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Friday financial focus

• China: Trade tops forecasts in January
• Japan: Back-to-back monthly deficits
• EU: Close to budget cuts in response to Cameron
• Ireland: ECB deferral scheme eases pressure
• Global Markets: Headlines from key indexes
• Energy: Oil trims weekly loss on China trade
• Commodities: Copper imports by China rise

China: Trade tops forecasts
China’s exports and imports rose more than estimated in a January
that had five more working days than last year, helping sustain a
growth rebound in the world’s second-biggest economy. Overseas
shipments increased 25% from a year earlier, the customs
administration said today, compared with the 17.5% median estimate
in a Bloomberg News survey. Imports rose 28.8%, exceeding the
23.5% median forecast of analysts. Separately, Japan posted back-toback
monthly current- account deficits for the first time since 1981.

Japan: Back-to-back current-account deficit in December
Japan posted back-to-back monthly current-account deficits for the
first time since 1981, highlighting challenges for Prime Minister Sinzo
Abe’s campaign to revive the economy. The shortfall in the widest
measure of the nation’s trade was 264.1 billion yen ($2.8 billion) in
December, the Ministry of Finance said in Tokyo today. The median
estimate of 23 economists surveyed by Bloomberg News was for a
deficit of 144.2 billion yen. Weakness in global demand, a spat with
China and increased energy imports because of nuclear plant
shutdowns are weighing on the world’s third-biggest economy as Abe
pushes the Bank of Japan to end deflation and spur growth. The yen’s
slide against the dollar is offering the prospect of an export revival.

EU: Close to budget cuts in response to Cameron
European Union leaders prepared the first-ever cuts in the bloc’s
budget, bowing to UK Prime Minister David Cameron’s insistence on
thrift at the EU level. After an all-night bargaining session interspersed with catnaps on couches at EU headquarters in
Brussels, the leaders reassembled at 6:30 this morning to consider a 2014-2020 spending ceiling of €960bn, down from
an original proposal of €1.047tn and less than the €994bn spent in the current budget cycle. At the center of the
controversy was Cameron, making his first EU summit appearance since announcing plans for a referendum that could
result in Britain leaving the 27-nation bloc as early as 2017. Britain’s demands for savings ran into opposition from
France, Italy and eastern and southern European economies keen to tap EU subsidies. Any one country could veto the
deal, with the breakdown of spending between agriculture, infrastructure and regional development aid still up for debate
and wealthier countries arguing over rebates from the annual budget.

Ireland: Deferral scheme eases pressure
Ireland clinched an historic deal yesterday to ease pressure on its debt mountain and defer the legacy costs of bailing out
failed Anglo Irish Bank and Irish Nationwide. The deal, which won the backing of the ECB yesterday after 18 fraught
months of negotiations, will stretch out the cost of paying back the bailout to about 40 years instead of ten, cutting the
state’s borrowing costs by €20bn over the next decade. The deal sent borrowing costs down below pre-2007 levels last
night, with 10-year yields plummeting to 3.955%. “[This] outcome is an historic step on the road to economic recovery. It
secures the future financial position of the state,” Prime Minister Enda Kenny said.

Global Markets: Headlines from key indexes
The FTSE 100 fell sharply yesterday as traders took profits on an index that has outperformed Europe this year, with
banks leading losses after comments by key policymakers. US stocks declined yesterday, taking a step back from their
recent advance, prompted by comments by the ECB president on the euro and Europe’s outlook. Japan’s Nikkei share
average dropped on Friday to mark its first weekly loss in 13 weeks as sentiment was dented by gloomy comments from
the ECB. China shares rose in choppy Friday trade ahead of the week-long Lunar New Year holiday, buoying slim Hong
Kong gains, lifted by strength in the auto sector after strong January sales.

Energy: Oil trims weekly loss on China trade
China bought 24.87 million metric tons of crude more than it exported last month, equivalent to 5.88 million barrels a day
– the most since May. This helped oil futures advance and trim the first weekly decline in over two months.
Commodities: Copper imports by China rise
Copper imports by China, the world’s largest user, increased in January 2.9% from a month earlier as trading firms
bought the metal ahead of the Chinese New Year holiday in preparation for a seasonal pick-up in demand during March.

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