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Financial Focus

PRIME MINISTER Mariano Rajoy said Spain’s future is at stake in its
battle to tame surging bond yields. Rajoy has stepped up his rhetoric in the
past week as he seeks to persuade Spaniards to accept spending
reductions and tax increases as a less painful alternative to a bailout.

BORROWING costs on Italian and Spanish government debt weighed
heavily on investor sentiment yesterday, with the yield on a 10-year Italian
bond rising 0.24% and the Spanish equivalent Spanish rising 0.21%

JAPAN’s core machinery orders rose a surprise 4.8% in February from the
previous month, the government said today, raising its assessment of the
indicator for the first time since June last year in a positive signal for an
economic recovery that has seen mixed signs recently.

THE IMF is set to lower its forecasts for China’s medium-term current-
account surplus, according to two officials who have seen the draft report.
They had predicted surpluses of more than 7% of GDP for 2015 and 2016.

ASIAN nations from South Korea to Singapore may refrain from monetary
easing this week as rising oil prices add to inflation risks, even as pressure
mounts on Japan to add stimulus and China grapples with slowing
expansion.

US CORPORATE profit growth stalled in the US last quarter as companies
from McDonalds to 3M saw gains in the world’s largest economy eroded
by a slump in Europe.

Markets:
YESTERDAY, the FTSE 100 index slumped to its lowest levels in 2012 as investors had a four-day weekend to digest a
gloomy US jobs report that appeared on Friday. All the main European stock markets saw significant falls through the
day as US jobs data undermined hopes for a US led recovery while investors feared that Spain would need a Eurozone
bailout. The sell off in US stocks accelerated, as the Dow dropped for the fifth day, and the S&P 500 index recorded it’s
worst day since December 8th.

OVERNIGHT, Asian stock markets dropped as rising borrowing costs for Spain reignited worries about Europe’s debt
crisis, while renewed anxiety about global growth hurt Japanese exporters.

TODAY, European shares are set to fall further after hitting 12-week lows in the previous session, with a sharp rise in
Spanish and Italian bond yields and worries over global growth prompting investors to move out of riskier assets.

Currencies:
THE EURO traded close to a three-week low against the dollar after a jump in Italian borrowing costs stoked concern that
Europe’s debt crisis is worsening. The euro also reached its lowest point against the yen for seven weeks ahead of
Italy’s sale of €11bn of bills today and longer-term debt tomorrow.

Energy:
CRUDE prices rose as much as 0.4% in New York, stalling the fall of 1.4% yesterday caused by rising US inventories.

Commodities:
WHEAT prices are falling for a second year as a glut of supply expands global stockpiles to an all-time high and farmers
prepare to reap the third-biggest harvest on record. Inventories will gain 7.1% to 210 million metric tons this year and
output in the next year of 681 million tons will have been exceeded only twice in history.

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