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Financial Focus

The Bank of England’s quarterly inflation report on Wednesday could offer insights on when the monetary policy committee will raise the cost of borrowing from historic lows of 0.5%. Analysts expect the report to complicate the bank’s dilemma, raising forecasts for inflation while lowering growth estimates, after the disappointing 0.5% GDP expansion in the first quarter.

CHINESE producer price inflation for April is expected to moderate to a year-on-year rise of 6.9%, down from 7.3% in March, when data is released on Wednesday. Headline consumer price inflation data, however, looks set to remain around a 32-month high of 5.4%. China’s retail sales growth is expected to rise to 17.8%, up from 17.4% in the previous month.

THE US TRADE deficit is forecast to grow from $45.8bn in February to $48bn in March, in data published on Wednesday, with both imports and exports rebounding since the last set of data.

GERMAN first-quarter GDP data is expected to show that the country doubled its growth to 0.8% from the previous three months, helped by continued industrial sector strength.

Greece will need a revampedbail-out package, Eurozone ministers concluded at the weekend, as Athens is unlikelyto raise money in the markets in early 20212 as envisaged under a 110bn recue plan.

Ireland’s 85bn bailout deal is likely to be revisited, with senior Irish ministers admitting that they will continue negotiating the terms of the bailout throughout the term of the scheme.

MARKETS:

The FTSEuro First 300 index of top European shares gained 1.2% on Friday after forecast-beating April US nonfarm payroll data boosted investors’ confidence in the outlook for the US economy.

ENERGY producers led Asian stocks higher overnight, with the MSCI Asia Pacific Index climbing for the first time in five days, after stronger-than-forecast US jobs growth bolstered confidence in the world’s largest economy and halted a rout of commodity prices.

FINANCIAL bookmakers expected to see the leading European equity benchmark indexes falling on Monday, trimming the previous session’s strong gains as worries over the Eurozone debt crisis resurfaced.

CURRENCIES:

THE EURO rose 0.6% against the dollar overnight, following a fall of 3.45% in the final two days last week, the biggest back-to-back loss since 2008. Denials from EU ministers and the Greek government that Athens would leave the common currency, and statements making it clear that the Eurozone debt crisis will not prevent the European Central Bank from increasing interest rates further, helped support the euro.

ENERGY:

OIL rallied as much as 1.9% in New York overnight, rebounding from the biggest weekly decline since 2008, as signs of an improving economy in the US, stoked speculation that last week’s slump was exaggerated.

COMMODITIES:

COMMODITIES rallied overnight, rebounding from the biggest weekly slump since 2008. The S&P GSCI Index of 24 raw materials jumped 1.3% as of 12:40pm in Tokyo after an 11% slump last week. Oil and silver futures rose for the first time in five days, and lead rallied 2%.

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