TheFXSpot:Amidst Fin Mkt Panic, Cool Heads Attempt To Prevail 4  FEB   By Vicki Schmelzer New York - The widespread panic permeating stock, commodity and foreign exchange markets Thursday is not unlike that seen at the end of 2008 and the first quarter of 2009, analysts said. By Vicki Schmelzer New York (MNI) - The widespread panic permeating stock, commodity and foreign exchange markets Thursday is not unlike that seen at the end of 2008 and the first quarter of 2009, analysts said. However, given that market conditions are decidedly better now than a year ago, the sell-off being seen currently is more likely to be a correction rather than the start of a new long-lasting downtrend, they said. "We had a considerably different economic backdrop back in late 2008 early 2009 -- a double dip in not on most radar screens now," one analyst said. Credit spreads in most instruments have narrowed and liquidity has generally returned to normal. "The broader breadth of the market is up and running," the analyst said. As confirmation of this thinking, BAS/Merrill Lynch's January fund managers survey, released January 19, showed that global investors were raising their appetite for risk. BAS/Merrill's risk and liquidity indicator, which combines readings on risk appetite, investor time horizon and cash weightings, surged to +46 in January, the highest level since May 2006, and compared to December's +44 and the long term average of +40. Since mid January, however, risk appetite sentiment has been undermined by escalating concern about widening credit spreads in peripheral eurozone country debt as well as by the expected global economic fall-out from potentially tighter Chinese interest rate policy. Global stocks were, at times, in free-fall Thursday, with emerging market equities especially hard hit along with the indices in the PIGS countries (Portugal, Italy, Ireland, Greece, and Spain). Spain's IBEX 35 index closed down 5.94% at 10241.7. Brazil's Bovespa was closing down 4.73% at 63934, with the index further roiled by deemed hawkish COPOM minutes, released earlier in the day. The IBEX 35 is down 14.2% year-to-date and the Bovespa is down 6.8% year-to-date. Juxtapose these indexes with the S&P 500, which closed down 3.11% at 1063.11 (range 1062.82/1097.25). The S&P is down 4.7% year-to-date. While madness seemed to reign throughout the day, traders noted that the CBOE's volatility indicator or VIX was not yet back at late January levels. The VIX stood at 26.08 Thursday, after trading in a 22.63 to 26.32 range. After holding in risk friendly territory, sub-20, for most of early January, the VIX began to edge higher on increased risk aversion (jitters about PBOC rate hikes choking off global growth - peripheral eurozone country debt woes) topping out at 28.01 on January 22. Up until today, the index has closed below 25 since January 26. Unless Friday's release of U.S. January non-farm payrolls provides a knock-your-socks off surprise, traders looked for additional downward pressure in stocks and commodities, with dollar strength also likely versus most currencies. "The market is running with that (risk aversion) and you can't stand in front of that train," said Matthew Strauss, senior currency strategist at RBC Capital Markets. That said, there are "risks on both sides" of Friday's U.S. jobs report, he said. With the dollar potentially overstretched at current levels, "it may be a good time to take profit on euro shorts," Strauss said. Euro-dollar closed at $1.3735, on the low side of a $1.3729 to $1.3903 range. The chart of the euro looks strikingly similar to the charts of gold, the CRB index, Aussie, and select other instruments. The key downturn in the euro came after the January 20 close below its 200-day moving average. Once the pair started falling, it could not stop, traders observed. In contrast, gold, closing at $1064.25 Thursday and off over $60 from Wednesday's peak at $1124.45, was still well above its 200-day, found at $1020.60 Similarly, the CRB index, closing at 263.67, held above its 200-day at 260.55 and Aussie, closing at $0.8640, was still above its 200-day at $0.8570. Traders doubted that Friday's jobs report will be able to shake the market out of its doldrums. The median estimate in a Market News International survey of economists looks for non-farm payrolls to be flat in January. Estimates range from -40,000 to +75,000. The unemployment rate is expected to rise by 0.1% to 10.1%. Estimates there range from 9.9% to 10.1%. "I do believe we may be leaning towards a poor result," said one U.S. trader. "The only thing that would make tomorrow worse would be that snowstorm arriving early," he said. Heavy snowstorms are expected late Friday in Northern Virginia, Maryland, Delaware, south eastern Pennsylvania and south Jersey. Washington and Baltimore may see over a foot of snow by Saturday night, and some locations around the northern Chesapeake Bay and Delaware Bay may see more than two feet, TheWeatherChannel said. ** Market News International New York Newsroom: 212-669-6430 ** [TOPICS: MNEF01] 2/4/2010 4:27:00 PM