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Financial Focus

China’s lending tumbled in May and money supply grew at the slowest pace since 2008, adding to signs that the world’s second biggest economy is cooling. The Shanghai Composite Index slid 1.1% as the data fueled concern that interest-rate increases to combat inflation will trigger a slowdown. A report tomorrow may show that consumer prices jumped 5.5% in May from a year earlier, the biggest gain in almost three years.

SOME of Wall Street’s biggest banks are preparing to cut their use of U.S. treasuries in August as a precaution against any turbulence that could follow if the Republicans and Democrats fail to increase the U.S. debt ceiling soon. One strategy, which bank executives only agreed to discuss due to the political sensitivities relating to discussing Treasury debt, is to have more cash on hand to put up as collateral against derivatives and other transactions, decreasing the financial systems reliance on Treasuries.

MARKETS:

EUROPEAN benchmark indices are looking to steady today, as investors take stock following the previous sessions sharp sell-off that knocked a number of indices to a three month low.

ASIAN stocks dropped, extending the regional benchmark index’s longest streak of weekly losses since October 2008. The MSCI Asia Pacific Index fell 1.1% as of 1.33pm in Tokyo, extending last week’s 1.4% decline. The measure has lost about $461 billion in market capitilisation since this year’s peak on the 2nd of May, amid disappointing economic data and capped by a jobs report that showed U.S. companies hired fewer workers than estimated.

CURRENCIES:

THE YEN fell to a one-week low against the dollar on speculation that the Bank of Japan will introduce more stimulus measures to support economic growth. The yen weakened versus most major currencies after a report showed Japan’s machinery orders unexpectedly dropped in April following the earthquake. The euro touched a two week low against the dollar after Luxembourg Prime Minister Jean-Claude Juncker said a bailout for Greece must include “voluntary” investor participation.

ENERGY:

OIL declined for a second day in New York before reports that may show slowing economic growth in the U.S. and China, curbing fuel demand in the world’s two largest crude consumers. Futures slid as much as 0.6%, extending the biggest single session drop in four weeks, on Friday. Sales at U.S. retailers looked to have fallen in May and China’s industrial production slowed, according to economists surveyed by Bloomberg before the reports scheduled for tomorrow.

COMMODITIES:

COPPER fell on Friday, capping the biggest weekly loss in a month, on a decline in imports of the metal by China, the world’s largest consumer. Inbound shipments slipped 3% in May from the prior month as users drew down inventories and higher London prices made imports more expensive. The metal also retreated as copper inventories tracked by the London Metal Exchange posted a weekly increase for the ninth time in ten weeks.

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