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Financial Focus

New European Union rules designed to make the financial system safer would require banks operating in Europe to raise an estimated 460bn in capital by 2019 or substantially reduce their risk and balance sheets.

The draft proposals unveiled yesterday make the EU the first jurisdiction to start implementing the global Basel III capital and liquidity guidelines that were adopted last year. u o

Japan posted an unexpected trade surplus for the first time in three months, adding to signs that manufacturers are recovering from the huge disruption caused by the earthquake in March. Japan returned a narrow trade surplus of Y70.7bn in June, compared with a market forecast for a deficit of Y150bn.

ECONOMISTS have slashed expectations for this year’s UK growth by half a percent in recent months, as worries over sovereign debt crises on both sides of the pond. Forecasters now see the British economy expanding just 1.3% in 2011- down from 1.8% as recently as March; a poll of independent economist’s revealed last night.

MARKETS:

JAPANESE stocks fell for the second time this week as lack of progress in the U.S. talks to avoid a default on the government’s debt eroded confidence in the world’s biggest economy, clouding the outlook for exporters. The Nikkei 225 Stock Average fell 0.1% as of 1:25pm in Tokyo, after rising as much as 0.2%, with five stocks retreating for every two that gained.

EUROPEAN share prices are expected to edge up in opening trade today, keeping their two day tentative rebound alive as investors turn their attention to the emergency euro zone summit meeting that it is hoped could yet produce a new bailout plan for debt stricken Greece.

CURRENCIES:

THE EURO rose for a third day against the greenback after Germany and France reached an agreement on addressing Greece’s debt crisis. The 17 nation currency also climbed to the highest level in a week versus the yen. The dollar dropped to a one week low against the yen on concern that U.S. policy makers will struggle to agree on a plan to cut the nations deficit and increase the debt limit.

ENERGY:

OIL traded near the highest close in a week, swinging between gains and losses, as shrinking U.S. stockpiles countered signs manufacturing may have contracted in China, the world’s biggest energy user. September futures slid as much as 0.4.

COMMODITIES:

CORN dropped for a second day on speculation that increased competition among exporters may hurt demand for U.S. shipments. Wheat also fell while soybeans gained. December delivery corn retreated as much as 1.4% on the Chicago Board of Trade.

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