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IF THE sudden fall in China’s sharemarket sent a shock through the developed world this week, it was not before time. The centre of gravity in the economic world has shifted and the rich countries no longer dominate the world economy.

Have you heard of the 80/20 rule? Someone noticed a long time ago that it’s common for about 20 per cent of a population to account for about 80 per cent of some variable.

Many people believe the 80/20 rule applies to the distribution of the world’s income and wealth. The 20 per cent of the world’s population living in the rich countries account for about 80 per cent of the world’s income which, of course, leaves the 80 per cent of the world’s population in the developing countries with just 20 per cent of the income.

In such a world, the rich economies call the shots, with the richest economy’s sharemarket Wall Street setting the lead for all the other sharemarkets.

If that’s how you believe the world works, prepare to change your mind. As The Economist magazine noted in a special survey last year, the 85 per cent of the world’s people living in the developing countries now account not for 20 per cent of gross world product but more than half. (This is when you measure the value of production using “purchasing power parity”, as you should because it takes into account the lower prices in poor countries.)

The now not-so-poor countries consume more than half the world’s energy and accounted for 80 per cent of the growth in oil consumption over the past five years.

Their share of world exports is more than 40 per cent, double what it was in 1970. And get this: the developing countries now hold 70 per cent of the world’s foreign exchange reserves.

If you think this remarkable story is all down to China with maybe India thrown in for good measure you’re not quite right. For a start, you’ve left out the two other big “emerging” economies, Brazil and Russia. But, in any case, the BRICs Brazil, Russia, India and China account for only 40 per cent of the emerging world’s combined gross domestic product, according to The Economist.

And in 2005, China and India made up less than a quarter of the total increase in the emerging economies’ production of goods and services.

How has the emerging economies’ share of gross world product become so much bigger? By them growing faster than the rich countries.

In the first five years of this decade, the emerging world grew at nearly three times the rich world’s rate almost 7 per cent a year versus 2.3 per cent a year.

If we switch from straight GDP growth to GDP growth per person, the five years saw it growing by 5.6 per cent a year in the emerging economies compared with 1.9 per cent a year in the developed countries.

When you put the developing and developed countries together, you find gross world product per person grew by

3.2 per cent a year over the five years. The Economist reminds us that, whereas when America and Britain were industrialising in the 19th century it took them about 50 years to double real income per person, these days China doubles every nine years.

What most people don’t yet know is that the growth of the emerging economies is having a significant influence on the performance of the rich economies.

“Emerging economies are driving global growth and having a big impact on developed countries’ inflation, interest rates, wages and profits,” The Economist says.

The growth in global production of manufactures and some services by the cheap-labour countries is putting downward pressure on the world price of many items.

This is keeping inflation rates low, and low inflation means low nominal interest rates. The export-led growth of the emerging economies is adding about 1.5 billion people to the global labour force, doubling its size. This has boosted the return to capital, fattening company profits and richly rewarding executives.

But in many rich countries the median wage of workers has barely changed in real terms. Add to this the outsourcing of jobs to the developing world and you have a recipe for conflict over who in the rich countries wins and loses from globalisation.

As the newcomers become more integrated into the global economy and their incomes start catching up with the rich countries, The Economist predicts they’ll provide the biggest boost to the world economy since the industrial revolution.

Watch today’s Markets Desk video.

Stocks tacked on more gains Wednesday, despite a couple of weaker-than-expected economic reports (see 11:00 am update).

According to preliminary data, the Nasdaq rose 0.3% and extended its winning streak to five. The S&P 500 crawled up 0.1%, the Dow 0.2%. Nasdaq volume fell about 13% and NYSE volume dropped 10%.

DXP Enterprises () rallied 1.75 to 42.24 on heavy volume as it continued to recover from a recent pullback. The industrial pump maker’s Accumulation/Distribution Rating has improved to B from D a couple of sessions ago. DXP was still 15% above a 36.71 buy point from a cup pattern.

THQ Inc. () rallied 1.94, or 6%, to an all-time high of 36.12 on nearly double its average trade. Late last month, A.G. Edwards started coverage of the video game publisher with a buy rating. THQ’s full-year 2007 profit is expected to surge 126%.

