>GLOBAL MARKETS: European Stocks To Take A Beating At Open

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European stocks are expected to tumble at the open Tuesday, following heavy falls in Asian markets, where the Nikkei dropped more than 10% amid fears of a nuclear disaster in Japan.
U.S. stocks are also likely to open sharply lower, judging by losses in stock index futures. Meanwhile, the euro, oil and gold are all weaker in early European business, while the Swiss franc and German bunds are higher. The Japanese yen is mixed.
Capital Spreads called London’s FTSE 100 index to open 130 points lower at 5645, Germany’s DAX index down 139 points at 6728 and Paris’s CAC-40 index 81 points lower at 3797.
News of a third explosion at the Fukushima Daiichi nuclear power plant heightened fears of a full nuclear catastrophe. These were compounded by Japanese prime minister Naoto Kan, who said there’s a high risk of elevated levels of radiation from the country’s nuclear reactors, and urged everyone within 30 kilometers of the plant to stay indoors.
Despite the sharply lower opening calls, Citigroup does not expect the events in Japan to overwhelm the world economic recovery or investors’ risk appetite. “For Europeans, growth in emerging markets and the U.S. remains the most important macro driver and a negative shock for the Japanese economy is unlikely to be enough to push the world economy back into recession,” it said.
“Furthermore, at the margin, the policymakers in the world are more likely to maintain cheap money to keep recovery on track to counteract any negative impact from Japan. Cheap money should be supportive to equity markets,” Citigroup added.
On the macroeconomic calendar, U.K. house-price figures are due at 0930 GMT, while the German ZEW survey is at 1000 GMT. In the U.S, the Empire State manufacturing survey and import price index data are due at 1230 GMT and the National Association of Homebuilders’ housing-market index is scheduled for 1400 GMT.
The Federal Open Market Committee rate decision is due after the close at 1815 GMT, where all eyes will be on Federal Reserve chairman Ben Bernanke’s speech. No change in policy rate is expected, but “market participants will evaluate the shift in tone regarding improved labor market conditions and inflation expectations, given recent developments,” said Credit Agricole and Investment Bank.
On Wall Street Monday, stocks fell as investors tried to assess the financial fallout from Japan’s earthquake and tsunami.
The Dow Jones Industrial Average closed down 0.4% at 11,993.16, the Nasdaq Composite fell 0.5% to 2700.97 and the Standard & Poor’s 500 index shed 0.6% to 1296.39.
“The triple issue of the earthquake, tsunami and now the nuclear plant is enough to make anyone afraid,” said James Dailey, portfolio manager of the Team Asset Strategy Fund.
Peter Tuz, president of Chase Investment Counsel, said he continues to worry about the situation in the Middle East and North Africa as well. Japan’s earthquake “may have knocked the Middle East turmoil off the TV screen, but it’s still there,” he said.
In Asia, stock markets tumbled Tuesday, dragged down by a sharp drop in Tokyo’s headline stock-market index amid widespread worries about the possibility of a Japanese nuclear catastrophe.
Japan’s Nikkei Stock Average pared earlier losses but was still down 10.6%, Australia’s S&P/ASX 200 fell 2.1% and South Korea’s Kospi Composite lost 2.4%, while the Shanghai Composite Index fell 2.1% and Hong Kong’s Hang Seng Index dropped 3.4%.
In China, “there is panic selling in A-share market as investors are fretting over the reactor leaks in Japan, and further downside is likely to depend on whether the leaks in Japan can be placed under control,” said Tang Yonggang, an analyst from Hong Yuan Securities.
In the European foreign exchanges, the euro was weaker, having gained Monday on news of the EFSF extension. By 0720 GMT, the euro was trading at $1.3911, down from $1.3993 late Monday in New York.
By contrast, the Swiss franc gained from ‘safe-haven’ flows while the Japanese yen was mixed: down against the dollar but up against the euro.
Among commodities, spot gold was at $1415.30 per troy ounce, down $10.45 from New York, while April Nymex crude oil futures were down $2.10 at $99.09 per barrel.
In the bond markets, the June bund futures contract was up 1.01 at 123.20. Among U.S. stock index futures, the June Dow Jones Industrial Average contract was down 1.7% while the S&P 500 contract was down 1.9%.

