Erdogan reportedly said Hamas, the legitimate winner of the Palestinian elections, was fighting for its land. "You are always talking about democracy. You'll never let Hamas rule. What kind of democracy is this?" he reportedly said, apparently addressing the Israeli leadership.

In his speech, Erdogan also slammed Turkish media reports which were critical of his party's support of Hamas, saying the "columnists" had a slanted view of the events. Earlier on Friday, Turkey's deputy prime minister said his country would work to reduce its military and economic cooperation with Israel. Existing contracts, he said, would be reviewed and reworked or canceled

Hungary's bonds fell after a spokesman for Prime Minister Viktor Orban said talk of a default is "not an exaggeration" because a previous administration "manipulated" figures. The country was bailed out with a 20 billion-euro ($24 billion) aid package from the European Union and International Monetary Fund in 2008.

"The comments out of Hungary have really spooked the market," said Rajeev Shah, a credit strategist at BNP Paribas SA in London. "Investors are interpreting it as a bad sign for trying to tackle Europe's debt crisis." The euro dropped below $1.21 for the first time since April 2006, stocks tumbled and the cost of insuring against corporate default rose on speculation Hungary will weaken the EU's willingness to rescue the region's indebted nations.

"Are we on the brink of something more serious?" Deutsche Bank AG strategist Jim Reid wrote in a note to clients today. "We've little doubt that the authorities have no appetite for imminent peripheral defaults but we do see the situation getting worse before it gets better. This leaves markets vulnerable until there is more certainty surrounding the structure of the peripheral funding bail-out."

The euro sank, with traders citing official comments on Hungary's woes and rumors of derivative problems at Societe Generale. "We won't comment on market rumors," a spokeswoman for France's third-largest bank said, adding, "if we had something to say, we would have said it." Its stock fell 7.6%.

HSBC Bank caused jitters with a research note to clients in which it downgraded Europe excluding the UK to "underweight" from "neutral."

The Hungarian prime minister's spokesman declined to comment on remarks by Lajos Kosa, managing vice president of Hungary's ruling Fidesz party, that Hungary is facing a Greece-like sovereign-debt crisis and will need crisis-management measures. But the spokesman, Peter Szijjarto, said the new government won't let the country's economy go the same way as Greece.

"The purpose is they really want a bomb. That is their main objective," said defector Sai Thein Win, the major who says he visited the installations and attended meetings at which the new technology was demonstrated.

A US senator on Thursday postponed a trip to Myanmar, saying it is a bad time to visit because of new allegations that its military regime is collaborating with North Korea to develop a nuclear program.

Myanmar's military regime is under economic and political sanctions by many Western nations because of its poor record on human rights and its failure to hand over power to a democratically elected government. The leader of the pro-democracy opposition, Nobel peace laureate Aung San Suu Kyi, has been detained for about 14 of the past 20 years.

Business representatives confirm that German industry, which exports heavily to other countries within the Euro zone, has up to now greatly benefited from the common currency. If an austerity program can be successfully imposed on Southern Europe, establishing a pan-European economic "model" patterned on Germany, the Euro will remain advantageous for Germany. But strong resistance is expected from Greece and other countries.

If expensive transfer payments cannot be avoided, it may become necessary "to think the unthinkable" of Germany "leaving the monetary union" writes the business press. In the long run, Germany's withdrawal from the Euro zone is, in fact, highly probable, the Swedish economics scholar Stefan de Vylder tells german-foreign-policy.com. The first insinuations about the probable consequences indicate that serious tensions can be expected in Europe.

He did not specify whether he wanted the rebate scrapped, but Britain's European neighbours, notably the French, have long clamoured for that. The comments provoked fury from Eurosceptic MPs, who accused the EU of 'squandering' hefty British contributions but providing nothing in return.

They also provide an early test of Prime Minister David Cameron's promise to defend Britain's interests in Europe. Protection of the rebate was made a cornerstone of British policy in Europe after Baroness Thatcher fought to secure it 26 years ago. It was seen as compensation for the disproportionate amounts demanded from UK taxpayers for CAP, which benefits British farmers to a much less extent than their French and German counterparts.

Tony Blair's government was widely condemned for giving up part of the rebate in 2005. Treasury papers revealed last year that this concession will have cost British taxpayers 9.3 billion pounds between 2007 and 2013 - the equivalent of 344 pounds for every household. As a consequence, the value of the rebate to Britain from the EU fell from 5.6 billion pounds in 2008/09 to 5.1 billion pounds in 2009/10. The rebate will produce only 3.3 billion pounds for 2010/11, driving up the UK's net payments to Europe from 4.8 billion pounds last year to 6 billion pounds.

