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LONDON — Oil prices soared on Thursday on tensions surrounding key producer Russia, as equities diverged with traders tracking interest rate decisions, the Ukraine conflict and China's pledge to support volatile markets.

The price of benchmark oil contract, Brent North Sea crude, jumped more than five per cent to return above $100 per barrel after Russia rejected a ruling from the UN's top court to suspend its Ukraine offensive.

"Russia's invasion is still dictating price action... given the country's global importance in terms of supply," said Interactive Investor analyst Victoria Scholar.

The fallout from the war in Ukraine could cut global economic growth by "over one percentage point" in the first year after the invasion, the OECD grouping of developed economies said in a report.

The impact "if sustained" would produce "a deep recession in Russia" and further increase global consumer price inflation by approximately 2.5 percentage points, it added.

The warning came as Russia's finance ministry said it had carried out interest payments on two foreign bonds, avoiding default for now after it was hit by unprecedented Western sanctions over Ukraine.

Central banks 

Central banks were in focus again on Thursday as the Bank of England (BoE) raised its main interest rate by a quarter point, following the US Federal Reserve's decision to do the same the day before.

The hike, widely anticipated by analysts, was the BoE's third straight rate rise as it battles with decades-high UK inflation.

"The global economy faces elevated levels of inflation because of various factors, including from surging energy and commodity prices," said Fawad Razaqzada, analyst at ThinkMarkets.

US markets were slightly down shortly after opening, as the market came to terms with the Fed's decision on Wednesday. 

The Dow Jones Industrial Average and the S&P 500 slipped 0.4 per cent, while the tech-heavy Nasdaq lost 0.9 per cent.

In Asia, Hong Kong's main stocks index closed with another massive gain, as investors pile back in after China's pledge to support markets.

The Hang Seng surged seven per cent, a day after a nine-per cent jump.

Another blistering surge in tech firms helped Hong Kong extend its recovery from the recent rout, while traders also cheered soothing comments on the US economy by the Fed.

China's top economic official has vowed measures to support beaten-down markets and indicated that a debilitating crackdown on the technology sector was nearing its end.

"The statement addressed so many issues on various fronts, which is really rare," said Ding Shuang at Standard Chartered.

"Selloffs tended to be self-fulfilling partly because of the lack of response from the government," but part of the government's aim is likely to break that inertia and stabilise expectations, he added.

COLOMBO — Sri Lanka will seek an International Monetary Fund (IMF) bailout, President Gotabaya Rajapaksa said on Wednesday, as it battles inflation and unprecedented food and fuel shortages.

A lack of foreign currency has left Sri Lanka unable to finance essential imports in what authorities say is the South Asian nation's worst economic crisis since independence from Britain in 1948.

"Subsequent to my discussions with the International Monetary Fund, I have decided to work with them," Rajapaksa said in an address to the nation, after meeting with an IMF delegation on Tuesday.

He added that IMF help was needed to secure "a new method" to repay around $6.9 billion in external debt and sovereign bond repayments due this year.

Long queues outside gas stations and rolling daily blackouts have become the norm, while skyrocketing prices have caused serious hardships among the island's 22 million people.

"The root cause of current issues is our foreign exchange crisis," Rajapaksa said, adding he was aware of the "difficulties" faced by people queuing for food and fuel.

"Today, I am determined to make tough decisions to find solutions to the inconveniences that the people are experiencing," he said.

Sri Lanka's foreign reserves, which sat at $7.5 billion when Rajapaksa took office in November 2019, dropped to $2.3 billion at the end of February.

The coronavirus pandemic hammered the island's tourism sector — a key foreign exchange earner while foreign worker remittances also declined.

International rating agencies have since downgraded Sri Lanka, effectively blocking its access to commercial borrowings.

They have also raised doubts about Colombo's ability to service its external debt amounting to just over $51 billion.

BERLIN — American chip making giant Intel said on Tuesday it planned to invest tens of billions of euros in the European Union, as the continent seeks to reduce its reliance on semiconductors from Asia.

The project to boost the entire production process, from the research of new technologies to the manufacturing and packaging of semiconductors, could total up to 80 billion euros ($87.9 billion) over the next decade, the group said in a statement.

The production of the key technology, also known as chips, has become a strategic priority in Europe as well as the United States, after the shock of the pandemic choked off supply, bringing factories to a standstill and emptying stores of products.