>Damage at two Japan nuclear plants prompts evacuations

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After the tsunami damages the cooling systems at five reactors in northeastern Japan, officials take steps to avert the possibility of a meltdown.
Japanese officials struggled Saturday to avert the possibility of a meltdown at two major nuclear power plants whose emergency cooling systems were damaged by Friday’s earthquake and tsunami.
Emergency officials ordered the evacuation Saturday of all civilians within a six-mile radius of the Fukushima No. 1 plant, which is about 150 miles northeast of Tokyo, after its normal backup cooling systems failed and it became necessary to release radioactive steam to relieve pressure that could cause an explosion.
Several hours later, authorities revealed that cooling systems at the Fukushima No. 2 plant, a few miles south, had also failed, and evacuations were ordered around that plant as well.
In all, five reactors at the two plants were damaged.
Radiation levels in the control room at Fukushima No. 1 were reported to be as high as 1,000 times normal, while levels outside the plant were said to be about eight to nine times normal, indicating some leakage of radiation had already occurred.
Shaking from the magnitude-8.9 earthquake triggered an automatic safety procedure at 11 of Japan’s 55 commercial nuclear reactors. At those plants, control rods were plunged into the cores, where the radioactive fuel rods are kept, to bring electricity production to a halt.
But the cores continued to produce massive amounts of heat that needed to be cooled.
The cooling system must continually pump water from a large pond that surrounds the core through a set of towers that keep the water at a safe temperature. Otherwise, the water will boil off, the fuel rods will melt, and there is a possibility that radioactive material will escape from the reactor’s containment dome — a so-called meltdown.
“If they can’t get adequate cooling to the core, it could be a Three Mile Island or worse,” said nuclear physicist Edwin Lyman of the Union of Concerned Scientists, which is working to improve the safety of nuclear power. The loss of coolant at the Three Mile Island Nuclear Generating Station in Pennsylvania for only 30 minutes led to a 50% meltdown of the core in that 1979 accident.
The pumps normally obtain electricity from the grid. But the Fukushima prefecture’s grid was badly damaged by the tsunami, cutting power needed to cool the fuel rods. Though reactors have diesel emergency generators to provide backup electricity, those at Fukushima No. 1 and No. 2 also were apparently damaged by the tsunami.
The reactors have backup batteries, and operators used them to restore the flow of coolant at the No. 1 plant. But those batteries have a life of no more than about eight hours, experts said.
Officials of Japan’s Nuclear and Industrial Safety Agency said Saturday they had obtained more batteries and may use military helicopters to fly them to the site.
Authorities said that pressure had already built up inside the containment building at the No. 1 plant to about 50% above normal and that they had begun venting radioactive gas into the atmosphere, although they said there was no danger from the release.
“Rising containment pressure is not a good sign that they have things under control,” Lyman said. “We need to get better information from the Japanese about what is going on, but the few things that are coming out are very worrisome.”
The reactors at the two plants use some of the oldest nuclear technology, dating to the 1960s. “These first-generation boiling-water reactors have the least margin of safety of any reactor design,” said Frank N. von Hippel, a Princeton University physicist and former White House advisor.
Without electrical power to circulate water inside the core, the cooling water would begin to boil off, he said.
But despite the dangers, some experts said the nuclear plant operators should be able to add new cooling water and keep the core fully immersed while it cools down.
“It doesn’t sound like we are in meltdown mode,” Von Hippel said.
Jim Walsh of MIT’s Center of International Studies agreed that these reactors will probably be OK. But there are other facilities in Japan that produce enriched fuel for reactors and manage highly radioactive waste, some of which are in remote areas in the north, “and no one has said ‘boo’ about them,” he said. “It’s not inconceivable that some of them have had problems. The story may continue to unfold in the next few weeks.”
Long before the problems created by the tsunami, a series of serious incidents in Japan’s ambitious civilian nuclear power industry over the last decade have raised concerns about its attention to safety and the role of government regulators.
The history of Japan’s nuclear incidents includes a pattern of problems being kept secret or passed off as far less serious than they actually were.
In 2007, several electric utilities admitted covering up accidents, including one that experienced an uncontrolled nuclear reaction inside a reactor while it was shut down for maintenance. The same year, Tokyo Electric Power Co. — which operates the two Fukushima plants — apologized for a radiation leak caused by an earthquake at a plant that had not been built to withstand a quake of that magnitude.
In 2004, five workers at a nuclear plant in western Japan were killed when a corroded pipe burst and sprayed them with boiling water and steam, revealing flaws in safety procedures.
The U.S. Nuclear Regulatory Commission said Friday that American nuclear reactors are not vulnerable to the sequence of events that overtook the Japanese reactors because regulations here take into account the specific vulnerabilities at each plant under the most extreme conditions possible.
In the case of the San Onofre Nuclear Generating Station, operated by Edison International in northwestern San Diego County, a 30-foot seawall protects the plant and its emergency generators from the maximum theoretical tsunami that could hit the site, said regulatory commission spokesman Scott Burnell.
Edison International spokesman Chris Abel said the seawall is just one of several redundant systems meant to ensure power for an orderly shutdown in the event of an emergency.
In Japan, the shutdown of the 11 nuclear reactors affects perhaps 8% of the country’s electrical generating capacity. Most of those plants should be able to go back on line within a few days, though it may be longer before repairs can be made to damaged power lines that carry electricity from the plants to consumers.