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Financial Highlights

LLOYDS became the latest UK bank to be dragged into the ongoing Libor
scandal over the weekend, after the New York Fed made public emails
sent by Barclay’s staff to the US authorities that accuse Lloyds of entering
false Libor submissions in mid-2007. It seems more banks are likely to
implicated, as Barclays told staff that their actions will be put into
perspective when other banks’ actions are made public. And the New York
Times has revealed that the US Justice Department is building criminal
cases against several financial institutions and their employees related to
the manipulation of interest rates.

CHANCELLOR Angela Merkel last night announced she was confident
that a majority of German lawmakers would back aid for Spain’s ailing
banking sector in a Bundestag vote this Thursday.

A LEAKED government circular yesterday suggested that China is
planning to encourage foreign investment in the country by cutting taxes
applied to the profits of overseas companies by up to half.

ITALY’S government will revise its forecasts to predict an even deeper
recession, when it updates its official estimates in September, new
economy minister Vittorio Grilli said in an interview published yesterday.

UK HOUSE prices dived in July, after a double hit from bad weather and
sporting distractions, according to Rightmove’s July House Price Index
released today.

Markets:
GOLDMAN Sachs is set to record another downbeat set of results tomorrow, a top analyst has warned, with poor profits
driven by the weak economic outlook. Barclays’ Roger Freeman believes the banking giant’s second quarter profits will
be down 23% compared with 2011. MANCHESTER United is struggling to find supporters for its initial public offering in
the US, with potential investors put off by the huge cost of paying players and the club’s debt pile.

OVERNIGHT, China shares fell, underperforming Asian peers and limiting gains in Hong Kong, hit by a slew of profit
warnings that suggest the slowdown in the world’s second-largest economy is hitting its companies harder than expected.
TODAY, European shares are set for a steady start, with investors waiting for company earnings reports and this week’s
testimony from US Fed Chairman ben Bernanke to determine the market’s near-term direction.

Currencies:
THE EURO traded 0.6% from its lowest level in two years before reports this week that may show stagnating inflation
and weakening confidence in the currency bloc as the deepening sovereign crisis curbs growth. The euro has declined
4% in the past three months, the worst-performer among the 10 developed-nation currencies tracked by Bloomberg
Correlation-Weighted Indexes. The yen advanced 5.8% in the same period, while the dollar climbed 3.9%.

Energy:
OIL fell from the highest close in more than a week after Premier Wen Jiabao said China’s economic recovery hasn’t
gained momentum, stoking speculation that demand may ease in the world’s second-biggest crude consumer.

BILLIONAIRE Wilbur Ross, who built a company from distressed US coal assets and sold it last year for $3.4 billion, says
the industry’s current slump differs from earlier setbacks and may last for years because of the shale-gas boom.

Commodities:
HEDGE FUNDS boosted their bullish commodity bets by 8.9% last week, as mounting speculation that China will take
more steps to boost growth spurred the longest rally in prices since February.

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