Fitch said its downgrade to AA from AA+, with outlook negative, "reflects risks to both BP's business and financial profile", reversing an earlier view that the spill would have little impact. Moody's also cut the group's ratings to Aa2 from Aa1, while Standard & Poor's said it is reviewing ratings on 35 oil companies in the Gulf of Mexico.

In a separate blow to the oil giant, BP's Russian joint venture on Thursday gave up a 10-year struggle to develop one of the world's biggest, most gas-rich fields.

TNK-BP, the Russian joint venture 50 per cent owned by BP, put one of its units into bankruptcy proceedings, meaning the giant Kovytka field will be sold off to the highest bidder. The sale will realise cash for TNK-BP - after its attempts at developing Kovytka were repeatedly stymied by the Russia government.

BP produces a quarter of its oil and gas from Russia and a quarter from the Gulf of Mexico. In a sign that BP's problems are becoming an increasingly political issue, BP executives met Charles Hendry, Britain's new energy minister on Thursday. BP was the UK's biggest company before it lost a third of its value following the accident that killed 11 men last month.

The figures showed that there was a 22.4 per cent drop in the number of passengers on services to and from the Asia-Pacific region. However, there was only an 8.5 per cent reduction in passengers on North and South American routes. The figures produced by the airline covering May included 14 days of industrial action which, BA estimates, cost it 98 million pounds. BA admitted that the full financial impact of the stoppages, taking into account lost bookings, will only become clear once the dispute is over.

However the group said that an increasing number of cabin crew were defying the strike call by the Unite trade union, which meant it was able to operate four out of five longhaul services including all flights to and from JFK. In addition all services to South Africa will run, ensuring that fans attending the World Cup will face no disruption.

However, a Unite spokesman insisted that the wave of strikes was hitting BA hard in the pocket. "It's costing BA a fortune. It was never our intention to hurt passengers but to cause BA enough damage that the airline would address our concerns."

The string of emergency rescues led by global central banks was certainly popular among the banks - hardly surprising considering their continued existence was at stake. But now, bankers are bemoaning the very deficits incurred by various national governments in part because of financial sector bailouts. They worry all of the commitments made in Europe and the United States might have put governments - and perhaps even the central banks themselves - on the path to insolvency.

Of course, central banks can't really become insolvent in a strict sense, since they can always print money. The anxiety then becomes the ability of the monetary authorities to tighten their purse strings in time to prevent spikes in inflation and interest rates. Central banks can extend unlimited amounts of credit to banks and governments. But they do so by issuing ever more of their own liabilities - money. And just as the trust in banks' and governments' liabilities eroded when they issued ever more, we believe that the trust in money will erode if central banks issue ever more of it.

Greek militant groups have also detonated bombs, one of which killed an Afghan youth and another targeting the bourse. Analysts say in southern Europe in particular, street protests are likely to recur periodically, but the main concern is whether governments rethink austerity measures as a result.

"There are going to be protests and people are going to try to torch banks from time to time," said Eurasia Group analyst Jon Levy. "It is going to be occasional and far from the sort of thing that will bring society crashing down. But it will get a lot of media coverage and that means it may well have market impact." The violence in early May hit Greek assets, the euro and broader global markets as 24-hour news channels focused on Greece and investors worried the backlash might prompt the government to backtrack on vital reforms.

Insurers say they have seen a notable uptick in enquiries about political risk cover - which protects against expropriation, political violence and exchange controls - particularly for Portugal and Spain as they face stringent cuts. "The main risk is going to be in capital city centers where you have a risk of protest," said Daniel Riordan, head of political risk at insurers Zurich. Overall, most analysts say Italy has probably the greatest risk of violent unrest along with France.

Speaking before two days of talks bringing together the world's top 20 developed and emerging economies, South African Planning Minister Trevor Manuel said he could not think of a more challenging time than the present for the Group of 20. The meeting of G20 finance ministers and central bank governors was an opportunity to take decisions to banish the specter of a double-dip recession, Manuel said. "It's important that we all understand just how fragile the recovery is," he told reporters in this southern port city.

Police boats patrolled near the beach hotel where the meetings are taking place. Authorities have stepped up security in the city in the face of the some of the most war-like rhetoric on the divided peninsula after the South accused North Korea of sinking one of its warships.

As well as a 110 billion euro bailout for Greece, the 16-member euro zone is slinging a financial safety net under other heavily indebted countries that use the single currency. Together with money from the International Monetary Fund, the support could total 750 billion euros ($910 billion).

Investors first responded enthusiastically to the rescue package, but the euro has since slumped on concern about the ability not only of Greece, but also countries such as Portugal and Spain, to plug holes in their budgets. "I don't think the Greece problem is over yet. We are not out of the woods," Youssef Boutros-Ghali, Egypt's finance minister, told Reuters.

