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Financial Focus

FRENCH central bank chief Christian Noyer lashed out at the UK economy yesterday, saying Britain’s sovereign should be downgraded before any cut to France’s gold-plated credit rating. Noyer’s unexpected attack drew responses from Number 10 and the Treasury. Prime Minister David Cameron pointed to the “credibility” granted by the UK’s low bond yields and his government’s plans to reduce the mammoth annual deficit.

A TORRENT of natural disasters in which about 30,000 people lost their lives has cost the worldwide economy a record £226bn ($350bn) this year, according to figures published yesterday. Earthquakes, hurricanes and floods wrought havoc, leaving homes, businesses, bridges and roads devastated.

FRANCE’S two biggest banks were among eight downgraded by ratings agency Fitch yesterday. Fitch hit BNP Paribas, Société Générale, Deutsche Bank, Credit Suisse, Barclays, Bank of America, Morgan Stanley and Goldman Sachs with downgrades to their viability ratings and long-term issuer default ratings. Fitch said the banks were “particularly sensitive to the challenges the financial markets face”.

MARKETS:

THE FTSE 100 staged a modest rebound in thin volumes yesterday, with battered insurers and oil stocks boosted by some short-covering ahead of today’s futures and options expiries. The FTSE ended up 34.05 points, or 0.6%, at 5,400.85, a shade below the 50% retracement of the October-November move that it crossed in intra-day trade. The index had extended gains in the afternoon as strong economic data from the United States suggested that the world’s largest economy is improving and might drive corporate earnings growth on this side of the Atlantic.

U.S. weekly claims for jobless benefits fell to a three and a half year low, and factory activity in much of the country’s Northeast picked up this month, data showed on Thursday. However, the rally was short lived, with market players saying they were reluctant to move back into equities until there is some visibility on Europe’s progress in resolving its sovereign debt crisis.

CURRENCIES:

INDIA’S RUPEE, the worst-performing currency in Asia this year, will post the region’s best returns in 2012 as strategists predict Prime Minister Manmohan Singh’s pledge to open the retail industry will spur foreign investment. Global funds increased rupee-denominated debt by $3.1 billion this month, the most on record, amid speculation that slowing will allow the central bank to stop raising interest rates.

ENERGY:

OIL ROSE from a six-week low as investors speculated that the biggest weekly decline since September is exaggerated. Futures rose as much as 0.5% after falling 1.1% yesterday on Federal Reserve data that showed output at U.S. factories, mines and utilities slid last month for the first time since April. Separate reports showed better-than- expected manufacturing activity in the New York and Philadelphia regions and the lowest jobless claims in three years.

COMMODITIES:

GOLD’S biggest rout in three months means traders are the least bullish since July and Dennis Gartman, the economist who sold the last of his metal on the day the slump began, warned of further declines. Ten of 21 analysts surveyed by Bloomberg expect the metal to gain next week, the lowest proportion since July the 29th. Three were neutral. While bullion’s slide of as much as 9% this week took its drop from the record $1,923.70 an ounce reached in September to almost 20%, the common definition of a market, investors are still holding the most metal ever in exchange-traded products, a wager now valued at $119.2 billion.

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