>> stocks and u.s. equity futures decline in asian trading as global markets react to friday's terror attacks in paris. isis, takes the fight to launching airstrikes in syria. european police hunt a belgian-born suspect. return to recession. gdpn's third-quarter contracts more than expected. what is next for abenomics. a warm welcome to the program.

i am anna edwards at bloomberg's european headquarters in london. guy: i am guy johnson in paris. the city is still coming to terms with what happened friday night. the political, security, and economic implications of the event, still not fully understood. we have a team of reporters standing by around the world to try to understand what happened and what will happen next. us next fromins hong kong. he is there with the latest market reactions. bataclanols is at the theater in paris looking at what comes next in the security story. ryan chilcote is at the g20 where world leaders have been reacting. we are going to tel aviv where elliott gotkine will deal with some of the security implications for the region. before we get to our reporters,

let me bring you up to speed with the latest events as we understand them from around the world as we react to this story. as anna was saying, french warplanes have been striking targets in northern syria in the city of raqqa. french officials say friday's attacks in paris were ordered from syria. the islamic state says the operation was payback for france 's military interventions in the middle east. brussels is the early focus of investigations as police say two of the attackers had links with the city. two rental cars from belgium were used in the attacks, and seven people have been detained in connection with the investigation. -- anhunt continues for manhunt continues for a 20 60 -- 26-year-oldan

brussels-born man. president obama and putin talked one-on-one for more than half an hour in the country of the g20. aides say syria was the main subject. german chancellor angela merkel says the refugees fleeing the conflict in syria must not be blamed for what has happened in paris. plenty of things still to be dealt with as we try to understand what happens next in terms of the manhunt we've been talking about and the economic implications and security implications and political implications, all of which will be dominated by what has happened in the city. let's find out how the markets have been reacting in asia. let's go to zeb eckert. good morning. we are seeing a selloff across the asia-pacific, a six-week low on the msci benchmark index come and this reflects the new

uncertainty, the new geopolitical risk that has been introduced. you will see red across the screen. while the markets in the asia-pacific trading lower. we see the hang seng, down 1.7%. the shanghai composite off its lows, some buying lifting that market, but elsewhere across the eastn, southwest -- south asia is down. check out the philippines, 2.5% down as leaders prepare to meet. the nikkei 225 has been lower today with exporters leading the way down. that is because the yen has been rallying. when we have these times of uncertainty, investors go into safe havens. dna, by the way, down about 8%. let's tell you how this terror incident is affecting investor sentiment across the asset classes and across sectors today.

take a look at what is happening in the airline and travel space. this should give you a sense of how significant this is on psychology. airlines are among the biggest movers to the downside, along with travel agencies. as a group, they are down about 1.4%, airlines leading the way. taiwan recommends to citizens that they stay away from paris in the wake of these attacks. china airlines, down on the session, and china southern was one of the big movers as well. let's check in on the commodity markets and tell you how those are moving. 122.50, butding at still, the yen advancing on this safe haven play. intermediate, $41 a barrel, and the london brent benchmark looks like this, $44.99, and gold

advancing as investors seek safety wherever they can. it is a global market reaction to these terrible events. guy: thank you very much indeed. global leaders have been speaking about the events on friday night, and understandably, they've been condemning what happened here. >> france is strong, and even if it can get hurt, it always stands up again, and nothing will be able to hit it, even though grief is all around us. friends is solid. friends is active. france is brave, and it will triumph over barbarism. >> we, your german friends, we feel so close to you. we cry with you. we will fight with you against the ones who did something so income perhaps a ball. why thoughts go out to the more than 120 people whose lives were

taken and to their friends and relatives. germany feels with you in your pain and grief. >> we stand prepared and ready to provide whatever assistance that the government and people of france need to respond. .rance is our oldest ally the french people have stood shoulder to shoulder with the united states time and again, and we want to be very clear that we stand together with them in the fight against terrorism and extremism. guy: hans nichols is outside the theatre, the scene of the worst violence friday night in paris. the city waking up, trying to get back to business, but nevertheless, deeply scarred by what happened here. hans: i think that is one way to describe the city, scarred yet resilient. there are many things about this story that are unclear. what is clear is that there is a nexus between france's

