Race for nuclear bomb may worry markets

NEW YORK (Reuters) - The race to acquire nuclear bombs ranks among the biggest geopolitical threats that could unnerve international markets in the coming year, a top fund manager said on Tuesday.

"The nightmare scenario boils down to stupidity and people getting emotional about things," Reiner Triltsch, a managing director at United States Trust Co. who oversees the firm's international funds, told the Reuters Investment Outlook Summit in New York.

Casting his eye around the world, Triltsch said North Korean leader Kim Jong-il's experiments with nuclear weapons at the expense of sounder economic policies "are extremely dangerous."

While a fresh round of six-party talks on ending North Korea's nuclear ambitions may take place in the next 10 days or so, according to a State Department official, Triltsch said that once the "cat is out of the bag" it is hard to go back.

Similarly, financial markets may become increasingly nervous about Iran's nuclear ambitions. "One day they will have the bomb," Triltsch said, adding that it is becoming ever more difficult to exclude ambitious countries from the once exclusive club of nations that has the ability to explode a nuclear bomb.

And while these kinds of threats are not new this year, Triltsch said they make take on new meaning for the markets because people may soon realize that recent strong growth cannot continue on forever.

"People worry that things can't be good forever and that's why they are looking at potential geopolitical risk more strongly at this time."