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Financial Focus

France and Germany have set themselves a deadline of the end of October to reach agreement on a comprehensive package of measures to stabilize the Eurozone, including the recapitalization of European banks if they need. Merkel and Sarkozy spelt out their determination to defend the stability of the euro, but refused to go any further on details before the G20 summit in November.

GLOBAL banking regulators will press ahead with the first worldwide effort to force banks to hold more liquid assets and cut back the industry’s reliance on short term funding. The deal, which was struck last year by the 27 member countries, will force banks to hold more top quality capital against unexpected losses, but there are rising concerns that some countries will not stick to the agreement.

DAVID CAMERON has urged European leaders to take a “big bazooka” approach to resolving the Eurozone crisis, warning that they have just a matter of weeks to avert economic disaster. The UK prime minister wants France and Germany to bury their differences and adopt a five point plan to end the uncertainty.

MARKETS:

BETTER than expected U.S. jobs data lit up a subdued session for Britain’s FTSE 100 on Friday, which eked out a small gain as investors shrugged off concerns over the health of Europe’s banking sector. London’s bluechip index, closed higher for the third straight day, and swung into positive territory after data showed U.S. employers hired more workers than expected in September.

EUROPEAN shares are set to gain for a fourth straight session today, following the news that Germany and France will be announcing fresh measures to tackle the debt crisis by the end of the month, improving investors’ appetite for risk.

CURRENCIES:

THE YEN and dollar fell against the majority of their most traded counterparts as speculation that Europe can contain its debt crisis spurred a climb in U.S. equity futures, damping demand for haven currencies. The euro rose versus 14 of its 16 major peers and the Australian dollar gained for a fifth day against the greenback before data this week may show that employment in the South Pacific nation increased.

ENERGY:

OIL climbed for a fourth day in New York as investors bet that fuel demand may increase after a pledge by Europe to contain its sovereign debt crisis and signs of an economic recovery in the U.S. Futures rose as much as 1.2% after the biggest weekly gain in seven months.

COMMODITIES:

U.S. SUGAR stockpiles are shrinking to the lowest in 37 years after rain and freezing weather damaged the beet crop, potentially reversing a price slump and forcing the government to ease import limits. Sugar is the only major agricultural commodity produced in the U.S that is subject to import quotas, and the USDA increased the limit by 45% this year as futures surged 21% in the three months through August.

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