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The massive earthquake and tsunami in Japan are estimated to have killed 10,000 people and left officials scrambling to avoid meltdowns at three nuclear reactors.

The disaster hit commodities markets hard on Friday, and brought on a flurry of short bets against Japanese stocks.

The effects on the U.S. market are harder to determine. The S&P 500 fell below its 50-day moving average last week and support appears to be waning, despite a rally on Friday.

In the short term, investors are likely to focus on the ramifications for energy companies, particularly nuclear power. Japanese officials said there may have been a partial meltdown at the No. 1 reactor of a nuclear plant in Fukushima.

"The disaster could prove to be a setback for nuclear power as an alternative energy source," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Whether or not we see a reaction in utilities and engineering and construction companies remains to be seen."

Ablin, however, did not foresee a notable reaction in the broader U.S. market.

Nuclear-powered countries may reexamine expansion efforts or expend more on safety and security at plants. President Barack Obama has been a supporter of an expanded nuclear energy program, but that will be called into question now.

In February, the White House asked for $36 billion in federal loan guarantees to help finance the building of nuclear power plants, as it did last year, which would double what the loan program already has in authority.

"Nuclear loses in the near term. Conventional oil, natural gas, and coal are the winners," David Kotok, chief investment officer at Cumberland Advisors in Sarasota, Florida, wrote in a Sunday commentary.

Nuclear energy stocks have received a boost following yearly budget proposals from President Obama. The Van Eck Market Vectors Nuclear Energy exchange-traded fund (NLR.P) hit a 52-week high on February 8, rising 7 percent in the two weeks after Obama's 2011 State of the Union address.

The quake triggered an increase in risk aversion, with nervous Japanese liquidating investments overseas and bringing capital back to yen-denominated assets.

The dollar fell 1.2 percent to 81.87 yen on Friday, while shares of the CurrencyShares Japanese Yen Trust (FXY.P) rose 1.3 percent to $120.62. The yen may come under pressure, however, if the reconstruction worsens the country's already-heavy debt burden.

OIL, MIDDLE EAST STILL WEIGH

Investors are also still grappling with political protests in the world's top oil exporter, Saudi Arabia.

That figure is nearly as much as the entire worldwide catastrophe loss to the global insurance industry in 2010, and could be the triggering event that forces higher prices in the insurance market after years of declines.

AIR said its loss estimate range was $14.5 billion to $34.6 billion. That was based on a range of 1.2 trillion yen to 2.8 trillion yen, converted at 81.85 yen to the dollar.

The firm cautioned the estimate was preliminary, and it has said its models do not factor in the effects of the tsunami that followed the earthquake, or any potential losses from nuclear damage.

AIR cautioned that in some cases, buildings will have been damaged by the 8.9-magnitude earthquake and then swept away by the flooding thereafter, making precise counting difficult.

There are also lingering questions about the cost of the clean-up and long-term monitoring following explosions and radiation leaks at the Fukushima nuclear reactors. Such reactors generally have insurance that excludes earthquake damage, and many Japanese homeowners have nuclear exclusions in their own policies.

That is likely to limit liability to the operator and the government and minimize impacts to the insurance industry itself.

HISTORICAL RECORD

At the upper end of the range, this temblor will go down by far as the costliest earthquake in modern history in terms of insured losses, surpassing the roughly $15 billion in losses of the 1994 Northridge earthquake in California.

Of all catastrophes since 1970, adjusted for inflation, it would rank as the second costliest behind Hurricane Katrina.

It may also be enough to stem years of price declines in the global property insurance and reinsurance markets, which are awash in excess capital following a lack of major hurricane disasters in recent times.

Going into this year, analysts and brokers said it would take a $50 billion event to stem the price declines in the market for just a year.

Since January 1, the industry has also confronted at least $10 billion in losses from an earthquake in New Zealand, still-untold losses from Australian flooding and an estimated $8 billion to $10 billion in losses from unrest in the Middle East.

Cumulatively, some like Standard & Poor's believe the losses may be enough to trigger the long-awaited "hard market" in which insurers again have pricing power.

(Additional reporting by Dave Cutler; Editing by Louise Heavens)

After seeing oil prices skyrocket from days of turmoil in Libya, investors now must grapple with political protests in the world's top oil exporter, Saudi Arabia, and the impact of the biggest earthquake on record to strike Japan.

The S&P 500 was trading below its 50-day moving average this week, and is within reach of support at 1,275, a low touched in late January.