involvement in syria and the attacks that happened here. night that these attacks were directed from syria. the difficult part and scary part for french officials is many of the allegedly attackers are potentially homegrown. we know two or three were born in belgium or france. that gives you a sense they might know the local culture. they have a sense for these cities. even if this was designed in belgium, it was carried out in paris. it's a mixture of defiance, but also, life goes on. in this district, the cafes were fall last night. last night at the palace de republique, it was clear there was a showing of good will. people were walking around, offering free hogs, but late last night, firecrackers were set off. it seemed like a stampede. it gives you an idea of how on edge it is as the manhunt continues. there is an eighth suspect.

we don't know if the sus -- if the number is limited to eight, but we do know french police issued a european-wide manhunt for salah abdeslam, a 26-year-old belgian national. focus, as well as piecing together how and where any of the french nationals or belgian-born come if they spent time in syria gaining training. the investigation and the hunt continues. hans nichols outside the heatre, thank you much indeed. let's turn to the g20 taking place in turkey. leaders gather to talk about a multitude of subjects, but what happened in paris, dominating events. ryan chilcote is there. what can we expect today? to thef they stick agenda, today will be different from yesterday. they will discuss things like

boosting growth, cutting unemployment, how to regulate the banks, maybe even tackle climate control. different.as very the leaders dinner, for example, the official agenda was paris, terrorism, syria, the migration crisis, just like most of the day, the final dinner consumed with conversation about the events in paris and its consequences for security in europe. distraction? any leaders say the economic , they were really just your to rubberstamp them. it's a question i put to canada's prime minister. here is what he had to say. >> i think the events in paris are on everyone's mind. it's how we continue to work towards greater understanding and cooperation across the g 20 nations. it's going to be an important

discussion to continue to have. ryan: there were a few examples of that cooperation yesterday. leaders agree to work together to try to cut the amount of funding for terrorism that goes across borders. that has been a sticky issue. in addition, they worked together -- this will be in the communique -- to tighten borders. they even discussed things like how they can work together to make the world a more equitable place. the turkish president, the host of the g20 leaders, talking about why many of the lead -- the reasons we are seeing the terrorism we are seeing is because there isn't enough hope economically speaking. finally, the most concrete and obvious example of this newfound cooperation on the back of those attacks was a meeting between the russian and american presidents. they haven't met since the general assembly, and yet they set on yesterday on the sidelines of the g20 and discussed syria for almost 35

minutes, the u.s. saying that russia and their conversation was a constructive one, a huge difference from how you might characterize the russian-american relationship over the last couple months, the two leaders agreeing on a plan to have the u.n. come in and media talks between the regime in syria and the opposition forces, as well as get ready for some kind of possible transition to a peaceful syria. this is stuff that was almost impossible to imagine going into this. remember how the united states complained bitterly about president putin blind-siding the obama administration after their last meeting with his military intervention into syria, and yesterday, you heard pragmatic, constructive words from the u.s. lots of differences remain not just between the united states and russia, but also saudi arabia, turkey, iran. they are all here, and they've been discussing syria and this greater issue. as many people were telling me,

this is a step forward, despite the fact you might've thought they were distracted. back to you. indeed,nk you very much ryan chilcote reporting from the g20. let's go to our middle east editor, elliott gotkine. what does this mean regionally, politically? how does it feed back into the middle east. give us a market reaction, as well. what are they telling us about how the region feels about what happened in paris? elliott: from a geopolitical perspective, i suppose the most obvious impact has been france ramping up airstrikes inside of syria. 10 fighter jets, launching strikes on the islamic state stronghold in northern syria sunday evening. one can assume there will be more airstrikes from france and other european union countries. not only a founder member of the union but also a nato member was

attacked. more broadly speaking, there's a lot of sympathy, a lot of solidarity with the french and sorrow for what has happened. you had landmarks across the region being lit up in the tricolor to show solidarity with the french. i think there is a slight sense of hurt, as well, in some parts of the middle east. , when the and israel attacks happened in paris, the world was up in arms, but days before, there was a double suicide bombing in lebanon, and the world barely batted an eyelid. francet what happened in is in terrible and shouldn't be condemned and solidarity shown with the french, but there should be equal standards when attacks like the one in lebanon or in saudi arabia and israel also take place. on the markets, there are a number of things going on.

