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Financial Focus

GERMAN CHANCELLOR Angela Merkel indicated she will maintain
pressure on Greece to meet debt- cutting pledges required for its second
financial rescue, saying fiscal discipline is needed to hold the euro area
together. “If you have a single currency you naturally have to be able to
trust each other,” she said. While “it is right” to bail out Greece, Portugal
and Ireland, “we have to say again and again that everyone must do their
homework because otherwise this Europe can’t hold together.”

CHINA’S Premier Wen Jiabao is seen signalling next month that curbing
pollution, inequality and the risk of financial instability eclipse the benefits of
faster economic growth, a survey of analysts indicated. Wen will target an
expansion of less than 8% in his report to the National People’s Congress
in Beijing on March the 5th. A cut may indicate policy makers are prepared
to tolerate a slower expansion as they move the economy’s drivers to
consumption from exports and investment, a shift that may address global
imbalances blamed for the last financial crisis.

THE GERMAN government is set to resist or delay increasing the size of
the Eurozone’s financial “firewall” against contagion from the Greek debt
crisis, in the face of mounting pressure from its partners, the International
Monetary Fund and the US administration. Steffen Seibert, spokesman for
Angela Merkel, the German chancellor, insisted on Wednesday that Berlin
saw no need to increase the size of the permanent €500bn European
Stability Mechanism. “The German government’s position has not
changed,” he said. “That means no, it is not necessary.”

US STOCKS fell back from earlier highs yesterday as weak housing figures and poor European and Chinese growth prospects
dented market confidence. The Dow Jones hit a post-financial crisis record of 13,000 on Tuesday, but fell 0.11% yesterday to
12,951, while the Standard and Poor’s 500 slid 0.19% over the day. December’s housing sales figures were revised
downwards, taking the shine off strong January figures.
ASIAN STOCKS were lower amid lingering concerns about the implementation of Greece’s bail-out package and the region’s
economic outlook. Concerns about the European economy resurfaced, after the Eurozone’s February composite purchasing
managers’ index showed that the region moved closer to a recession this month as private sector economic activity fell back
into contraction territory.
THE DOLLAR held gains against most of its major counterparts on concern oil prices, near a nine- month high, will restrain
global growth, increasing demand for haven assets. Demand for the greenback was supported on speculation Chinese Premier
Wen Jiabao will steer policy toward curbing inequality and financial instability at the expense of faster growth.
THE PRICE of oil hit an all-time high in sterling yesterday, paving the way for record petrol costs at the pumps in the coming
weeks. The relatively weak pound means Brent crude spiked at around £78.50 a barrel, beating the previous record of £77.70
set last spring. In dollar terms crude, squeezed up by supply worries linked to Iran’s confrontational stance, rose up to 1.3% to
nudge past $123 a barrel yesterday – a nine-month high.
THE U.S. CORN crop may rise to a record as farmers plant the most acres since World War II, easing pressure on higher food
and fuel prices, a government report may show. Soybean and wheat output also may expand. The 2012 corn harvest may reach
14.235 billion bushels, the most on record dating to 1866, after planting reaches 94 million acres, the most since 1944, the U.S.
Department of Agriculture said on February the 13th. Soybean output may rise about 5%, while wheat rebounds from a five-year

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