The confluence of events is making investors increasingly cautious. The market's recent weakness revived talk a correction is near, analysts said, even though stocks recovered on Friday from early losses to finish the day higher with the Dow back above 12,000 and the S&P 500 back above 1,300.

Stocks have rallied sharply since the start of September, with the S&P 500 still up 24 percent for that period, but have faltered in the last two weeks. At Friday's close, the Standard & Poor's 500 Index .SPX was down 1.3 percent for the week.

"Oil prices were already moving higher before unrest in the Mideast, and if we do have something that is pronounced in Saudi Arabia -- and I don't think that's a high probability -- but if we do, the cards are off the table as far as where prices could go," said Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas.

"The impact from that is, I think you've got a chance for another recession."

Protests in Saudi Arabia were more muted than what some had anticipated on Friday. Concerns arose that planned "Day of Rage" protests in the country could lead to further instability in the Middle East and North Africa.

INFLATION AND THE FED

The jump in crude oil prices to 2 1/2-year highs has raised anxiety about their dampening effect on the economy.

Given those concerns, investors will be tuned into any comments on energy from the Federal Reserve when it releases a statement following its policy meeting next Tuesday.

European Central Bank President Jean-Claude Trichet warned last week about inflation risks, and surprised investors by saying the bank may raise interest rates as soon as next month.

The U.S. central bank is unlikely to hint at policy changes next week, and is expected to keep interest rates near zero.

"The Fed is essentially on autopilot. I think the market is correct in assuming they will do everything it takes, including initiating a 'quantitative easing part three,' if they have any evidence this economy doesn't have an escape velocity," said Joseph Battipaglia, market strategist at Stifel Nicolaus, in Yardley, Pennsylvania.

Next week also brings readings on inflation in the U.S. Producer Price Index and the U.S. Consumer Price Index, as well as data on industrial production.

Stocks snapped back from early-week losses even as other markets were hit hard by a devastating earthquake in Japan, the country's strongest on record. Oil refiners and industrial-related shares led Wall Street higher.

Investors had been on edge that planned "Day of Rage" protests in Saudi Arabia could lead to further instability in the Middle East and North Africa. Those fears had intensified after police used force to disperse demonstrators in Riyadh on Thursday.

"The Day of Rage in Saudi Arabia did not end up causing as much of a stir as they thought," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco. "That's been the concern all week."

Shares initially fell as investors reeled from images of mass destruction after the Japanese earthquake and tsunami left at least 1,000 dead. But the market reversed losses and notched solid gains as investors shook off fears of the quake's impact on Japan, the world's third largest economy. Japan's major cities and manufacturing facilities were not affected by the quake.

The Dow Jones industrial average .DJI rose 59.79 points, or 0.50 percent, at 12,044.40. The Standard & Poor's 500 Index .SPX climbed 9.17 points, or 0.71 percent, at 1,304.28. The Nasdaq Composite Index .IXIC added 14.59 points, or 0.54 percent, at 2,715.61.

Refiners Valero Energy Corp (VLO.N) rose 6.3 percent and Tesoro Corp (TSO.N) jumped 8.4 percent after Japan's oil refining capacity was hit by the earthquake and tsunami.

Howard Ward, a fund manager at the GAMCO Growth Fund, said speculative moves would likely be a short-lived overreaction. "It's generally a mistake for people to be too reactive to a natural disaster like this," he said.

Short sellers were quick to react to the quake. The ProShares UltraShort MSCI Japan exchange traded fund (EWV.P), which amplifies the reverse of the underlying MSCI Japan index by a factor of two, rose 3.2 percent on over 100 times its usual volume.

Japanese shares traded in New York fell sharply. The Bank of New York Mellon's index of Japanese ADR's .BKJP lost 2.1 percent. Toyota Motor Corp (TM.N) lost 2.1 percent to $85.65.

Investors said some industrial shares could benefit in the rebuilding operation in Japan but said information on the extent of damage was still scarce.

"The long-term impact is probably going to favor large equipment CAT-type stocks and some of the basic materials," said Pado, referring to heavy-equipment maker Caterpillar Inc.

Caterpillar (CAT.N) shares rose 1.7 percent to $100.02. The Dow Jones industrials index .DJUSIN rose 1 percent.

Stocks of global insurers were also in the spotlight on expectations of claims for damages.

Among insurers in the United States likely to have exposure in Japan, Aflac Inc (AFL.N) fell 0.3 percent to $55.55 and Berkshire Hathaway Inc (BRKb.N) rose 0.4 percent to $85.26. The KBW Insurance index .KIX rose 0.6 percent.