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Financial Focus

ECB President Jean-Claude Trichet pressed euro-area governments to take decisive action to halt the debt crisis, after the ECB bought them more time by extending an emergency lifeline to lenders. “We are not back to ‘business as usual’ as some thought some months ago,” Trichet said yesterday. “We call all authorities to implement swiftly all decisions and to be constantly ahead of the curve.”

REPUBLICAN lawmakers are rejecting President Obama’s $447 billion job creation plan in its entirety and expressing skepticism about its pieces, creating doubt about whether it can overcome obstacles in congress.

THE OUTLOOK for the UK economy has worsened in recent weeks and the risk of a double dip recession is higher than in July, BoE policymaker Martin Weale told Reuters yesterday. However, inflation was still a problem and not all recent news pointed towards a significant undershoot of the Bank’s inflation target in the medium-term horizon, necessary to warrant more quantitative easing, Weale said.

MARKETS:

EUROPEAN shares are set to rise for a fourth straight session today following coordinated central bank action to improve liquidity, although analysts said that the recent upward movement in the stock market still appeared to be just a relief rally. Shares in the United States and Asia jumped after the ECB said yesterday that major central banks around the world will cooperate to offer three-month dollar loans to commercial banks to prevent money markets freezing up. Ben Potter, strategist at IG markets said, “there was a lack of confidence beginning to build in the European inter-bank lending markets and these U.S. dollar funding lines will help ease these confidence issues.”

CURRENCIES:

THE EURO was set for its first weekly gain against the yen in three weeks on prospects costs for dollar funding will drop after the European Central Bank said it will lend U.S. currency to euro-area banks. The dollar held yesterday’s advance versus the yen before a report forecast to show U.S. consumer confidence this moth rebounded from the lowest since November 2008.

ENERGY:

OIL rose in New York, heading for the longest weekly winning streak since July, as investors speculated that a plan to contain Europe’s debt crisis will boost fuel demand amid falling supplies. Futures gained as much as 0.4% after the ECB said it worked with the U.S., U.K., Japan, and Switzerland to extend three-month loans to euro-area banks.

COMMODITIES:

GOLD was set for the biggest weekly loss in more than two years after the ECB and international policy makers coordinated to lend dollars to euro-area financial institutions, curbing haven demand. Bullion for immediate delivery fell as much as 1.5%, the lowest level since August the 26th. The metal has tumbled 4.7% this week, the worst decline since February 2009.

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