TOKYO: Currency and stock markets are likely to remain skittish this week after a meeting of the Group of Seven industrialized nations offered no quick fix for the turbulence in credit markets.

The Group of 7s message Saturday on currencies was much the same as has been at previous meetings and was expected to have little effect on markets. The communiquй encouraged China to allow the yuan to appreciate more quickly.

The finance leaders from the worlds top industrialized nations also urged banks to fully disclose losses and shore up balance sheets to help restore the normal functioning of markets.

Analysts said such words by themselves were unlikely to dispel worries over financial institutions losses from the turmoil in credit markets, which flared up last year as defaults rose on U.S. subprime mortgages.

The Group of 7s “joint statement contained nothing eye-catching and there were no surprises,” said Tsuyoshi Segawa, an equity strategist for Shinko Securities. “It will probably be hard for equity markets to show an immediate positive reaction.”

Since investors did not have very high expectations for the meeting to begin with, a sharp, negative reaction in equities or currency markets is not expected .

But risk appetite was likely to remain subdued, and as a result the yen could rise towards three-year highs against the dollar in the weeks ahead, analysts said.

“The risks of further rises in the yen are high,” said Masafumi Yamamoto, head of foreign exchange strategy for Japan at the Royal Bank of Scotland.

The yen is showing a tendency to take its cue from equity markets, and is seen as a barometer of investors appetite for risky carry trades that consist of selling low-yielding currencies like the yen to invest in higher-yielding currencies and assets.

Falls in equities tend to temper demand for such carry trades and lend support to the yen.

Yamamoto said the yen could rise to 104 to the dollar by the end of March, which would be its highest level since March 2005.

The dollar stood at 107.35 at the end of last week, having recovered from 104.95 in January, which was the dollars lowest level in nearly three years.

Equity markets had a dismal time last week, with the Dow Jones Industrial Average falling 4.4 percent, its worst week in about five years. The FTSEurofirst 300 index of top European shares fell 3.7 percent and the Nikkei average lost 3.6 percent.

Financial markets in mainland China and Taiwan will be closed Monday for the Lunar New Year holidays while the Hong Kong stock exchange will be open. Markets in Japan will also be closed for a national holiday.

The Group of 7 said the crumbling U.S. housing market had affected the global economy and that conditions could worsen as debt-laden banks clamp down on credit.

Mario Draghi, Bank of Italy governor and a European Central Bank governing council member, said Saturday that the next 10 days to two weeks would be crucial as more banks detail their exposure to bad debts.

Banks have already taken more than $100 billion in write-downs. Finance Minister Peer Steinbrueck of Germany said Saturday that write-offs could reach $400 billion.

Further write-downs by banks and possible capital injections may be announced alongside European bank results this month.

“The focus will be on individual steps such as any plans to bolster capital to resolve concerns about the financial system,” said Toru Tanaka, senior manager for treasury and foreign exchange at Mitsubishi.

“Currency markets are likely to move this way and that depending on such individual pieces of news,” Tanaka said.

Investors remain uneasy about the outlook for U.S. bond insurers, referred to as monolines, after Moodys Investors Services cut its “AAA” ratings for bond insurer XL Capital Assurance, a unit of Security Capital Assurance, on Thursday.

Investors are waiting to see whether Moodys and Standard Poors will downgrade the two largest bond insurers, MBIA Insurance and Ambac Assurance.

Any such downgrades would affect the securities they insure and could cause deeper financial losses, unsettling the financial system anew and hitting fragile stocks.

Other factors that investors will focus on in the coming week include data on U.S. retail sales set for release Wednesday and the testimony of the U.S. Federal Reserve Board chairman, Ben Bernanke, before the Senate Banking Committee on Thursday.

The Bank of Japan is expected to keep interest rates unchanged at 0.50 percent at a two-day meeting that ends Friday.

Arsenal moved closer to becoming the latest Premiership club to fall under foreign ownership last night after David Dein, the former vice-chairman who relinquished the role bitterly in April citing “irreconcilable differences” with the board, sold his 14.58% stake in the club to the Uzbek steel magnate, Alisher Usmanov.

Dein relinquished his holding for 75m to the specially created investment company Red & White, jointly owned by Usmanov and the London-based investor Farhad Moshiri, for which he will now act as chairman. While the prospect of Usmanov and Moshiri buying into Arsenal may be disturbing enough for the current board given how fiercely resistant they have been to foreign investment in the club, their biggest fear will now be that Red & White link up with Stan Kroenke, the American businessman who owns a 12.19% stake in the club, and mount a takeover bid proper.

The emergence of Kroenke, who was introduced to the board by Dein, had prompted the schism between the former vice-chairman and the other shareholders. The hierarchy, led by the major shareholder Danny Fiszman, who owns 24.1%, and the chairman Peter Hill-Wood, disagreed with the American’s increased involvement. Red & White yesterday claimed that they have “no current intention” to make a takeover offer for Arsenal, though Usmanov - who made the cash purchase of Dein’s shares and, worth an estimated 2.75bn - has indicated that the investment company will seek to increase their stake in the club.

