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Financial Focus

Japan’s slump after the March 11th earthquake, tsunami and nuclear crisis may be too short-lived to be called a recession, economists advising the government say. “The plunge was rapid and steep, but the economy was fortunately able to bottom out very quickly. What will follow now is a V- shaped recovery.” Yuji Shimanaka, chief economist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, said in an interview.

MOODY’s said it would put the US government’s Aaa credit rating under review for a downgrade unless there is progress on increasing the debt limit by mid-July. Treasury Secretary, F. Geithner has warned that a failure to raise the debt ceiling by August 2nd, the date he now projects borrowing authority would be exhausted, may have catastrophic effects on the US economy by sharply raising borrowing costs. Republicans are using the debt-ceiling talks to press for cuts in government spending. Geithner today predicted that agreement would be reached.

US EMPLOYERS probably hired fewer workers in May, a sign US businesses are losing confidence as the world’s largest economy cools, economists said before a report today. Payrolls rose by 165,000, the smallest gain in four months, after increasing 244,000 in April, according to the median of 89 estimates in a Bloomberg News survey. The jobless rate may have partially reversed April’s advance, falling to 8.9% from 9%. 

MARKETS:

CHINA’s stocks rebounded from the lowest level since January 25th overnight, erasing a weekly decline by the Shanghai Composite Index, as investors speculated inflation may ease in coming months, reducing the need for further tightening measures. The gauge has risen 0.7% this week, and is set for the biggest gain in two months.

THE FTSE 100 and Wall Street dropped on Thursday after Moody’s Investors Service said it might downgrade the debt ratings of several large US banks, and as investors awaited key jobs data from the United States.

EUROPEAN shares are set to rise today, though gains are expected to be muted ahead of a key US labour market report, which is expected to confirm the view that the pace of economic recovery is losing momentum.

CURRENCIES:

THE DOLLAR fell toward a three-week low against the yen before a report forecast to show US employers added fewer jobs in May, signalling a slowing economy that may prevent the Federal Reserve tightening monetary policy. The euro gained versus the dollar to the highest level in almost a month as Moody’s Investors Service said it may place the US government’s rating under review for possible downgrade and German HYPERLINK “http://topics.bloomberg.com/chancellor-angela-merkel/”Chancellor Angela Merkel said she’s committed to the shared currency.

ENERGY:

OIL traded near $100 a barrel in New York little changed from a week ago, before a report that will indicate the strength of the US economy and as OPEC prepares to meet in Vienna next week to decide output quotas.

COMMODITIES:

METAL prices, including copper and gold fell yesterday, with silver suffering a 2.65% drop. However, LME copper rose overnight as base metals rebounded after investors regained some confidence from a steady showing by US stocks ahead of closely watched US non-farm payroll data later in the day.

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