The details of the announcement were hotly anticipated in Europe, where governments have been jostling to host new production facilities as the continent seeks to reduce its dependence on Asian chip imports.

Earlier this year, the EU passed the Chips Act, a 43-billion-euro plan to boost production on the continent of the component, used in everything from electric vehicles to wind turbines.

Speaking at the Intel launch event, European Commission President Ursula von der Leyen said the US group's announcement was the "first major achievement" under the act.

'Mega site' 

Intel's planned investments span the EU, from Spain to Poland, addressing "the global need for a more balanced and resilient supply chain", said CEO Pat Gelsinger.

Semiconductors were "more critical than ever", and were the "brains powering essential digital technologies", he said in a press conference.

The cornerstone of the "landmark" investment was a 17 billion-euro "mega site" in the eastern German city of Magdeburg.

Intel plans to begin building the manufacturing hub in the "first half of 2023" with production to begin as soon as 2027.

The US group would also develop its research and development centre near Paris and a foundry design centre in France.

The new R&D base around Plateau de Saclay would in time employ 1,000 people, working on Intel's "high performance computing and artificial intelligenc design capabilities", the group said.

Intel would also hand a 12 billion-euro funding boost to its facilities in Ireland, while it said it had entered into negotiations with the Italian government to invest "up to 4.5 billion euros" in a manufacturing facility.

As part of the package, the chip-maker would also be expanding its lab capacity in Poland and developing joint centres with the Barcelona Supercomputing Centre in Spain.

MUMBAI — Paytm shares nosedived almost 13 per cent on Monday after Indian regulators banned the beleaguered payments platform from enrolling new customers and reports emerged that its founder was arrested for crashing into a police car.

The firm enjoyed India's biggest initial public offering four months ago, with the backing of Chinese tycoon Jack Ma's Ant Group and Warren Buffett's Berkshire Hathaway.

But it has since lost more than two-thirds of its market cap despite a commanding position in the local digital payments space, as investors fret over whether the perennial loss maker will ever turn a profit.

India's central bank demanded Paytm immediately stop enrolling new customers on Friday and ordered an audit of its IT systems, citing "certain material supervisory concerns observed in the bank".

Shares in the firm closed 12.84 per cent lower in Mumbai after hitting record lows in Monday's trade.

Paytm said it "remains committed to working with the regulator to address their concerns as quickly as possible".

The firm's woes were compounded over the weekend after news broke that founder and Chief Executive Vijay Shekhar Sharma had been briefly detained last month after crashing into a senior police officer's car in the capital New Delhi and fleeing the scene.

Paytm downplayed the incident in a Sunday statement that characterised the accident as a "minor offence". 

Sharma, named India's youngest billionaire in 2017, launched Paytm in 2010 and quickly made the platform synonymous with digital payments in a country traditionally dominated by cash transactions.

His enterprise has benefitted from government efforts to curb the use of hard currency — including the demonetisation of nearly all banknotes in circulation five years ago — and from the pandemic.

The platform had 350 million customers at the end of December, according to the company's regulatory filing.

But the last few months have seen a dramatic reversal of fortunes for the platform and Sharma has seen his net worth written down by over $1.5 billion since its November 2021 market debut.

Paytm's parent One97 Communications reported a net loss of 7.79 billion rupees ($102 million) for the December quarter. 

PARIS — The world economy's fragile recovery from the COVID-induced crisis is now threatened by Russia's war in Ukraine and soaring commodity prices.

Here are four questions regarding the risks to global gross domestic product:

Will growth stall? 

"The war happened right at a time when Europe and the US had a recovery that was going really well. Projections in Europe were among the highest... [in] the last 20 years," said Jacob Kirkegaard, resident senior fellow with the German Marshall Fund of the United States in their Brussels office.

In just two weeks, the war has had a "material impact" on the economy, European Central Bank Chief Christine Lagarde said on Thursday, revising the growth outlook for the eurozone to 3.7 per cent for 2022, from 4.2 per cent forecast in December.

The war and sanctions, which include a US ban on Russian oil imports, are raising prices of energy and other key commodities like wheat, fertilisers and metals to surge, International Monetary Fund chief Kristalina Georgieva said.

That comes "on top of already high inflation", Georgieva said.

"We got through a crisis like no other with the pandemic. We are now in an even more shocking territory."

Credit rating agency S&P has cut its projection for global growth this year to 3.4 per cent — a decline of 0.7 percentage points over its earlier forecast due to the expected slump in Russia's sanctions-hit economy and rising energy costs.