The MV Rachel Corrie, a 1,200-ton converted merchant ship purchased by pro-Palestinian activists, set off Monday from Malta, Reuters reports. The vessel is named after an American woman killed in the Gaza Strip in 2003. The ship left for Gaza on the day Israeli commandos stormed a Turkish-backed aid vessel purportedly carrying humanitarian aid to the Hamas-governed territory, igniting a confrontation that left nine people dead and launched an international firestorm of protest.

"We're on our way to Gaza," crew member Derek Graham told Reuters by phone. "Everybody was very upset at what happened. Everybody has been more determined than ever to continue on to Gaza." Graham said the ship is carrying 15 activists - including Nobel Laureate Mairead Corrigan-Maguire - and was roughly 280 miles from Gaza on Thursday. Former UN Assistant Secretary-General Denis Halliday is also on board the ship, the Irish Times reported.

Israel has offered to escort the vessel and deliver the civilian aid items aboard, and it says Egypt is prepared to do the same. But Graham said he was concerned that not all of the cargo - including medical equipment, school supplies and cement - would be delivered. Israel maintains that cement can be used in rocket launchers, and not just for building construction.

Israeli Foreign Minister Avidgor Lieberman said Israel would not allow its Gaza blockade to be breached, meaning the ship would have to be boarded and inspected before it was allowed to pass. "No ship will reach Gaza," he told Israel Radio. "The Rachel Corrie will not reach Gaza."

North Korea's troops were on "full alert and readiness to promptly react to any retaliation," including the scenario of all-out war, he told the forum. Ri, departing from his prepared remarks, said that only the conclusion of a peace treaty between the two countries would lead to the "successful denuclearization" of the peninsula. The 1950-53 Korean War ended with an armistice but no formal peace treaty.

Communist North Korea, hit with UN sanctions after testing nuclear devices in 2006 and 2009, is still under international pressure to dismantle its nuclear programme. Ri repeated Pyongyang's assertion that North Korea had nothing to do with the sinking of the Cheonan warship which killed 46 sailors - the deadliest military incident since the Korean War.

US disarmament ambassador Laura Kennedy also rejected Ri's accusations that Washington had backed Seoul in "groundlessly" blaming the sinking on a North Korean submarine. "I agree that the situation on the Korean peninsula is very grave but I disagree with the statement made and reject those allegations against my country," Kennedy said. "The investigation carried out was scrupulous and painstaking and we certainly accept without doubt the results which clearly indicated where the blame lay," she added.

Across the world, secretaries to the rich and the powerful have blocked out the next three days in their bosses' calendars for their annual gathering, this time at the Dolce in Sitges, one of Spain's most exclusive resorts. Normally, every minute of their working lives is accounted for but, each year, a couple of hundred of the world's financial elite and the more business-friendly members of the political class disappear from view; supposedly to save the planet from the dangers of parochialism, the nationalist genie.

It is all terribly confidential - breathe a word about it and you're out of the club - but the Bilderberg watcher Daniel Estulin claims to have a copy of the agenda. The big question this time around is whether the euro will survive. "They are afraid that the countries in trouble will leave and the euro will fall apart," said Mr Estulin. "The biggest nightmare is if EU members return to nationally orientated policies."

Henry Kissinger, 87, the former US Secretary of State, and David Rockefeller, 95, the former chairman of the Chase Manhattan Bank, are the elder statesmen of Bilderberg - but the leaked invitation list reveals that the gathering is made up primarily of elderly white gents.

Remember Richard Perle, 68, George Bush's erstwhile Prince of Darkness? He could perhaps form a Prince of Darkness sub-group with Lord Mandelson. Paul Wolfowitz, 66, formerly of the World Bank? Mario Monti, 67, EU commissioner for the single market between 1995 and 1999? Only the possible attendance of George Osborne, 39, the British Chancellor, will reassure hotel staff that they are not dealing with a Saga Holidays tour. Other members of this clandestine coven include Queen Sofia of Spain and Queen Beatrix of Holland.

If you are planning on bringing a $900 million Los Angeles class submarine through the ice, as the captain might say to the analyst after receiving an ice report: "you'd better be very sure of the ice thickness before I risk the boat and the crew". In 2008, less than half of the ice (47%) was greater than two metres thick. Now, more than 75% of the ice is greater than two metres thick. In 2008, 18% of the ice was more than three metres thick. This year that number has increased to 28%. There has been nearly across the board ice thickening since 2008.

The average thickness has increased from about 2.0 metres to 2.5 metres. That means an extra 20 inches of ice will have to melt this summer. So far, this seems unlikely with the cold Arctic temperatures over the last couple of weeks. A few weeks ago, when extent was highest in the JAXA record, our friends were asking for "volume, not extent." Their wishes have been answered. Ice volume has increased by 25% in the last two years, and those looking for a big melt are likely going to be disappointed.