Some would call it paranoia, some an overreaction, but all would agree that financial markets are in a heightened state of anxiety. Paradoxically, one cause of the nervousness is low and negative interest rates. Until recently they were seen as a positive, stimulating appetite for "risky" assets. Now, they are perceived as a sign of central banks' impotence and investors are running scared.

For a second week the Japanese yen was the biggest beneficiary of the turbulence and this time the euro took second place, adding one US cent and strengthening by two cents against sterling. The euro's status as a safe haven currency outweighed some fairly ropey economic data from Germany. Factory orders were down by a monthly -0.7%, industrial production fell -1.2% and both imports and exports declined by -1.6% in December. The only pan-Euroland ecostat was for investor confidence which, unsurprisingly, softened by three and a half points to 6.0.