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Financial focus

Monday Headlines:
• China beats US in global trade race
• UK private sector bounces back
• Independent Scotland could lose EU & UN membership
• EU chiefs meet to discuss aid to Cyprus and Greece
• France’s industrial production may have declined
• UK inflation poised to miss another inflation target
• Australian stocks near three-year high; Most Asian markets closed
• European markets seen flat at week’s opening
• Euro touches two-week low on slowdown fears
• Venezuelans panic-buying following devaluation
• US movers closer to energy self-sufficiency
• Hedge funds increase bullish commodity bets

News:
China has eclipsed the US to become the world’s top trader in goods
for the first time, official figures from the two countries revealed.
Chinese imports and exports together totalled $3.87 trillion in 2012,
according to figures from the country’s ministry of commerce, just
ahead of the US’s $3.82 trillion in goods traded – surpassing the
world’s biggest economy for the first time.

The UK private sector surged back into growth in the first month of
2013, according to the results of the Lloyds TSB PMI survey out this
morning. This new data adds to other research suggesting the UK will
avoid slipping into its third recession in just five years.
An Independent Scotland would have to reapply to be a member of
major world organisations such as the EU and the UN, according to
government legal advice published today.

European finance chiefs meet in Brussels today to discuss aid to
Cyprus and Greece as a tightening election contest in Italy and a
political scandal in Spain disrupt market calm.

Industrial production in France, Europe’s second-largest economy,
probably declined 0.2% in December from the previous month, when it
rose 0.5%, according to the median estimate of economists surveyed by Bloomberg News before the statistics office
releases data today.

UK inflation will come in above target for the 38th straight month when data for January is released tomorrow, analysts
have predicted. The Consumer Price Index (CPI) will show inflation of 2.6% to 2.7%, City economists said, marking yet
another month above the Bank of England’s 2% target, with aggressive discounting in non-food retail balanced out by
rising restaurant and transport insurance prices.

Markets:
The S&P 500 has rallied 6.4% in 2013 to its highest level since November 2007 as US lawmakers reached a budget
compromise and companies reported better-than-estimated earnings. That’s more than double the MSCI Asia Pacific
Index’s gain of 2.9% this year through the end of last week.

Overnight, US stock futures gained and Australian shares traded near the highest level in nearly three years with many
Asian equity markets closed for public holidays.

Today, European stocks are seen flat as simmering worries over Spain and Italy were set to halt the previous session’s
tentative rebound. European stocks have sharply retreated over the past two weeks, dragged by growing fears over
Spain where a scandal on secret cash payments has affected the prime minister, while confidence in Italy has been
shaken in the run-up tot he February 24th elections.

Currencies:
The euro touched a two-week low against the dollar on signs the region’s economy is slowing amid political uncertainty in
Italy and Spain. The currency held a three-day loss versus the yen before data forecast to show industrial production in
France fell and with finance chiefs from the bloc set to meet in Brussels to discuss aid to Cyprus and Greece.
Venezuelans lined up to purchase airline tickets and TVs this weekend in a bid to protect themselves from price
increases after ailing President Hugo Chavez devalued the bolivar for a fifth time in nine years.
Energy:
Record petroleum exports helped shrink the US trade deficit in December to the smallest in almost three years as
America moved closer to energy self-sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo.

Commodities:
Hedge funds increased bullish commodity bets for the fourth straight week and became the most bullish on copper since
December as signs of faster growth in the US and China fueled the best start to the year since 2005.

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