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Financial Focus

Big government debts and a slower than expected economic recovery
have seen the UK’s outlook slashed by another credit rating agency, in a
major blow to chancellor George Osborne. Fitch announced last night that it
was revising the UK’s outlook from stable to negative, one week ahead of
the Budget – placing pressure on Osborne to get the public finances under
control and reform policies to boost economic growth.

TWO PRIVATE FUNDS, established specifically to acquire Facebook
shares, have been charged by the Securities and Exchange Commission
for “misleading investors and pocketing undisclosed fees.” The SEC claims
the fund managers – Frank Mazzola and Laurence Albukerk – collectively
raised more than $70m. The Commission also charged online trading
platform SharesPost, which has been facilitating private trading of
Facebook stock, for failing to register as a broker-dealer.

THE IRISH GOVERNMENT is battling to persuade Eurozone authorities to
renegotiate €31bn of loans it took out to prop up its defunct banks, arguing
that a deal is vital to its, and Europe’s, recovery from the debt crisis. The
lobbying has become urgent because next week Dublin wants the
European Central Bank to allow it to defer an annual €3.1bn loan
repayment which is due on March the 31st.

MARKETS:
BRITAIN’S TOP share index retreated yesterday, having flirted with the
6,000 level due to a more promising global economic outlook and robust earnings, with heavily weighted miners hit by concerns
over Chinese demand. After five successive days of gains, the longest winning streak since last summer, the FTSE 100 ended
down 10.48 points, or 0.2%, at 5,945.43, after an intra-day peak of 5,989.07. Miners were responsible for taking the index into
the red with 11.2 points of downside, as they tracked copper prices lower on uncertainty about the outlook for demand from top
consumer China, which has tempered its economic growth expectations.

IN OVERNIGHT TRADING, global stocks struggled to extend gains after hitting cyclical highs as improving sentiment toward
the US banking sector failed to offset Eurozone contagion fears. On Wall Street, the S&P 500 fell for the first time in five days
and closed 0.2% lower. US Treasuries fell sharply, with the yield on the 10-year note hitting a four-month high amid a wave of
Treasury bond auctions and as expectations for further economic stimulus by the Federal Reserve subsided. Investors were
also more circumspect about other growth-focused assets. Copper, which tends to have a fairly tight correlation to any bullish
mood, fell more than 1% to $3.84 a pound, possibly the result of a slide in Chinese stocks.

CURRENCIES:
THE DOLLAR ROSE to an 11-month high against the yen before U.S. data forecast to show regional manufacturing expanded
and initial jobless claims decreased, adding to signs the American economy is gathering momentum. The greenback was near
the highest level in four weeks against the euro amid reduced bets the Federal Reserve will begin a third round of bond
purchases, or quantitative easing, which could debase the world’s reserve currency.

ENERGY:
OIL ROSE from the lowest price in more than a week in New York on speculation the U.S. economy will strengthen and bolster
fuel demand. Futures advanced as much as 0.5%. U.S. petroleum demand climbed 2.2% to the highest level in a month,
Energy Department data showed. Global oil-market fundamentals will continue to tighten this year and push Brent crude prices
toward a 2013 forecast of $130 a barrel, Goldman Sachs Group said.

COMMODITIES:
RAIN ACROSS parched cocoa plantations in West Africa, which supplies 69% of the world’s beans, is leading analysts to pare
forecasts for shortages, threatening the biggest rally in a year. Global output should about match demand in the crop year
ending in September, compared with the 94,000-metric-ton deficit seen last month.

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