"Market even more illiquid with a false strength as the US holidays. Expect a firm widening as volume comes back on Monday."
Cross Market News
- Asia-Pacific Equities: most markets shook off a negative open to edge higher midday Thursday, although Japanese shares remained sharply lower as investors returning from a holiday caught up with European and global developments. The worst-received German bond sale since the euro was created fuelled fears about Europe's worsening debt crisis and the Nikkei 225 index hit its lowest level since April 2009: Nikkei -1.8% .
- Standard and Poor's said Japanese Prime Minister Yoshihiko Noda's administration hasn't made progress in tackling the public debt burden, an indication it may be preparing to lower the nation's sovereign grade. "Japan's finances are getting worse and worse every day, every second," Takahira Ogawa, director of sovereign ratings at S&P in Singapore.
- UK-based banks are providing strained European lenders shut out of global funding markets with large amounts of financing through privately negotiated asset-swapping deals. The deals are said to involve relatively strong banks, based in Britain providing funds to lenders in countries hit hardest by the eurozone crisis, including Greece, Cyprus, Italy, Ireland, Spain and Portugal. The Financial Services Authority has warned that liquidity swaps may increase the risk of contagion in the financial system, shifting risk on to insurers or pension funds which may be on the other side of the trade.
- Europe's plans for treaty changes to enforce fiscal discipline in the eurozone may fall foul of popular anger in Ireland unless the EU creditor states agree to share more of the pain. The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues.
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