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Melissa Brown Bailey McCann, Opalesque New York:

Market headwinds including volatile currency returns, continued European instability and rising correlations have put a damper on the overall short term risk outlook worldwide according to new data from global research and analytics firm Axioma. The firm released its quarterly global risk review today, highlighting major trends in risk throughout markets and asset classes.

Compared against the data from last quarter which was surprisingly optimistic, Q2 seems to have given back many of the early positive indicators. Global risk overall increased during the second quarter, especially near the end. China was the one standout of generally low risk, the short term (1-3 month) risk horizon stayed relatively stable relative to other markets.

According to report data, Europe continues to decouple. Risk in the FTSE Eurobloc countries is on the upswing and the PIIGS (Portugal, Italy, Ireland, Greece and Spain) especially are showing increased risk over the short and medium term. "We saw a significant difference in risk between Greece, Italy and Spain block relative to other countries, even within Europe," explains Melissa Brown, lead author and Senior Director of Applied Research, Axioma, in an interview with Opalesque.

"Risk in Greece started out higher and has shot up more precipitously during the quarter," she says, suggesting that the full extent of the Greek debt crisis may not yet be fully priced in. "By......................

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