Moreover, the cost of hosting Ukrainian refugees and budgetary aid will cost the European Union 175 billion euros ($192 billion), economist Jean-Pisani Ferry from the Paris-based Bruegel Institute think-tank said.

"I don't think that global economy will go into a recession," said Kirkegaard.

But he warned of the threat from stagflation — persistently high inflation combined with high unemployment and stagnant demand.

Why are prices soaring? 

Inflation has been rising worldwide for a year — due to COVID-linked disruptions in supply chains, leading to a spurt in the prices of raw materials which have raised production costs.

The war has sent oil and gas prices soaring, threatening to worsen inflationary pressure.

Federal Reserve Chair Jerome Powell told the US Congress that every $10 hike in oil prices would impact growth by 0.1 percentage points and add 0.2 percentage points to inflation.

The United States recorded 7.9 per cent inflation in February — a new 40-year high.

"We are facing an oil shock, a gas shock and an electricity shock. This has never happened together," said Thomas Pellerin-Carlin, director the Jacques Delors energy institute.

Apart from oil and gas, other key commodities have been affected, with prices of aluminium, nickel and wheat skyrocketing.

Russian President Vladimir Putin on Thursday warned of inflationary pressures worldwide as a result of the Western sanctions on his country.

Several key industries have already been hit, with several steel plants in Spain shutting down due to high energy prices.

Millions of households are finding it more expensive to travel, heat their homes and bring food to the table.

"The price of bread went up enormously" since the war began, said Omar Azzam, a Cairo resident, referring to a 50 per cent hike in a country which is the world's top wheat importer.

French President Emmanuel Macron warned Friday that Russia's attack on Ukraine will "deeply de-stabilise" food supplies in Europe and Africa as some of the world's most fertile agricultural land goes unplanted.

If production strategies in other countries aren't adjusted "several African countries will be affected by famines within 12 to 18 months precisely because of the war," he warned.

More stimulus 

on the way? 

Countries launched huge stimulus programmes to prevent their economies from crumbling after the pandemic emerged in 2020.

But government are loath to dig much deeper into public finances.

Aid will likely be more targeted. The G-7 group of industrialised nations, for instance has called for massive support to households slammed by energy costs.

Emerging nations, however, will be more fragile and vulnerable to inflation and even political instability, experts warn.

Is COVID still a threat? 

While many countries are easing COVID restrictions, China has been doing the opposite.

The world's second biggest economy on Friday locked down Changchun, a city of nine million people, to control a fresh wave of coronavirus.

If such measures continue, they will hit the world hard, warned Kirkegaard.

"The Chinese economy will slow dramatically, China will shut down whatever they need to shut down," he said.

"It is as big and unknown as the war in Ukraine because unlike Europe and the US that are able to live with COVID, it is certainly not the case in China," he said.

LONDON — Wall Street ended a downbeat week with further losses on Friday as traders braced for continued economic fallout from Russia's invasion of Ukraine. They were also cautious, keeping in mind a looming Federal Reserve rate hike, though European indices saw gains.

Oil also rose on Iran supply fears, but remained well below the 14-year peak of near $140 hit on Monday brought on by worries of disruptions to supply from Russia, a major producer.

The pound and yen hit multiyear dollar lows before regaining some ground, as traders prepared for the Federal Reserve to most likely hike interest rates next week for the first time since the pandemic, in the first of several moves this year to fight inflation.

While equities rose after Putin said his negotiators had reported "certain positive shifts" in talks with Ukraine, the enthusiasm petered out in New York trading as Washington and Brussels announced new sanctions against Russia and fighting continued.

The Nasdaq closed more than two per cent lower and the S&P 500 fell more than one per cent.

"This gullible market — or some indubitable algorithms — seems willing to take Putin's words as the makings perhaps of an exit path," said Briefing.com analyst Patrick O'Hare.

In Europe, London ended with a gain of 0.8 per cent, Paris rose by 0.9 per cent and Frankfurt climbed 1.4 per cent to post their first weekly rise since the war.

Sentiment there was also brightened by data showing the UK economy rebounded 0.8 per cent in January after a 0.2-per cent decline in December, as Omicron coronavirus curbs were lifted.

Markets have been rocked ever since Russia shocked the world by invading its neighbour on February 24.

Michael Hewson, chief market analyst at CMC Markets UK warned that "any deterioration in sentiment over the weekend could see these gains reversed in a heartbeat if Russia chooses to escalate further, as well as potentially crossing the red line of chemical, or biological weapons use". 