Arcelor Mittal () cleared a 54.45 buy point of a flat base. Shares jumped 1.44 to 55.04 on a 62% increase in volume. On Monday, the Luxembourg-based steel maker announced a $590 million share buy-back program. The stock is still within buying range up to 57.17 (the old high 54.35 plus 0.10 plus 5%).

On the downside, Monster Worldwide () gapped below its 200-day moving average and plunged 6.41, or 13%, to 42.10 on monster trade after it warned of lower sales in the first quarter. The online provider of employment services now expects Q1 sales between $328 million and $329 million. Its previous forecast was $330 million to $338 million. Analysts expected $333.1 million.

3:00 p.m. ET update: Indexes Pull Back In Late Trade

Stocks pared some gains going into the final hour of Wednesday’s session. The Nasdaq continued to lead the pack and was on pace for its fifth straight advance.

As of 2:40 p.m. ET, The Nasdaq added 0.3%. The S&P 500 was mostly unchanged. Nasdaq volume was tracking 12% lower. NYSE volume was tracking 15% lower.

Alternative energy, chip equipment, and gold/silver groups held on to gains. Transportation, staffing, and machinery groups were among the worst performers.

Mechel () erased early losses and picked up 2 points, or 6%, to 35.35, clearing a small consolidation. Last week, the Russian steel maker won an auction to buy a majority stake in Southern Kuzbass Power Plant.

Gildan Activewear () was off earlier highs, but still gained 1.72 of 62.02. Late last month, the clothing maker said it would close facilities in New York, Canada, and Mexico. The firm’s sales growth has accelerated for four straight quarters.

Standard Microsystems () added 0.80 to 32.65, its third straight heavy-volume advance. The maker of semiconductor solutions was nearing a 33.10 buy point in a cup-shaped pattern.

On the downside, U.S. Global Investors () turned tail after nearing its December high. Shares fell 1.28 to 30.59. The asset manager has surged since bouncing off its 40-week moving average last month.

1:00 p.m. ET update: Stocks Firm Up In Midday Trade

The major stock indexes turned higher midday Wednesday after a directionless morning.

As of 12:45 p.m. ET, The Nasdaq climbed 0.3% and the S&P 500 added 0.1%. Nasdaq volume was tracking 8% lower. NYSE volume was tracking 14% lower.

Chip equipment, alternative energy and gold/silver groups were among the top performers. Transportation, machinery and staffing groups headed lower.

Solar stocks heated up. SunPower () jumped 2.66, or 5%, to 49.80, clearing a short consolidation. The San Jose-based maker of solar power products boasts 10 straight quarters of triple-digit sales growth. Last week, Banc of America Securities started coverage with a buy rating.

Trina Solar () rallied 2.12 to 49.32 as it neared its all-time high. The China-based firm came public in December at 16 a share.

Perficient () bolted through a 20.95 buy point of a cup-with-handle pattern. Shares tacked on 1.30, or 6%, to 21.99. The IT consulting firm is featured in today’s Daily Stock Analysis.

Jones Soda () popped 1.22, or 6%, to an all-time high of 25.06. The beverage firm was on pace for its third straight heavy-volume advance. Jones has surged nearly 110% this year, trouncing its group’s performance of 5%.

Heavy-volume decliners included Ameristar Casinos (). It dropped 1.94, or 6%, to 30.53 on news that it would buy a unit of Resorts International Holdings LLC for $675 million in cash.

11:00 a.m. ET update: Stocks Little Changed In Early Trade

Stocks were narrowly mixed early Wednesday after Tuesday’s solid gains.

As of 10:45 a.m. ET, The Nasdaq rose 0.1%, while the S&P 500 was flat. Nasdaq volume was tracking 16% lower. NYSE volume was tracking 20% lower.

In economic news, the ISM services index fell to 52.4 in March from February’s 54.3. Economists expected a rise to 54.7. The prices paid component climbed to 63.3 from 53.8 as pricing pressure mounted.

Factory orders rose 1% in February, bouncing back from January’s 5.7% dive. But that fell shy of economists’ expectations of a 1.9% gain.

Acuity Brands () gapped above its 50-day moving average and rallied 3.65, or 7%, to 58.70 after it delivered earnings above views. Before the open, the maker of lighting and chemical products said fiscal second-quarter profit jumped 67% to 62 cents a share, beating views by 13 cents. The stock is shaping a new base after its early February highs.

