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Financial Focus

GERMAN Chancellor Angela Merkel attempted to shut the door on common euro-area bonds as a means to solve the debt crisis, saying that she won’t let financial markets dictate policy. While common borrowing might arrive at some point in the distant future, bringing in euro bonds at this time would further undermine economic stability and so they “are not the answer right now”, said Merkel.

RECORD-low yields on U.S. treasuries show that traders expect Federal Reserve Chairman Ben Bernanke to signal, as soon as this week, that the central bank will begin a third round of asset purchases to boost the economy, a scenario the world’s biggest bond dealers said is unlikely.

MARKETS:

JAPAN’S Topix index dropped for a fourth day, falling to its lowest level in more than two years, as exports slid on concern global economic growth is slowing. The Topix slipped 0.4% as of 1:27pm in Tokyo. The Nikkei 225 was little changed after rising as much as 0.4%.

THE SHANGHAI Composite Index, which tracks the bigger of China’s stock exchanges, also lost 0.4% as of 1:30pm erasing a gain of almost 0.8%. The gauge lost 2.3% last week, capping a fifth week of losses, the longest since December 2010.

THE FTSE 100 index is seen opening lower this morning, tracking falls on Wall Street and in Asia as fears of recession in the global economies grow. Wall Street ended down on Friday in its fourth week of losses on worries global growth is slowing down, while Asian stocks gave up earlier session gains.

CURRENCIES:

THE YEN retreated from near its postwar record against the dollar and the Swiss franc weakened amid speculation policy makers in both countries will seek to curb gains in their currencies that are hurting exporters. The yen was set for the biggest drop in two weeks after the Japanese Finance Minister said he is ready to take decisive action.

ENERGY:

BRENT oil fell in London, narrowing its record premium to U.S. futures, as investors bet that Libyan production may recover after rebels entered the capital Tripoli in a push to force out leader Muammar Qaddafi. The European benchmark contract tumbled as much as 2.3% amid speculation that Qaddafi’s regime is crumbling, while New York crude swung between gains and losses after a fourth week of declines.

COMMODITIES:

GOLD may climb the most in more than three decades this year as investors and central banks boost their holdings on concern that global economic growth may stall amid a worsening sovereign-debt crisis in the U.S. and Europe. Gold for immediate delivery may reach $2,000 by the end of the year, extending this year’s gain to 41% according to a Bloomberg survey. That would be the most since the 127% surge in 1979.



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