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Financial Focus

Several European countries are demanding collateral on bailout loans they provide to Greece, after it emerged that Finland had secured a commitment earlier this week. Austria, the Netherlands and Slovakia added their voices to the demand for collateral to secure their commitments to Greece via the European Financial Stability Facility.

FRANCE relaxed a ban on selling banks short, trying to calm index futures, concerned that the rule would keep them from exchanging contracts when they expire. Investors who are short index futures can replace the holdings with new contracts, according to the AMF, France’s financial regulator.

JAPANESE Finance Minister Yoshihiko Noda said currency market intervention needs to surprise and he’s ready to act to stem gains in the yen that could derail an export led recovery. Noda told reporters in Tokyo yesterday that he will continue to monitor markets closely and that both the government and Bank of Japan are doing what they can to support the economy.

MARKETS:

STOCKS nose dived in the opening minutes of trading in Japan this morning, mirroring another disastrous day for markets in Europe and the U.S. yesterday. The Nikkei 225 lost over 2% in initial trade, dropping to 8,756. Earlier this month the index hit a low of 8,656.

THE FTSE suffered its biggest fall in over two years yesterday, losing 4.5% to end the day perilously close to the 5,000 mark. After economists at Morgan Stanley said the U.S. and Eurozone are “dangerously close to recession”, stocks in the U.S. also collapsed. The Dow Jones Industrial Average fell 3.68%, while the Nasdaq slumped even further, closing down 5.22%.

CURRENCIES:

THE DOLLAR and yen advanced against most of their major counterparts as Asian stocks extended a worldwide rout in equities amid speculation European banks lack sufficient capital. The euro slid for the fourth day versus the yen before data forecast to show German producer price inflation slowed in July. The won led declines in Asian currencies after South Korea’s financial regulator urged insurers to boost capital in preparation for a potential crisis.

ENERGY:

OIL fell in New York, heading for a fourth weekly drop, as investors bet fuel demand will falter amid signs of weaker growth among the world’s biggest consumers. Futures slipped as much as 2.1%, leading a decline in global commodity prices.

COMMODITIES:

GOLD rallied to an all time high, poised for the biggest run of weekly gains since April 2007, as escalating concern that the global economy is slowing drove equities and commodities lower, spurring demand for haven. Immediate delivery bullion, which touched a high of $1,839.30 an ounce, rose 0.8% to $1,838.70 for a 5.3% advance this week.

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