Robbins & Myers () regained its 50-day line as shares gapped up and vaulted 5.22, or 14%, to 43.38. Late Tuesday, the maker of equipment systems for the energy, pharmaceutical, and industrial markets reported a 188% surge in fiscal Q2 earnings, but that was a penny below views. The company raised its full-year profit outlook to between $2.20 and $2.40 a share, from $2.10 to $2.30. Consensus estimates are for $2.30 a share.

Comtech Group () cleared an 18.19 buy point of a cup-with-handle pattern. It added 0.69 to 18.56. Volume was tracking about three times average.

A couple chip equipment makers scored nice gains after Stifel Nicolaus upgraded the sector to overweight from neutral. Varian Semiconductor Equipment Associates () gapped up 1.85 to a record high of 56.95 and MEMC Electronic Materials () jumped 2.62 to 62.34.

On the downside, Layne Christensen () pulled back 1.86 to 37.94 after Oppenheimer cut the stock to neutral from buy. On Tuesday, Layne climbed nearly 8% after its Q4 earnings shot up 110% and trounced views.

NEW YORK (AP) - The traditional excuse for disappointing retail sales in February — cold weather — may not be enough to explain sluggish results posted by U.S. merchants from Gap Inc. to AnnTaylor Corp. Unappealing fashions may also have something to do with it.

As merchants reported their sales results Thursday, the disappointments went beyond the usual stragglers like Gap and included stores like teen stalwart Abercrombie & Fitch Co. Bebe Stores Inc. reported its first monthly decline in 46 months, blaming the weakness on not having enough trendy tops.

Wal-Mart Stores Inc., which reported continuing problems with its apparel offerings, had sales below analysts’ estimates.

High-end stores like Nordstrom Inc. were among the bright spots, but analysts say stores catering to the middle- to lower-income shopper might suffer more as the economy continues to slow.

“February can be a treacherous month from a weather standpoint,” said Michael C. Appel, managing director of Quest Turnaround Advisors LLC. But the big problem, he said, was the merchandise.

Marshal Cohen, chief analyst at NPD Group Inc., a Port Washington, N.Y.-based market research company, agreed, saying, “The weather is a good excuse, but the truth is weather is one direction. Another direction is merchandise.”

Cohen noted that retailers’ biggest mistake is that stores are not in step with customers’ penchant for buying clothing to be worn immediately; merchants display the new merchandise well ahead of when the season begins. The late arrival of winter weather helped clear out cold weather items and boosted sales in January. But that meant there was little for shoppers to buy last month, as they had little interest in spring wear.

Another problem, Cohen said, is that fashion has become “too commoditized.” This season’s fashions — 1960s mod looks like baby doll tops and mini dresses in geometric patterns — are being offered everywhere at every price point, he noted. Not to mention that some experts doubt whether these looks will have broad-base appeal.

Retailers also are grappling with a slowing economy, particularly a weakening housing market, that could challenge shoppers in the months ahead. Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass., said defaults and delinquencies in the mortgage industry — coupled with the decline of mortgage equity withdrawls that give consumers extra cash — could curtail spending.

All these factors combined helped depress the February sales tally at The International Council of Shopping Centers-UBS sales, which rose a modest 2.5 percent, the low end of the projected range of 2.5 percent to 3.0 percent. The results are based on sales at stores open at least a year, known as same-store sales and considered a good gauge of a retailer’s health.

While February is one of the least important months of a retailer’s calendar, merchants do hope to get some idea of which spring fashion trends are resonating with shoppers.

Wal-Mart, dragged down by weakness at its namesake discount stores, reported a slim 0.9 percent gain in same-store sales, below the 1.5 percent estimate from Wall Street analysts surveyed by Thomson Financial.

The world’s largest retailer blamed the sales shortfall on the continued weakness in the home and apparel business. Wal-Mart said those two businesses should remain soft through the spring.

Rival Target Corp. enjoyed a 5.7 percent increase in same-store sales,above the 5.1 percent estimate.