No bid is imminent but the reality is that, should Red & White ally with Kroenke, the two groups would boast a stake worth just under 27% of Arsenal, within touching distance of the 29.9% which would require a takeover bid to be lodged. A further 3% of the club is owned by the Arsenal Supporters’ Trust.

Dein outlined the sale of his shares at an Islington restaurant yesterday and, while he was insistent that his intentions were not hostile, the ramifications of his actions will have been felt some two miles away at the Emirates Stadium. The former vice-chairman pointed out that he has now introduced two billionaires in Kroenke and Usmanov to the club as strategic investors with the intention of ensuring Arsenal remained competitive .

“This marks a significant step towards realising the vision I share with thousands of fans at home and abroad of making Arsenal the world’s No1 football club,” said Dein, who has watched Arsenal home and away since April from an executive box having lost his seat in the directors’ box. “My immediate intention is to work with others to provide the financial resources necessary to turn the vision into reality.

“To provide these financial resources, Arsenal need new investors. I believe the board should welcome non-British involvement. Without new investors, I feel very soon Arsenal might not be able to compete successfully at the very top level, despite the fantastic work of Arsиne Wenger.”

It remains to be seen if the Frenchman, who has been publicly critical of English clubs falling into the hands of foreign owners, would agree.

Usmanov apparently keeps a box at the Emirates, although he has been photographed at Chelsea matches at Stamford Bridge and is an associate of Roman Abramovich, largely through his background in the steel and iron ore industries.

The sale represents a staggering profit for Dein, a former market trader who bought his original shareholding for 292,000 in 1983.

PARIS: When a billionaire born in Uzbekistan and an outspoken former British ambassador clashed over a scorching blog, the first outcome was the Internet equivalent of a smackdown.

The daily Web log, or blog, of the former U.K. ambassador to Uzbekistan, Craig Murray, vanished after Murrays British Internet provider received a flurry of ominous legal letters demanding the removal of “potentially defamatory” information about Alisher Usmanov, a mining mogul with a rising stake in the English soccer club Arsenal.

Two weeks later, Murray is not blogging, but his blistering opinions are about to surface again through a Dutch Internet provider that offers refuge to controversial bloggers in the United States and in England, where libel laws are more lax. And with that journey, Murray has stirred support and a common outrage among bloggers and Internet service providers who complain that chilling demands from companies are becoming more frequent in a number of countries.

“Im personally predicting that the next growth area is not censorship of bomb-making Web sites,” said Richard Clayton, a computer security researcher at Cambridge University and part of the OpenNet Initiative that tracks Internet filtering around the world, “but complaints about defamation and civil suits.”

Murrays odyssey began in early September when he posted a pejorative description of Usmanov on his blog.

Schillings, a London law firm specializing in media entertainment, then fired back for Usmanov with legal warnings to Fasthosts, the blogs Internet service provider, demanding elimination of the posting within 24 hours.

More letters followed and by the fourth complaint, Fasthosts simply deactivated the Web site - along with two other servers, shutting down more than a dozen other sites, including that of a British member of Parliament.

“Its extremely scary that this can happen, because they can take down something without anything being tested in court, without any legal sanction at all except a letter from a high-priced lawyer,” Murray said in an interview. “Im very happy to have this tested in court. Why dont they do that? Because that will bring together people who know the truth of the matter.”

After his blog was silenced, a number of other bloggers with views ranging across the political spectrum started organizing a coalition to seek legislative protections, according to Tim Ireland, an online marketing consultant whose blog also vanished when the servers were shut down.

The Internet Service Providers Association, or ISPA, the leading trade group for British ISPs, is also hosting a meeting of its members this month to debate the issue.

“The threat is and always has been money,” Ireland said. “Might makes rights. We have to take away at least one aspect in U.K. libel law that gives an unfair advantage to people who are cashed up.”

In the meantime, Murrays accusations, which were also part of his memoir, “Murder in Samarkand,” continue to spread online to other blogs, pointing out the potential perils of trying to squelch information.

Rollo Head, a spokesman for Usmanov, said the businessman and his advisers remained content with the tools used to challenge damaging and misleading information. “We are very comfortable with the strategy that we pursued with regard to the Web site,” he said.

Usmanov hired Schillings, which specializes in “reputation protection” and boasts about being lawyers to the stars. Harriet Campbell, a solicitor there, declined to discuss the impact of the firms strategy, saying in an e-mail message that, “like any professional law firm, Schillings does not comment on its instructions or approach to its current client matters.”

But on its Web site, the law firm freely offers a tip sheet to challenge online critics across national borders, describing a client and wealthy chief executive who was accused of unethical behavior and financial crimes on a U.S. Web site.

In that case, the British firm employed similar tactics. It contacted the Internet provider, “advising them that even though the allegations had physically been posted in the U.S., they were defamatory under U.K. law as they could be accessed here.”

The provider removed the material, according to Schillings, and “once the source was outed and starved of publicity, he quickly settled to avoid a defamation claim.”

Companies in the United States, Canada and Australia have moved against bloggers to remove copyrighted material with takedown complaints or have demanded removal of critical comments posted by blog visitors.

But British bloggers are particularly vulnerable to defamation complaints because of a previous court ruling that found that Internet providers qualified as publishers of libelous material if they did not react when alerted about a problem.