a recoil, concerns the global economy will be impacted if there's an escalation of the conflict in syria. that took a big hit on the markets in the gulf. we had saudi arabia down by 3%, dubai down by 3%, egypt taking a big hit. the other thing going on was sale.s i should note finally that there is a large french jewish community in israel, more than 20,000 strong. the immigration from france to israel increased in the wake of the "charlie hebdo" attacks. they are expecting 7000 french jews to move to israel this year, and one can assume that in the wake of the attacks in paris friday, the figure may even go higher. guy: thank you very much indeed. our middle east editor, elliott gotkine, on the reaction in the region to what happened in paris.

an hour, it's going to be a busy day. we are going to continue to monitor the manhunt for salah abdeslam, that story front and center. at 4:00 p.m. today, a rare event in paris. the president francois hollande will be speaking to the congress, affectively the two houses. he is normally banned from doing so, but exceptional times lead to exceptional events, and we are watching the political fallout in france as the day develops. back to you. anna: thank you very much. we will be back with guy for regular updates throughout our programming. let's put a broader context around the news we have heard from france and the middle east. we're joined by the managing director at redefining, international think tank specializing in economic policy. thank you for joining us. what lens are you looking at this through? we've seen the market reaction. we've seen the geopolitical

reaction with the french intensification of bombing in syria. how are you digesting what we saw on friday? >> i think that the main long-term effect is going to be on the politics and political landscape, not just in europe but also geopolitically. the conclusion is that things which have been very difficult, given the fragmented response of european politicians, first to the euro crisis and then what happened in ukraine and elsewhere, this might become more fragmented, and the initial reactions from the new polish european minister who basically said that the paris attack cemented that, for all intents and purposes, the resettlement of refugees that had been agreed to by the european union and commission was essentially off the table. you have had other far right groups come all the way from

marine le pen to the belgian-flemish far right to the dutch far right especially -- essentially using this to make political capital. anna: we have heard angela merkel not backtracking, expressing sympathy, of course, but sticking to her policy. jean-claude juncker, also. sony: that is really admirable. merkel, coming from being a demonized figure in the euro crisis, as emerged as a leader with a moral compass in europe, but she is under increasing domestic pressure, particularly from the csu. csu hader of the essentially stayed away from making political capital after the "charlie hebdo" attacks. he came out and said the refugee policy germany had had to change. there are huge domestic pressure is on misses merkel. this was one of the reasons why

france has been apps from the european debate on migration, because marine le pen was seen to be rising, and france has not affected european policy. now mr. hollande can no longer shy away from this. anything he says that has to do with more liberal, open policies, continuing what europe has been offering, a safe haven, is going to cost him domestic political capital. anna: are you surprised to see the french acting so quickly to take the fight to is in a more intensified form overnight with the launch of bombing activity? sony: i am surprised and perhaps a bit disappointed. the biggest danger from an attack like this is a knee-jerk reaction. what we have seen in the past come all the way from the u.s. going in with the iraq war, etc., is a tit-for-tat counter escalation going on.

yesterday, there were bombings on isis. some of the bombs had fairly ,hildish statements scrawled on "this is for paris," and so on. we need a measured response. perhaps it is the right thing to do, but if it is seen to demonstrate to citizens, we are just doing something, perhaps we haven't had enough time to absorb what happened. almost assuredly, the attacks in paris had been planned for a long time. they had little to do with what france is doing yesterday and tomorrow and the day before in iraq and syria. i think it's time to sit back and reflect and not have a knee-jerk reaction. there's also a unique opportunity for the attacks to unite politically, and we've seen some of that in the g20. anna: indeed, and the conversations in vienna. thank you very much.