Limited Brands Inc. had a 3 percent increase in same-store sales, below the 4 percent estimate. The company had warned that bad weather affected Valentine’s Day sales at its Victoria’s Secret and Bath & Body Works chains.

Bebe had a 2.2 percent decline in same-store sales, below the estimate for a 2.2 percent gain. “I continue to believe we will see a more appropriate assortment in March with a sexier feeling to our overall assortment,” said CEO Greg Scott.

Chico’s, whose sales stalled in recent months, posted a 4.3 percent decline in same-store sales, worse than the 1.4 percent estimate. The company, which caters to boomers, is refreshening its assortments.

AnnTaylor, dragged down by sluggish sales at its lower-price Loft division, struggled with a 2.9 percent decline in same-store sales,though better than the 4.5 percent analysts expected. The company said it is working to refresh Loft’s merchandise with updated classics and wear-now fashions.

Gap, whose troubles led to the departure of its CEO in January, had a 4 percent decline in same-store sales, better than the 4.8 percent decline analysts estimated.

Abercrombie & Fitch posted a 6 percent same-store sales drop, worse than the 2.3 percent analysts expected.

Among department stores, Federated Department Stores — which acquired May Department Stores Co. in 2005 and is transforming its Macy’s brand into a national department store chain — reported a 1.2 percent same-store sales gain, below the 2.8 percent estimate.

“Sales in February were impacted by a series of snow and ice storms in the eastern half of the U.S., including those during the important selling days immediately preceding Valentine’s Day,” said Terry J. Lundgren, chairman, president and CEO in a statement.

Penney had a 0.2 percent decline in same-store sales in its department store business, somewhat better than the 0.5 percent decline analysts expected. The company said sales improved at the end of last month, particularly in areas where the weather turned warm.

Meanwhile, high-end stores continued to shine. Nordstrom reported a 9.1 percent increase in same-store sales in February, beating the 5.7 percent estimate.

On Wednesday, Saks Inc., which operates Saks Fifth Avenue, said its same-store sales surged 24.7 percent. Analysts expected 6.4 percent.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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(Updates with analyst comments)

LONDON (AFX) - Consumer confidence fell slightly in February as Britons became more pessimistic about the UK’s general economic situation, a leading pollster found today.

In its monthly survey, GfK/NOP said its main headline consumer confidence index fell one point to -8 from -7 in January, whereas analysts polled by AFX News were not expecting any change in the index.

Although three out of the five subindices within the indicator fell, UK consumers found some comfort in the fact that the Bank of England did not raise rates in February, said Carol Bernasconi, divisional director at GfK/NOP.

“This month consumers are much more optimistic about their personal finances compared with the past year. This is probably a result of interest rates remaining the same this month despite rumours that they would increase again,” she said.

However, past rate hikes are being felt, as “again for the second month in a row the ‘now is a good time to save index’ has recorded an increase, indicating that people are being cautious in the current economic climate,” Bernasconi said.

The major purchases measure slumped 6 points to +4, while the ‘now is a good time to save’ index rose one point to +35.

“The current softness of consumer confidence, following news that retail sales fell back sharply in January, reinforces doubts about consumer spending’s ability to sustain the robust level seen in the fourth quarter,” said Howard Archer at Global Insight.

He expects benign wage gains as well as rising interest rates and debt levels to keep consumer spending moderate over coming months.

The GfK/NOP index showed that Britons’ views on the general economic situation of the country during the last 12 months have seen a drop of two points, down to -33. There was also a small drop in expectations for the general economic situation during the next 12 months, with the index falling by one point to -21.

The rises in the subindices came in personal household finance views. The index measuring changes in personal household finances rose three points, leaving it at 0, while the index for household finances over the next year rose one point to a score of +10.

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Watch today’s Markets Desk video.

Stocks recovered from a brief dip, but were below their best levels of the morning.

As of 1 p.m. Eastern time, the Nasdaq, New York composite and S&P 500 were each up 0.2%, and the Dow 0.1%. Nasdaq volume was tracking 6% higher, NYSE volume 2% lower.

Education, Internet and shoe manufacturers were among the groups leading the market.

Universal Electronics () gapped up and lodged itself 2.08 higher at 33.32 in frantic trade. The stock broke out of a base earlier this week and is now extended from its 29.99 buy point.

