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Financial Focus

ITALY and Spain have not asked the International Monetary Fund for any funding despite fears they will need help beyond a European rescue scheme, its boss Christine Lagarde said last night. She called for a swift solution to the crisis and said the IMF can make loans only when governments ask for them, as happened with Portugal, Ireland and Greece. “The IMF has not received any request for assistance from, nor are we negotiating with, either Italy or Spain.”

ITALY and Belgium saw their debt costs rocket to new records in bond auctions yesterday in an ominous precursor to Rome’s much larger long-dated debt sale this morning. Despite an early market rally due to reports of a bailout plan for Italy, Rome was forced to pay over 7.3% plus inflation to borrow just 567m euros.

The UK will fall victim to a second recession, a leading economic forecaster warned yesterday, pushing up unemployment and further damaging George Osborne’s hopes that he will be able to meet his deficit reduction target. The figures will make for grim reading for the chancellor, who will today deliver his Autumn Statement just hours before millions of public sector workers walk out on strike, costing the economy around £500m. Any recovery in the UK is not expected to kick in until late next year, with growth of 0.5% in 2012 and 1.8% in 2013. Unemployment is forecast to rise from 8.1% in 2011 to 9.1% in 2013.

MARKETS: THE FTSE 100 rallied yesterday as financial and basic resources stocks advanced, helped by hopes that euro zone leaders were moving closer to action to stem a debt crisis in the region. London’s blue chips added 148.11 points in its second consecutive day of gains after nine straight sessions of declines, as equities across Europe and the United States rose and yields on distressed euro zone bonds declined.

CURRENCIES:

THE DOLLAR fell against 14 of its 16 major counterparts as advancing stocks damped demand for safer assets. The U.S. currency dropped 0.2% to $1.3349 per euro as of 1:50 p.m. Tokyo time from the closing level in New York yesterday.

ENERGY:

OIL dropped from the highest close in more than a week before a report forecast to show that crude and gasoline stockpiles increased in the U.S. Futures slipped as much as 1 percent, the first decline in three days, after failing to settle above $100 a barrel yesterday. A U.S. Energy Department report tomorrow will probably show oil inventories rose for the first time in a month, while gasoline supplies climbed for a third week, according to a Bloomberg News survey.

COMMODITIES:

Copper rose the most in a month as a proposed framework for a bailout fund in Europe boosted prospects that the region will tame a debt crisis that has slowed economic growth and demand for raw materials. Copper futures for March delivery climbed 2.7% to close at $3.3715 a pound at 1:14 p.m. on the Comex in New York, the biggest gain for a most-active contract since October the 27th.

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