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Financial Focus

GREECE SHRUGGED off a downgrade to “selective default” yesterday by ratings agency Standard & Poor’s, saying the move was expected following its launch of private sector involvement in a €206bn debt restructuring. The finance ministry said the downgrade was “pre-announced and all its consequences have been anticipated, planned for and addressed” by
Eurozone partners who are backing Greek efforts to avoid a disorderly default.

THE TAXMAN took an extra £8.3bn from top UK companies in the last fiscal year, with big firms contributing 14% more compared to the previous year. In total, the so-called Hundred Group of businesses paid an eyewatering £67.7bn in tax in the year to March 2011, according to data released by PwC this morning. Their contribution made up 13% of all receipts to the public purse, prompting the Treasury to hit back at recent claims that the government has been toadying up to big business.

THE UK GOVERNMENT is to end “aggressive tax avoidance” schemes used by banks from the profit they can make buying back their own bonds, in a move that could cost Barclays more than 100 million pounds. The government said yesterday that it was closing two tax loopholes immediately to save it more than 500 million pounds, adding that an unnamed bank disclosed the loopholes to them. Legislation would be introduced to retrospectively “block its recent use by the bank that has
disclosed the scheme and by any other company that has engaged in a similar scheme in the same period,” the Treasury said.

MARKETS:
TRADING WAS CAUTIOUS yesterday with many risk assets retreating marginally from recent highs, but a better-than-expected
reading on US home sales helped the S&P 500 close at a post-financial crisis high. The FTSE All-World index was down 0.3%
after having closed on Friday at its best level in seven months. The index has rallied 11% so far in 2012 as hopes for a Greek
debt bail-out deal appeared to be realised and after economic data, particularly out of the US, have shown signs of
improvement.

THE FTSE 100 ended lower yesterday, pressured by weakness in banking issues after international leaders said more money
was needed from Europe to help ease the region’s debt crisis, and with heavyweight HSBC falling after its results. Eurozone
countries pledged at a meeting of finance leaders of G20 economic powers on Sunday to reassess the strength of their bailout
fund next month, reminding investors the debt crisis is far from over. Banks bore the brunt of the blue chip selling, unsettled by
the G20 statement and having already been forced to take a significant haircut on Greek debt.

CURRENCIES:
THE AUSTRALIAN and New Zealand dollars fell for a second day versus the yen as concern that Greece will struggle to
contain its debt crisis damped demand for higher-yielding assets. Both South Pacific nations’ currencies slid after Standard &
Poor’s cut Greece’s credit ratings to “Selective Default.” Australia’s dollar remained 0.3 percent from a one-week high versus
the greenback before the European Central Bank begins longer-term refinancing operations today.

ENERGY:
OIL DROPPED for a second day in New York on speculation that rising U.S. stockpiles signal easing fuel demand as crude
trades near the highest level in nine months. Oil for April delivery fell as much as 72 cents to $107.84 a barrel in electronic
trading on the New York Mercantile Exchange and was at $108.18 at 1:39 p.m. Singapore time. The contract yesterday slid
1.1% to $108.56, snapping the longest winning streak since January 2010.

COMMODITIES:
GLOBAL RESERVES of soybeans are shrinking the most in 16 years as demand for food, and feed rises, creating the biggestever
exports for U.S. farmers. Inventories at the start of the next season on October the 1st will be 20% lower than a year earlier,
Jefferies Bache LLC predicts. Prices that rose 7.8% since December the 30th will gain another 7.5% to $14 a bushel by June,
the New York-based commodities trader estimates.

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