The maker of pre-programmed universal remotes for consumer electronics reported 31 cents a share in its first quarter. That’s 104% over last year’s bottom line and 4 cents over views. The company won an upgrade from RBC Capital Markets.

Priceline.com () leapt 2.90 to 60.40 on five times its usual trade after the online travel services company upped its Q1 guidance to 43 cents a share. That’s up from an earlier estimate of between 22 cents and 28 cents. Analysts expected, on average, 28 cents, according to a Thomson Financial poll. Priceline had soared as high as 63.18 in the first hour of trading, but cooled off since then.

Celgene () tacked on 1.70 to 63.31, a new high, in slightly above-average trade. The maker of treatments for cancer and immune-inflammatory diseases was hit early Thursday by a poorly received earnings report. The stock fell as low as 59.37 before closing at 61.61, off just 1.25 for the day. That action looked much like an upside reversal. Friday’s action looks like a follow-through to that recovery.

Irish airline Ryanair (), which got thrown for a 6% loss Thursday, fell another 1.82 to 42.60 in heavy trade. The European Commission put off until July 4 its deadline to rule on Ryanair’s $1.9 billion hostile takeover bid for rival Irish carrier Aer Lingus.

BigBand Networks (), which came public in March at 13, plunged 2.56 to 18.87 on nearly five times its average volume for this time of day. BigBand makes the network platforms that enable audio and video signals to transmit to various devices. This is how music and your favorite TV shows end up on your computer and cell phone.

The company beat Q1 earnings estimates but gave Q2 and full year sales guidance below Street expectations.

11 a.m. ET update: Merger News Fuel Stocks In Early Trade

The major indexes opened higher Friday after merger news eclipsed a mixed jobs report.

At 10:40 a.m. ET, the New York composite led with a 0.5% gain. The S&P 500 headed further north of the 1500 mark, rising 0.4%. Meanwhile, the Nasdaq added 0.3%. Nasdaq volume was tracking 4% higher and NYSE volume was tracking 10% lower.

On the economic front, the economy added 88,000 jobs in April, below economists’ expectations of 100,000. Payrolls in March were revised up slightly to 180,000 from 177,000.

The unemployment rate ticked up to 4.5% as expected. Average hourly earnings rose 0.2%, shy of the expected 0.3%, easing fears of wage inflation.

Reuters Group () gapped up and rocketed 15.15, or 26%, to 74.07. The British media and financial data firm confirmed reports of takeover offers. Early this week, News Corp. () offered to buy Dow Jones () for $5 billion.

Yahoo () gapped above its 50-day line on monster trade. Shares surged 5.07, or 18% to 33.25. A published report said that Microsoft () has resumed its interest in the Internet search engine.

Elsewhere, Crocs () cleared a cup-shaped base. Shares gapped up and vaulted 10 points, or 18%, to a record high of 67.41 on brisk turnover. Late Thursday, the shoemaker delivered a 259% surge in Q1 profit, trouncing views. Sales jumped 217%. The company boosted its full-year earnings and sales outlook ahead of analysts’ estimates. It also announced a 2-for-1 split. Morgan Keegan lifted the stock to strong buy from buy.

Solar stocks were red hot after cooling off recently. First Solar () gapped up and jumped 7.30, or 13%, to 65.25. Late Thursday, the Arizona-based maker of solar modules reported first-quarter earnings of 7 cents a share, reversing a year-ago loss of 8 cents a share. Revenue soared 392%, the highest in 13 quarters. The stock recent found support at its 50-day moving average.

Trina Solar () gained 4.30 to 56.85 and SunPower () jumped 1.91 to 58.74.

On the downside, Jones Soda () gapped down and dropped 2.81, or 11%, to 22.40. Late Thursday, the company reported Q1 earnings of a penny a share, flat compared to a year ago and below views of 3 cents. Jones attributed the shortfall to rising costs. Sales rose 5% to $9.2 million, missing estimates of $13.7 million. Longbow cut the stock to neutral from buy.

Sears Holdings () gapped below its 50-day line, falling 7.72 to 180.60. Late Thursday, the department store operator said it expects first-quarter income between $1.30 and $1.30 a share vs. consensus estimates of $1.46 a share. The company said same-store sales in Q1 were down 4.7%.