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Financial Focus

EUROPE’S banks insisted yesterday that they can handle ramped up capital requirements from EU authorities without resorting to state bonuses. Despite some analysts having called a nine-month timeline for raising billions in new funds “unrealistic”, lenders are determined to appear unruffled.

A WAVE of weak data in the Eurozone points towards a recession, analysts are warning, piling more pressure on the Eurozone leaders. Figures out yesterday from the European Commission showed consumer and business confidence worsening in October. Economists stress that immediate pressure is on Berlusconi to reform Italy’s finances. He needs to avoid a default, overwhelming the bailout fund.

THE U.S. economy grew in the third quarter at the fastest pace in a year as Americans reduced savings to boost purchases and companies stepped up investment in equipment and software. GDP rose at 2.5% annual rate, up from 1.3% in the prior three months. Household purchases, the biggest part of the economy, increased at a 2.4% pace, more than forecast by economists.

MARKETS:

ASIAN stocks gained this morning, extending the best weekly rally since 2009, the won strengthened and bond risk fell as Europe’s agreement to stem the debt crisis and better than expected U.S. data renewed confidence in the global economy. The MSCI Asia Pacific Index rose 1.5% taking its weekly increase to 7.6%. S&P 500 index futures slid 0.3% after the gauges 3.4% jump yesterday.

WALL STREETS S&P 500 saw a 3.4% rise to 1,284 yesterday, as Morgan Stanley, up 17%, led a surge in the banking sector. This takes the benchmark to its best level since that start of August, and puts it on pace for the best monthly performance since the late 1980’s.

CURRENCIES:

THE YEN appreciated against 13 of its 16 most traded counterparts amid speculation that Japan will avoid intervening in markets even after the currency rose to a record for the fourth time in five days yesterday. Japanese Finance Minister Jun Azumi said today he will take bold action against the strong yen if needed.

ENERGY:

OIL fell in New York, trimming its biggest weekly gain since February, as a drop in Japanese industrial output countered speculation that U.S. economic growth and a deal to tame Europe’s debt crisis will boost fuel demand. Futures slipped as much as 0.8% after Japanese factory production declined 4% in September from the previous month.

COMMODITIES:

COPPER traders and analysts are forecasting an end to the biggest weekly rally since at least 1986 on concern demand will slow in China while Europe’s lingering financial crisis limits growth. Eleven of 23 people surveyed by Bloomberg say copper will drop next week, eight predicted a gain, and four said prices will be little changed. Traders also predicted lower sugar prices next week, and gains in gold, corn and soybeans.

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