETF Drop, Yen Up as Earthquake Shakes Tokyo

Bloomberg News, sent from my Android phone

April 7 (Bloomberg) -- U.S. stocks fell, dragging the Dow Jones Industrial Average down from an almost three-year high, while Treasuries erased losses and the yen rose as a magnitude 7.4 earthquake shook Japan less than a month after the nation's worst temblor on record.

The Dow slid 47.53 points, or 0.4 percent, to 12,379.22 at 10:57 a.m. in New York and the Standard & Poor's 500 Index dropped 0.4 percent. The iShares MSCI Japan Index Fund, an exchange-traded security tracking the nation's equities, lost 0.6 percent. The 10-year Treasury note yield was little changed at 3.55 percent after climbing three basis points earlier. The yen strengthened against 15 of 16 major counterparts.

The earthquake hit 215 miles northeast of Tokyo, the U.S. National Oceanic and Atmospheric Administration said in an e- mailed preliminary earthquake report, spurring concern that Japan will be hindered in its efforts to recover from a March 11 quake and tsunami that damaged nuclear reactors north of Tokyo.

"It's created more uncertainty for the region," said Thomas Garcia, head of equity trading at Santa Fe, New Mexico- based Thornburg Investment Management Inc., which oversees about $80 billion. "I'm not sure where it is in relation to the nuclear reactors, but if it is close that is not a good thing."

The European Central Bank increased its key interest rate today for the first time since 2008. Portugal is aiming for a bailout that may be worth as much as 75 billion euros ($107 billion), two European officials with knowledge of the situation said. Record-high borrowing costs made the nation the third in the euro region to seek a rescue package.

"There is more than a hint of irony that Portugal has been forced to ask for a bailout on the day that the ECB is expected to hike interest rates," Jane Foley, a senior foreign-exchange strategist at Rabobank International in London, wrote in a report before the ECB's decision. "While it can be argued that a 25 basis-point hike will not make an enormous difference for funding costs in the region, the peripheral crisis does underline the question mark over how high the ECB can push interest rates over the next year or so."

To contact the reporters on this story: Michael P. Regan in New York at . Inyoung Hwang in New York at ;

To contact the editor responsible for this story: Nick Baker at

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