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Financial Focus

US ECONOMIC data pushed markets lower yesterday as both jobless claims and the trade deficit increased much more than expected. The US trade deficit widened to $46.3bn in February as surging imports of oil, capital goods and cars overpowered record exports. A second report showed a higher-than-expected 26,000 rise in new claims for jobless benefits, which took the total to 397,000, significantly over forecasts of 378,000.

MARKETS:

YESTERDAY saw markets tumble, as a triple-blow of Eurozone debt fears, poor economic data and fears over escalating levels of violence in the Middle East sent investors scurrying. Traders talked of a ‘catalyst of negative sentiment’, which sent the FTSE to a five-week low and resulted in the worst day in seven months for the Dow.

OVERNIGHT, Asian stocks fell, putting the regional benchmark index on course for its biggest weekly drop since August. Seven times more shares declined as advanced on the MSCI Asia Pacific Index, and the gauge looks set for a 3.3% drop this week. Japan’s Nikkei 225 Stock Average was in decline but fell steeply as news of an 8.8 magnitude earthquake struck northeast of the capital.

TODAY, European stocks are set to fall, adding to the previous session’s sell-off as investors digested news of the earthquake that hit Japan. This will add to end-of-week concerns over Middle East violence, Eurozone worries and signs of a slowing economic recovery.

CURRENCIES:

THE YEN fell against most currencies after an 8.9 magnitude earthquake struck northeast of Tokyo and the government issued a Tsunami alert for the country’s northeast coast. The pound dropped against the dollar yesterday, as interest rates in the UK were held at 0.5%. The euro headed for its biggest weekly drop since January, as EU leaders meeting today look unlikely to agree on measures to combat the region’s debt crisis.

ENERGY:

OIL PRICES fell back despite the violence, as news that China posted a $7.3bn trade deficit in February, its first in more than a year, stoked fears that its economic growth may have peaked. Brent crude traded at about $115.

COMMODITIES:

GOLD held steady on Friday above $1,413 after reports of police firing on protesters in Saudi Arabia ignited fears of further Middle East unrest, but the metal was on track for its biggest weekly decline since late January, down more than $30 an ounce from a record high hit at the start of the week.

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