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Financial Focus

EUROPEAN finance ministers meet in Brussels today to lay the groundwork for Sunday’s meeting of government leaders. They agreed to an additional summit on October 26th yesterday, after Germany and France said the European Union needs more time to seal a “global and ambitious” accord. The EU leaders are said to be accelerating talks on combining temporary and planned permanent rescue funds as of mid-2012, while scrapping a ceiling on bailout spending.

JAPAN will sell about ¥800bn ($10.4bn) of additional government debt to the market this fiscal year to fund earthquake reconstruction, the Ministry of Finance said. Prime Minister Yoshihiko Noda approved today a ¥12.1 third supplementary budget to fund rebuilding, which follows two packages totalling ¥6tn for quake relief.

S&P outlined two ‘stressed economic scenarios’ in which Spain, Italy, Ireland and Portugal would be reduced by one or two levels. The first assumes low economic growth and double-dip recession, and add an interest-rate shock to the recession in the second.

MARKETS:

EUROPEAN shares are set to drift higher in early trade today after yesterday’s sharp losses, as optimism for a successful Eurozone debt solution grows. Gains may be limited, however, as France and Germany disagree over the best way to bolster the European Financial Stability Facility

ASIAN stocks erased earlier gains before European leaders meet this weekend to discuss ways to tame the region’s sovereign-debt crisis. The MSCI Asia Pacific Index lost 0.3%, after earlier climbing as much as 0.4%. Standard & Poor’s 500 Index futures added 0.2%.

CURRENCIES:

THE YEN is set for a weekly advance against most major peers, and the Swiss franc touched a two-week high against the euro, as belief that EU leaders can resolve the region’s debt crisis ebbed, increasing demand for refuge assets. Japanese Prime Minister Yoshihiko Noda said today dealing with rapid yen appreciation is the “highest priority.”

ENERGY:

OIL rose, trimming its first weekly loss in three, before European leaders meet to decide on a rescue fund to ease the debt crisis threatening the region’s economy. Futures climbed as much as 0.9% after closing yesterday at a one-week low. Oil in New York was pushed higher by a US manufacturing gauge that expanded in October at the fastest pace in six months.

COMMODITIES:

GOLD gained for the first time in five days, trimming its worst weekly performance in a month, as optimism that EU leaders are moving towards a workable plan to fight the region’s debt crisis drove commodities higher. SUGAR traders and analysts are the most bearish in almost three months on mounting speculation that supply will outpace demand for the first time in four years, creating a glut that may persist through 2013. Sugar has already fallen 26% since reaching a three-decade high in February, as the surge in prices encouraged farmers to plant more cane.

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