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Friday financial focus

Friday Headlines:
• EU: Eurozone economy falls short of forecasts
• UK: Britain to miss triple-dip recession according to poll
• Japan: Shrinking GDP strengthens Abe’s case
• USA: Jobless claims fall more than forecast
• Commodities: Gold up in Q4 – India biggest buyers
• Energy: Oil rises again as UN fail to reach a deal on Iran
• Currencies: G-20 policy to avoid competitive currency devaluations
• Friday Focus: How to revive US manufacturing

EU: Eurozone economy falls short of forecasts
Europe’s brittle economies shrank at their fastest rate since the
collapse of Lehman Brothers four years ago, official data for the fourth
quarter of 2012 showed on Thursday, with both strong and weak
countries falling short of expectations. News of the Eurozone’s 0.6%
quarter-on-quarter drop, deepening the bloc’s recession, and the
woeful country-specific performances hit the euro, which fell 1%
against the dollar. The single currency’s recent strong appreciation
has fuelled fears that a nascent recovery for the bloc may be dead in
the water.

UK: Britain to miss triple-dip recession according to poll
Britain’s battered economy will not sink into recession for the third time
in four years even if, as seems likely, the Bank of England refrains
from providing stimulus via extra asset purchases, a Reuters poll
showed. The economy will expand a mere 0.2% in the current quarter,
having contracted 0.3% in the final months of 2012, but thus missing a
third recession, according to the poll of 55 economists taken in the
past week. The BoE marginally cut its own growth forecasts on
Wednesday, but it said it stood ready to add to its quantitative easing
programme if warranted.

Japan: Shrinking GDP strengthens Abe’s case
Japan’s economy unexpectedly shrank last quarter as falling exports
and a business investment slump outweighed improved consumption,
bolstering Prime Minister Shinzo Abe’s case for more monetary
stimulus to end deflation. The prolonging of Japan’s recession into a third quarter shows that benefits from a weaker yen
and rising stocks have yet to be felt. The lower house of parliament passed Abe’s fiscal stimulus package today, while
Bank of Japan Governor Masaaki Shirakawa and his colleagues raised their assessment for the economy and left
monetary policy unchanged.

USA: Deferral scheme eases pressure
Claims for jobless benefits plunged last week, showing US employers have little need to trim staff as demand improves.
Applications for unemployment insurance payments decreased by 27,000 to 341,000 in the week ended February 9th,
fewer than any of the 49 economists surveyed by Bloomberg projected, according to Labor Department data issued on
Thursday in Washington. Another report showed consumer sentiment last week climbed to the highest level in a month.

Global Markets: Headlines from key indexes
UK stocks fell from their highest level in more than four years as reports on Thursday showed the economies of
Germany and France contracted more than forecast. US stocks were little changed yesterday, after erasing earlier
losses, as a drop in jobless claims and Warren Buffett’s deal for H.J. Heinz Co. tempered concern over shrinking
economies in Europe and Japan.

Energy: Oil rises again as UN fail to reach deal in Iran
West Texas Intermediate oil rose for the third time this week as United Nations nuclear inspectors failed to reach a deal
with Iran. Futures advanced as much as 0.7% on Thursday as UN officials said they didn’t secure an agreement that
would allow access to alleged atomic facilities and couldn’t settle on a date for another meeting, indicating that sanctions
on the country may remain in place.

Commodities: Gold up in Q4 – India biggest buyer
Gold demand rose 3.8% in the fourth quarter as Indian purchases jumped, narrowing the first drop in annual usage in
three years, the World Gold Council said. India remained last year’s biggest buyer, ahead of China.

Currencies: G-20 policy to avoid competitive currency devaluations.
G-20 finance ministers and central bankers start a two-day meeting on Friday in Moscow. The group will pledge in a joint
statement to avoid policies that lead to competitive currency devaluations. The yen has slumped over the past three
months as Prime Minister Shinzo Abe pressed the Bank of Japan to introduce additional stimulus measures that tend to
weaken a currency. BOJ Governor Masaaki Shirakawa and two deputies will step down next month, allowing Abe to pick
leaders to implement his plan for expanded monetary easing.

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