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Business

Business Briefs

German stocks fall along with other European indexes; Downgrade for Munich Re reinsurer; German Ministry for Economy to lower growth forecasts; Oil prices at highest level since Iraq war.

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Burning oil fields in Iraq may take months to repair

Stock markets suffer the longer a war goes on

European stock markets, from Germany’s DAX to Great Britain’s FTSE, dropped further Friday on news that the war in Iraq will take longer than the U.S. military expected. The Frankfurt-based DAX fell 2.5 percent to 2,520.27 points, owing largely to re-insurer Munich Re’s rating downgrade. France’s CAC-40 index lost 2.32 percent down to 2,722.84 points amid war fears. London’s FTSE index fell as well, with weak oil stocks among the biggest culprits. The FTSE 100 fell 1.69 percent to 3,729.1 points.Gains posted by Swiss re-insurer Swiss Re and Swatch were not enough to prevent the Swiss market index from dropping 1 percent to 4,194.5 points.

Downgrade for Munich Re reinsurer

The world's largest reinsurer Munich Re suffered a two-notch credit downgrade from ratings agency Standard & Poor's, after reporting a greater fourth quarter loss than expected. Standard & Poor's cut Munich Re's ratings from AA-plus to AA-minus, citing the reinsurer's slower than predicted recovery despite an upturn in the reinsurance business. The agency said the group faced severe challenges in order to restore its operating performance and to boost its capital strength after profits were hit by €5.7 billion in writedowns on its equity holdings, the strengthening of reserves for US losses and exposure to the weak Germany banking market. On Thursday, Munich Re had reported a quadrupling of 2002 net profits to €1.1 billion ($1.18 billion), but still fell short of market expectations.

German Ministry for Economy to lower growth forecasts

The German Ministry for Economy is expected to lower its official growth forecasts for the coming year in April, according to the Financial Times Deutschland. According to the paper, German Finance Minister Hans Eichel is expected to lower the government's forecast by between 0.5 and 0.25 points from the current 0.1 percent. However, the German Economy Minister Wolfgang Clement is thought to be in favor of a more optimistic number.

Oil prices at highest level since Iraq war

Oil prices have risen to their highest mark since the start of the war in Iraq. The price rose after reports from the U.S. Army that it could take several months to get burning oilfields in southern Iraq to operate again. Fears that the Iraq war could be much longer than expected and could result in severe fuel shortages saw the price of Brent crude oil rise by 68 cent to $27.50 a barrel in London, while US-grade oil is now trading at almost $31. Since March 21, oil prices have increased by 17 percent after reaching a four-month low.