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Investment market update

Early Trading

UK stocks are set to open mixed this morning, with investors looking forward to Federal Reserve chair Janet Yellen’s testimony on Capitol Hill later today for any insight into the US central bank’s monetary policy path.

World Markets

Asian stocks dropped as a week of volatile trading in global equities continued, with Japanese shares extending losses after the biggest one-day decline since August the previous day.

US stocks ended little changed as a late-day rally led by materials and healthcare shares offset another drop in oil prices. Energy was the day’s weakest sector, with the index falling 2.5% as US crude oil settled 5.9% lower.

UK stocks declined 1.0% to their lowest level since November 2012 at the close of trading in London, reversing gains of as much as 0.9%. Anglo American Plc, BHP Billiton Ltd. and Glencore Plc dropped more than 5.8%.

Headlines

The days of the €500 note could be numbered, and not just because it’s the favourite of crime lords everywhere. As the European Central Bank ponders pushing its deposit rate further below zero, it finds itself aligned with authorities wanting to curb a means of tax evasion and terrorism financing. If, as mooted by ECB President Mario Draghi, policy makers abolished the region’s most-valuable bank note, they’d also help remove a major barrier to pushing interest rates lower.

Former City regulator Adair Turner has warned that without radical policies, the UK economy could be stuck with low interest rates ‘almost indefinitely’. He told the BBC ‘interest rates in the UK may not go up beyond 2% by 2020’. Lord Turner also warned about the dangers of peer-to-peer lending, which matches individual borrowers with lenders.

Deutsche Bank AG is considering buying back some of its bonds, potentially countering this month’s selloff over concern that Germany’s biggest bank will struggle to make payments on its riskiest debt. While the bank has ample cash to make the purchases, no decision has been made and a buyback may yet be deemed unattractive.

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