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Financial Focus

US employers are likely to have added almost twice as many jobs in June compared with May, economists said before today’s Labour Department report, after better-than-forecast figures from ADP Employer Services yesterday.

JAPAN’s current-account surplus narrowed less than forecast in May, a sign the economy may be overcoming damage from the steep decline in exports after the earthquake.

INDUSTRIAL production in Germany, Europe’s largest economy, increased more than economists forecast in May, led by rising output of investment goods such as machines. Production jumped 1.2% from April, when it fell by 0.8%.

THE ECB increased its benchmark rate by 25 basis points to 1.5% yesterday, the second increase in three months, with President Jean-Claude Trichet signalling he may raise them again in coming months.

JEAN-CLAUDE TRICHET announced yesterday that the ECB would suspend its normal criteria for acceptable collateral, allowing Portuguese government debt to count as collateral even if the main ratings agencies rate the country as having defaulted. This suspension of the Bank’s rules will be adopted in an attempt to protect Portugal from Eurozone contagion.

MARKETS:

US STOCKS closed sharply higher and the Nasdaq notched an eighth day of gains on Thursday as improved labour market and retail sales data added to optimism a day before the critical June payrolls report.

ASIAN stocks gained overnight and are head for their third weekly gain, before data today forecasted to show US payrolls increased. The Nikkei 225 is bound for the highest close since March 11th after Japan’s Finance Ministry said today the current-account surplus narrowed less than economists forecast in May.

EUROPEAN and UK shares are set to rise today, mirroring gains in Asia and on Wall Street, on expectations that US jobs data will signal the economic recovery in the world’s largest economy is well on track.

CURRENCIES:

THE DOLLAR is headed for a third weekly gain against the yen, while the won jumped to the strongest level in almost three years. THE EURO kept a tentative grip on overnight gains in Asia, cheered by the ECB’s pledge to provide Portuguese banks with liquidity.

ENERGY:

CRUDE fell from a three-week high, trimming its second weekly advance, on speculation that yesterday’s 2.1% rally was exaggerated amid signs of ample crude supplies in the US. LIBYA’s output slumped more than 90% to 150,000 barrels a day in June from January, amid fighting between government forces and anti-Qaddafi rebels.

COMMODITIES:

SPOT GOLD inched down at times through the night, but is headed for a weekly gain of 3%, its strongest week since the end of April. There was a broad pullback across a wide range of commodity markets in June, driven by reluctance among investors to buy risky assets due to macroeconomic worries. Benchmark US wheat futures fell 25% in June while corn futures slid 16% and soybeans lost 5% over the month.

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