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Financial Focus

EUROZONE leaders once more put off finding a decisive remedy to the region’s debt turmoil last night, producing little but rhetoric on the most pressing problems in a crisis that threatens to throw the world into a new recession. After more than a week of delays, the summit of 17 euro nations produced merely the third leg of what was supposed to be a “comprehensive” three part rescue plan.

ITALIAN Prime Minister Silvio Berlusconi presented European leaders with a hastily constructed package of economic reforms last night, in response to an ultimatum demanding action to boost and cut Italy’s huge public debt. Employment laws could be reformed and state assets palmed off to raise cash, according to a letter sent by Berlusconi to European leaders.

EMERGING giants India, Russia and Brazil ruled out contributing to the Eurozone bailouts, though Chinese leaders were yesterday said to be considering offering help. China has bought Spanish bonds in the past, and was last month courted as an investor. Last night the country’s leaders were mulling over two options, either to put money into a special purpose investment vehicle or to increase Chinese participation through the International Monetary Fund.

MARKETS:

THE NIKKEI shrugged off concerns about the yen’s strength and rose more than 1% this morning, on expectations the euro zone leaders agreement to address Europe’s debt will contain the crisis. The Bank of Japan’s move to further ease policy by buying more assets also lifted sentiment, although the central bank stopped short of saying it would increase its buying of Japanese stocks through exchange traded funds.

TREASURIES fell for a second day as European leaders agreed to expand a bailout program aimed at resolving the regions debt crisis, curbing demand for the relative safety of U.S. government securities. Thirty year bonds led the decline, extending yesterday’s steepest loss in two weeks.

CURRENCIES:

THE DOLLAR weakened against the majority of its most traded peers after European leaders persuaded bondholders to take a 50% loss on Greek debt, sapping demand for haven currencies. THE EURO climbed against the greenback after the leaders agreed to boost a rescue fund for indebted nations.

ENERGY:

OIL advanced in New York, rebounding from the biggest drop this month, after European leaders agreed measures to tame a sovereign debt crisis that threatens to slow economic growth and curb commodity demand. Futures climbed as much as 2% after yesterday sliding 3.2%.

COMMODITIES:

NICKEL, the second-worst performing metal on the London Metals Exchange in the last six months, is set to rebound as Chinese steelmakers lead a recovery in demand. Nickel’s 20% slump this year has made it cheaper than pig iron, a substitute made from low grade ore from Indonesia and the Philippines. Nickel, used to strengthen stainless steel in everything from kitchen sinks to aircraft fuel tanks, may rise 16% next year as mills boost purchases.

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