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Investment market update

Early Trading

UK stocks are expected to open higher this morning as an oil price rally and news that the Bank of Japan had cut interest rates released the recent pressure on equity investors.

World Markets

Asian stocks rose to a two week high and the yen weakened as the Bank of Japan unexpectedly adopted a negative interest rate to support the world’s third-biggest economy.

US stocks closed higher after wavering all day between gains and losses. Oil prices climbed for the third day this week as Russia and OPEC discussed cuts in production, sending energy stocks higher.

UK stocks closed the session lower even though oil and mining stocks were showing good gains, as the price of oil rose. Anglo American extended gains to stand up 8% on news of higher output at its Brazilian mine and Royal Dutch Shell shares rose more than 2%. Lloyds Banking Group lost 1.3% on news the government was delaying its sale of its remaining stake.

Headlines

France’s recovery slowed in the fourth quarter as terrorist attacks kept tourists away and discouraged consumers from spending. Gross domestic product grew 0.2% in the final three months of 2015, national statistics office Insee said in a statement.

Bank of Japan Governor Haruhiko Kuroda sprung another surprise on investors, adopting a negative interest rate strategy of minus 0.1%, to spur banks to lend in the face of a weakening economy.The move to penalize a portion of banks’ reserves complements the BOJ’s record asset-purchase programme, including 80 trillion yen a year in government bond purchases, which was kept unchanged at the board meeting.

Oil extended gains from the highest close in three weeks as Russia’s energy minister said that OPEC and other producers may meet to discuss output. Delegates from the group said no meeting has been planned. Energy Minister Alexander Novak said the level of a proposed cut would be a matter for discussion, Interfax reported. At the moment, no talks have been scheduled with members of the Organization of Petroleum Exporting Countries, according to four delegates. Iraq said earlier in the week that Saudi Arabia and Russia were more flexible about cooperating to reduce output.

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