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Financial Focus

German Chancellor Angela Merkel yesterday rejected French calls to deploy the ECB as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil. “If politicians believe the ECB can solve the problem of the euro’s weakness, then they’re trying to convince themselves of something that won’t happen,” she said in Berlin. Merkel’s comments underscore German reluctance to assume more liability for taming the debt crisis which threatens to trigger a global recession.

Spanish bonds sank yesterday, driving 10-year yields to the highest since the euro was introduced in 1999, as borrowing costs climbed to the most in at least seven years at an auction of securities. Polls in Spain show the ruling Socialists are set to lose a general election on Sunday. The government is already implementing the deepest budget cuts in at least three decades, trimming wages, freezing pensions and tightening rules on prescriptions as it aims to halve the euro region’s third-biggest deficit in two years.

Mario Monti, Italy’s newly appointed prime minister, has called for “sacrifices” and sweeping reforms to rescue the country from its financial emergency, telling Italians that they must play their part in saving Europe from its worst crisis since the second world war.

US sales of existing homes dropped for a second month in October, sliding 2.2% from September, according to a Bloomberg survey of economists. The National Association of Realtors will release the data on November 21st.

MARKETS:

INVESTORS dumped US stocks on Thursday, scared by the market’s sudden fall through a key technical level brought on by more worries about Europe’s debt troubles. The broad sell-off repeated the pattern seen lately in which stocks are treated as an asset class, with little differentiation between winners and losers.

Asian stocks fell, dragging the benchmark index to a six-week low, as Europe’s debt crisis spread and concern mounted that bad loans in China increased. The Nikkei average slid below 8,400 to its lowest level in more than a month, after surging bond yields in Eurozone nations spooked investors and fuelled fears of tightening global credit conditions.

European shares are set to fall sharply today after six-week closing lows yesterday, with concerns mounting that borrowing costs in some Eurozone countries could rise beyond sustainable levels and further deepen the debt crisis.

CURRENCIES:

The dollar weakened against most major counterparts amid speculation the US Fed will introduce more measures to lower borrowing costs to stimulate the economy. ASIAN currencies are headed for their biggest weekly loss since September on signs economic growth is faltering as European policy makers struggle to contain the region’s debt crisis.

ENERGY:

Oil headed for the first weekly decline since September in New York as signs Europe’s debt crisis is spreading countered speculation economic recovery in the U.S. will boost demand in the biggest crude consumer. Futures were little changed, after slipping as much as 0.8%, and headed for the first weekly drop in seven weeks.

COMMODITIES:

Copper dropped 0.5% in Asian trading, having fallen as much as 2.1% during the session. The metal is set for a 1.8% decline this week, the third weekly drop. Zinc weakened by 1% and nickel lost 1.4%. Copper traders and analysts are the most bearish in almost two months because of mounting concern that Europe’s debt crisis will curb demand in the region that accounts for about 19% of global consumption.

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