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Financial Focus

THE UK CHANCELLOR aims to launch an “Osborne bond” – a 100-year
debt issue or even a perpetual gilt that never matures – to take advantage
of the country’s historically low interest rates. George Osborne will say in
next week’s Budget that he wants to “lock in” the benefits of Britain’s low
borrowing costs, which he says reflect market confidence in his fiscal plans.

THE US, EU and Japan have joined forces to launch a World Trade
Organisation case aiming to break China’s control over the global supply of
“rare earth” minerals essential to much high-technology manufacturing. The
unusual joint action between the rich world’s leading economic powers,
announced yesterday by President Obama, underlines the political as well
as commercial imperative for western leaders to tackle Beijing over its trade
practices.

CHINA will speed up economic reforms and let its currency float more freely
in a bid to make growth more sustainable and cushion the country against
external pressures and property market risks, Premier Wen Jiabao said this
morning. Wen said China’s decision to cut its economic growth target to
7.5% for 2012 from the 8% eyed in each of the previous eight years was
necessary to help transform the economy, and create more widespread
wealth while keeping inflation under control.

MARKETS:
BRITAIN’S FTSE 100 closed at its highest level this year yesterday as
banks and miners rallied after encouraging economic data out of Europe
and the U.S., although volumes were weak and traders said the market could be nearing its top. London’s blue chip index
closed up 63.16 points, or 1.1% at 5,955.91, but volumes were thin with the FTSE 100 trading 83% of a subdued 90-day
average. Investors’ appetite was given a boost by German ZEW sentiment data that beat expectations by a large margin, and
U.S. retail sales posted their largest gain in five months in February.

ASIAN STOCKS rose as investors took heart from upbeat US economic data and favourable stress test results for major US
banks, while a weaker yen gave Japanese exporters an added boost. Investor sentiment improved, taking South Korean shares
to a new high, after Wall Street closed at a multiyear high. US retail sales for February rose at their fastest pace in five months,
and “stress tests” showed positive results for 15 of 19 US financial groups. The MSCI Asia Pacific index was up 1.1% while
South Korea’s Kospi Composite index rose 1.5% to its highest level in more than seven months. Japan’s Nikkei 225 Stock
Average advanced 1.9% and Australia’s S&P/ASX 200 gained 1%. Hong Kong’s Hang Seng index rose 1.2% and China’s
Shanghai Composite index added 0.4%.

CURRENCIES:
THE DOLLAR strengthened against most of its major counterparts after Federal Reserve policy makers raised their assessment
of the U.S. economy and refrained from additional monetary easing. The yen slid to an 11-month low versus the greenback as
the yield spread between two-year debt in the U.S. debt and Japan to widened to the most since July, making dollar-based
assets more attractive. The yen also dropped as Asian stocks extended a global rally, damping demand for the lower-yielding
currency.

ENERGY:
OIL TRADED near the highest price in two days in New York as investors speculated fuel demand might increase amid signs
the U.S. economy is strengthening. Futures were little changed after advancing 0.4% yesterday as Commerce Department data
showed retail sales in the U.S., the world’s largest oil consumer, rose the most in five months.

COMMODITIES:
GOLD is poised for a 21% gain in 2012, extending its bull market to 12 consecutive years; as investors hoard record amounts
and central banks expand reserves for the first time in a generation. Bullion may rise to $1,897 an ounce in New York by
December the 31st from $1,566.80 at the end of 2011, according to Bloomberg. The rally that began in 2001 is the longest since
at least 1920 in London, including a 10% gain last year.

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