Intelligence chief: attacks on Google wake-up call

Malicious cyber activity is occurring on an unprecedented scale with extraordinary sophistication, Dennis Blair said in prepared testimony for a Senate intelligence committee hearing.

Google, the world's top Internet search engine, said last month it would not abide by Beijing-mandated censorship of its Chinese-language search engine and might quit the Chinese market entirely because of cyber attacks from China.

Blair said the Chinese military's aggressive cyber activities pose challenges to neighbors.

In another section of his remarks, Blair said that financial contagion risks are falling but have not disappeared.

Most emerging market countries had weathered the crisis, international private investment flows were recovering, and the International Monetary Fund has the resources to intervene when necessary, Blair said.

Nonetheless, the economies of several countries remain at risk despite the improving global environment, he said, pointing to Pakistan and Ukraine.

Bulgaria, Estonia, Greece, Hungary, Iceland, Ireland, Latvia, Lithuania, and Romania remain fragile and the breaking of euro pegs in the region would put new strains on European banks, Blair said.

(Reporting by Adam Entous, Writing by Tabassum Zakaria; Editing by Doina Chiacu and Eric Beech)