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Financial Focus

THE US is set to lose its top notch triple-A credit rating from at least one leading agency according to 30 out of 53 economists polled by Reuters. The survey result was revealed as talks over saving the government from a self-imposed default remained splintered by acrimonious briefings. Republican House speaker John Boehner’s scheme to raise the debt ceiling was attached by both sides, with President Obama’s aides threatening to veto the short term plan.

REGULATORS probing alleged manipulation of interbank lending rates have expanded their investigation into yen rates in London and a separate rate-setting process in Tokyo. Led by the U.S. Department of Justice, regulators from the EU, the UK, the US and Japan have been examining whether the London interbank offered rate, the reference for $350,000bn (£213,000bn) in contracts, was rigged at the height of the financial crisis.

UK BUSINESS leaders, economists, and Mayor Boris Johnson demanded strong measures to boost growth yesterday, after figures revealed that the economy grew by an unspectacular 0.2% in the second quarter of the year. Statisticians partially blamed sluggish growth on one-off factors such as the royal wedding; a persistently weak economy could see the UK lose its triple-A credit rating.

MARKETS:

JAPAN’S Nikkei 225 fell 0.5% as the yen strengthened against the dollar, cutting the profit outlook for the nation’s exporters. South Korea’s Kospi index was little changed whilst Australia’s S&P/ASX 200 index slipped 0.2%. Hong Kong’s Hang Seng index saw little movement, whilst China’s Shanghai Composite index swung between gains and losses.

BRITAIN’S FTSE 100 index is set to edge lower today, following weakness overnight on Wall Street, with investor sentiment soured as the U.S. remains in stalemate over the country’s debt ceiling.

CURRENCIES:

THE DOLLAR weakened against most of its major peers as President Obama and Congress remained at odds on the plans to raise the U.S. debt limit. The greenback touched record lows against New Zealand’s dollar and Australia’s dollar climbed to an all-time high after data showed inflation acceleration.

ENERGY:

OIL fell in New York on speculations that rising U.S. stockpiles indicated that fuel demand is faltering in the world’s biggest consumer of the commodity. Futures dropped as much as 0.5% after inventories climbed 3.96 million barrels to 358.2 million last week, the biggest increase in three months.

COMMODITIES:

GOLD futures surged to an all time high as investors sought to protect their wealth against the possibility of a U.S. default that may come as soon as next week amid a standoff over the country’s $14.3 trillion debt. The December delivery contract gained as much as 0.5% to $1,626.90 an ounce beating the previous peak of $1,626.30 set on July the 25th.

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