Oil jumped on Friday after the European Union revealed talks it is chairing about the revival of the 2015 nuclear accord with crude producer Iran must be paused, days after fresh demands from Russia complicated negotiations.

Oil has been extremely volatile ever since Moscow's invasion, with traders still fretting over Western moves to ban Russian crude.

"It's been a rollercoaster ride for oil this week, and for some, the weekend cannot come quick enough," said Stephen Innes, Managing Partner at SPI Asset Management.

Crude prices have pulled back from nearly $140 at the peak on Monday to around $110 on Friday as hopes rose that other producers will step up production.

"This optimism needs to be tempered by the fact that any increase in output from OPEC would not be enough to offset the loss of Russian supply," said Hewson at CMC Markets.

LONDON - Brent oil rebounded on Thursday, after tanking the previous day on hopes that the huge amounts of sanctions-hit Russian oil could be largely replaced by sourcing from elsewhere.

European benchmark Brent North Sea crude climbed 5.1 per cent to $116.80 per barrel in morning deals.

New York's WTI contract advanced 3.5 per cent to $112.58.

Both contracts had collapsed by more than 12 per cent in value on Wednesday, as traders also seized on a glimmer of hope for peace talks between key producer Russia and Ukraine.

Brent tumbled as low as $105.60, having hit a peak of $139 just two days before, as the Ukraine crisis continues to send shockwaves through markets.

The United Arab Emirates said on Wednesday it would urge fellow states in the oil producers' cartel of the Organisation of the Petroleum Exporting Countries to boost output, while US talks with massive producer Venezuela appeared to be making progress.

"Crude prices rebounded this morning after being whipsawed on various Russia headlines," said Markets.com analyst Neil Wilson.

"Brent and WTI plunged yesterday in a brutal reversal as the UAE indicated it could start pumping more oil and call on friends at OPEC to do more.

"Comments from Russian and Ukrainian officials also pointed towards a path to peace, but the situation on the ground is no different."

At the same time, Iraq has said it could lift output and nuclear talks with Iran were also showing signs of bearing fruit.

However, with the Ukraine war still raging and crude oil supplies still tight, expectations are for the commodity to maintain its price strength.

"Traders are still very much in a cautionary mode as it is not clear to them that the current change in momentum or shift in the direction of the oil trend will last," said AvaTrade analyst Naeem Aslam.

MADRID - Acerinox became the latest steel producer to halt operations in Spain on Thursday due to surging energy prices caused by Russia's war in Ukraine.

A union source at the Spanish stainless steel maker said the firm had halted production at its plant in Cadiz in the southern Andalucia region due to soaring electricity prices.

Electricity prices have hit record highs in recent days on the Spanish wholesale market, forcing Acerinox to push through plans to furlough all of its 1,800 staff at the Cadiz plant, he said. 

The unions, he said, were currently in talks with management to "negotiate the terms" of the so-called ERTE furlough scheme. 

The move came after a year in which the steelmaker's net profits soared to a record 572 million euros on surging global demand. 

Earlier this week two ArcelorMittal factories, both in the northern Basque Country, halted production over surging energy prices, a spokesman for the global steel giant said.

One plant located in Olaberria, with a 400-strong workforce, shut down for 15 hours on Tuesday due to "high electricity prices" which are weighing on production costs.

It resumed operations on Wednesday "but only intermittently" during off-peak hours when electricity prices were lower, he said. 

The group decided not to resume activity at a second factory with a 200-strong workforce in Sestao where operations had been due to resume Sunday after being idle for four days.

"We're following the price closely every day but we still don't know how long this situation of exorbitant prices is going to last," he said.

According to another industry source, "other steel plants" have also decided to halt production for several days, such as the Spanish group Megasa. 

Madrid has for months urged its European partners to change the mechanism which couples electricity prices to the gas market but its pleas have so far fallen on deaf ears, despite support from Paris.

But since Russia's invasion of Ukraine, positions have shifted with the question of electricity prices to be discussed at a two-day EU summit at Versailles near Paris which began on Thursday. 

In a statement, Fernando Soto, head of AEGE, which represents energy-intensive companies, urged the Spanish government to introduce "emergency measures". 

"Energy-intensive industries in Spain are suffering from the rising costs of electricity supplies" which have reached levels "never before seen in our market," he said on Wednesday, warning the sector's activity was "at serious risk".