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Financial Focus

AMERICAN factory output expanded at an accelerating rate in March,
according to a PMI survey, underlining the diverging fates of the world’s
biggest economy and the Eurozone. Similar surveys for the Eurozone
show that manufacturing activity contracted in the region, with French
figures exceptionally weak. UK manufacturers surprised economists by
expanding a little quicker, despite the woes of its EU partners.

UK manufacturing activity expanded at its fastest pace in 10 months in
March, driven by a pick-up in new orders and increasing the chance that
economy grew in the first three months of 2012 and avoided a recession.
Financial firms in Britain, including banks hit in 2011 by the Eurozone debt
crisis, have started taking on new staff again, confounding forecasts for
more lay-offs, according to a new industry survey.

DIRE unemployment figures in the Eurozone suggest that governments
will face an uphill struggle to cut their debts as tax revenues fall and
welfare payments increase. Unemployment stands at 10.8% of the
workforce, the highest rate since June 1997.

GREEK officials have urged hold-out investors in the country’s bonds
regulated under foreign law to accept a 75% loss as it seeks to achieve
total participation in all its haircuts of at least 99%.

JAPAN’s liquidity supply dropped in March for the first time in more than
three years, fuelling politicians’ complaints that the central bank should be
doing more to end deflation.

Markets:
YESTERDAY, US shares started quarter two on a positive note, with the S&P hitting a four-year high as manufacturing
figures from the US and China overcame recent worries over the outlook for global growth.

OVERNIGHT, Hong Kong stocks rose, with the Hang Seng heading for its first gain in five days, as US manufacturing
data beat expectations and a gauge of Chinese service industries improved.

TODAY, European stocks are seen inching up, adding to a sharp two-session rally and tracking gains on Wall Street
following forecast beating US manufacturing data.

Currencies:
THE DOLLAR declined against most of its major peers as sings of recovery in the US economy sapped demand for the
relative safety of the world’s reserve currency. THE YEN strengthened against the dollar for a second day after bearish
b ets on Japan’s currency reached the most extreme level since July 2007.

Energy:
OIL PRICES fell after the biggest gain in six weeks as a forecast for rising inventories in the US signalled that demand
may be easing. Crude stockpiles probably rose a second week to the highest level since August, and analysts do not
see the demand picking up in the near future.

Commodities:
GOLD may advance for a third day as better than expected US economic data weakened demand for the dollar as a
haven, tempering the impact of slower consumption in India, the largest buyer, as jewelers in the country extend their
strike.

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