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Financial Focus

Sensitive data leaked by the UK treasury could have fallen into “the wrong hands” and been used to profit off the markets. The Treasury has sent confidential inflation data to around 400 recipients prior to its official release twice this year already, provoking criticism of Chancellor George Osborne from statistics chief Sir Michael Scholar. An investigation had to be held on a third occasion, after suspicious market movements were noticed before March’s surprisingly modest inflation figure. “There is a risk of market manipulation if key economic data falls into the wrong hands before publication,” Scholar wrote yesterday.

THE G8 leaders said that a strengthening global economy will pave the way to cuts in debt built up in the recession that followed the 2008 financial crisis. Europe vowed to fight its fiscal woes with “determination,” while Barack Obama promised a “clear and credible” U.S. deficit reduction strategy. Japan was allowed to put off savings measures until its economy rebounds from the March earthquake and tsunami. Without mapping binding targets, the leaders pledged to “remain focused on the action required to enhance the sustainability of public finances.”

MARKETS:

THE NIKKEI average pared losses to stand almost flat on Friday, after bank shares gained on a report that capital requirements for European banks may be relaxed.

EUROPEAN shares are expected to rise sharply in early trade today, tracking gains in Asia and on Wall Street, with mining and energy shares seen up on a rise in metals and crude oil prices. The FTSE 100 is expected to open 46 points higher this morning, with the German DAX to gain as much as 65 points or 0.9%, and the French CAC 40 to open up 43 points higher.

CURRENCIES:

THE DOLLAR weakened for a second day against the euro and yen before reports that, economists said, will show U.S. consumer spending slowed in April and pending home sales declined. The U.S. currency fell versus 15 of its 16 most-traded counterparts and Asian stocks advanced, boosting demand for higher-yielding assets.

ENERGY:

NATURAL GAS futures dropped from a three week high after a government report showed that U.S. inventories increased more than forecast last week. Gas declined 1.2% after the Energy Department said stockpiles rose by 105 billion cubic feet in the week that ended the 20th of May.

OIL rose in New York, heading for a 1.3% gain this week, on speculation that the global economic recovery will sustain demand for crude.

COMMODITIES:

COPPER, gold, iron ore, and coal will lead a rally in commodities over the next two to three years as demand for raw materials from China and India outpaces supplies, according to Standard Chartered PLC. “There is a lag between supply and demand and that’s going to drive these commodities higher,” said Ashish Mittal, the bank’s global head of commodity sales. “During the global financial crisis a lot of investments got postponed.”

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