nobody can predict how markets will react to terrorist activity , of course, but history shows movements are often sharp but short-lived. nejra cehic has been taking a closer look. sharp and short-lived is exactly how we can describe some of the market reactions to pass the tax. let me take you back to september 11, 2001. after that attack, we saw the s&p 500 fall 12% in five days, the most since the aftermath of the 1987 crash, but u.s. stocks recover their losses by the next month by october 11. looking at barley, october through thousand two -- looking 2002, hitting a low, but by the end of the year,

it ended up a .4%. if we look at madrid march 2004 come on the day of the bombings, the ibex 35 index fell the most since the previous november. in the next three days, it reached its lowest level of the year, but it rebounded by the beginning of april. finally, looking at the bombings in london in 2005, the ftse 100 fell the most in a year, but it recovered its losses the next day. the pound recovered its losses by august. what we can see at the moment in reaction to the attacks in paris is perhaps a more muted reaction to what we've seen in the past. investors have had the weekend to digest everything that has happened, although for that has horror that all the has happened. the question is, how will investors be able to decipher how much of the market reaction is linked to the terror attacks in paris and how much is already

down to the concerns about the global slowdown and concerns about china, and also, of course, concern about the fed? anna: thank you very much, nejra cehic, putting the reaction in some broader context. let's get back to sunny -- son kapoor. perhaps useful to reflect on the fact that u.s. equity markets were considerably weaker on friday even before any of this happened, and u.s. equity markets closed down by more than 1%. the global markets had plenty of things to worry about. the global economy had plenty to worry about before we edited renewed concerns about terrorism. does this have a long tail, this event, in terms of its affect on the fed and the global economy, or is it a tragic event we have to react to now and move on from? sony: there are two parts to it. one is the immediate market

reaction. there is a flight to safety, which is exactly what we are seeing, but that usually come as your analysts demonstrated, dissipates. the long tail might come from the political response to this. what effect this has on policy in the middle east, for example, particularly the shia-sunni rivalry that is going on between saudi arabia and iran, being played out as a proxy war all the way from yemen to syria to baghdad, is going to be a huge issue. there is another strong link between the economy and security , and that is an alarming report from the imf that came out a few months back, that said at present, oil prices, and at present, fiscal policy, it continues, saudi arabia is going to run out of money and savings in five years time, and that is a politically and economically dangerous thing given the young demographic, given the

radicalization that exists, and given the millions of unemployable young men. anna: as ryan was saying from the g20 in turkey, the g20 is concerned about the on equitable distribution of wealth in the middle east and north africa -- inequitable distribution of wealth in the middle east and north africa. is there room for hope at all? war: i mean, the syria essentially started four years back, and what has been shocking is a completely inadequate response from the world. more than 300,000 people have been killed. millions have been displaced. it's only this year that suddenly because of the number of refugees coming to the european borders, or seems to be a perk up in political interest to do something, and i think to the extent the paris attacks can catalyze a united response, particularly bringing russia to

the table -- turkey, because of beingfugee flow, despite ostracized, has been brought back into the mainstream discussion with the deal on refugees, and if you get the regional players, the fact that we have a deal with iran means that they have a seat around the table. if it is possible to have a grand bargain to finally tackle -- not just contain but actually win back some of the territory that has been lost to is and offer hope to citizens there and show them that it is possible to have a brighter future and focus on the region, and e century tap into the hopes that were talked about in the arab spring, which were disappointed. anna: sony, thank you so much. 5:26 here in london. 6:26 if you're watching in paris. up next, we will be back in

paris for more on the investigation into the attacks on the french capital, and we will bring you market reaction. we have seen that flight to perceived safe havens taking place in the asian trading session. we'll have more when we come back in a moment. ♪

anna: welcome back. you are watching a special program from our london headquarters. it is half past 5:00 in london. let's go to paris now where guy johnson is standing by. guy: thank you very much indeed. let me bring you up to speed with the latest developments surrounding the paris attacks. french warplanes have been active in northern syria, bombing raids taking place overnight in the northern city of raqqa