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Financial Focus

EUROPEAN shares tumbled again yesterday as leaders failed to come to
an agreement on how to end the debt crisis and Eurozone officials told
member states to prepare for Greece to leave the currency.

THE UK, Germany and Finland all saw borrowing costs fall to record lows
as investors fled risky assets in favour of their “safe haven” bonds, while
yields jumped again for governments in Italy, Spain and Greece.

SPAIN said yesterday its rescue of problem lender Bankia would cost at
least €9bn (£7.2bn), while also saying that it is seeking ways to help its
highly indebted regions meet huge refinancing needs.

CHINA’S manufacturing may shrink for a seventh month in May, a private
survey showed, reinforcing the need for stimulus as Premier Wen Jiabao
accelerates a shift in policy to support growth.

THE FALLOUT from Facebook’s messy initial public offering widened on
yesterday as shareholders sued the social network and its bankers while a
trading firm revealed a massive loss on the shares and threatened to seek
“remedies.”

FRANCOIS HOLLANDE, France’s new president, said yesterday that Eurozone bonds would lower sovereign debt costs and
should be considered as part of a package of swift measures to boost growth and increase liquidity in the Eurozone, despite
Germany’s refusal to consider the initiative.

MARKETS:
JAPANESE stocks dropped for a second day as European leaders clashed over tackling the debt crisis and keeping Greece in
the monetary union. “Investors are so sensitive about European debt that they are swayed by every remark on the issue,” said
Naoki Fujiwara, who helps oversee $6.6 billion at Shinkin Asset Management Co. in Tokyo. “The direction from the European
leadership talks is still unclear.”

IN OVERNIGHT TRADING stocks fell even after a report showed new US home sales increased more than forecast in April.
The FTSE All-World equity index slid 1.3% to trade at its lowest level for the year. Wall Street’s S&P 500 reversed an initial
sharp drop to close 0.2% higher. Shares in large US banks, such as Citigroup and Bank of America followed declines in
European financials, while Facebook shares – which struggled since its initial public offering on Friday – climbed 2%.

CURRENCIES:
THE EURO was 0.3% from the lowest level since July 2010 after German Chancellor Angela Merkel said, following a European
Union summit, that her nation stands by its opposition to jointly issued common bonds. The 17-nation currency maintained a
drop versus the yen before data forecast to show Europe’s services and manufacturing industries shrank for a fourth month.
The Japanese and U.S. currencies remained higher after gaining yesterday against most major counterparts on increasing
demand for haven assets amid Europe’s deepening debt crisis.

ENERGY:
OIL rebounded after closing below $90 a barrel for the first time in seven months amid speculation the drop was exaggerated
and signs China will accelerate efforts to spur economic growth.

COMMODITIES:
RUBBER shippers from Thailand, the world’s largest producer, have started purchases on the Tokyo and Shanghai exchanges
to shore up prices of the commodity used in tires and gloves, according to the Thai Rubber Association.

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