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Investment market update

Early Trading

UK stocks have opened lower this morning following losses in Asia overnight, with investors cautious ahead of a much-anticipated policy decision by the European Central Bank on Thursday.

World Markets

Most Asian stocks fell overnight in the wake of lacklustre cues from Wall Street and mixed regional data releases. Japan’s industrial output figures for October failed to meet expectations while retail sales data exceeded forecasts.

US stocks ended little changed in light trading on Friday, with consumer stocks falling as investors worried over early reports on the US holiday shopping season and Disney’s subscriber losses weighed on the market. US stock markets closed three hours earlier following the Thanksgiving holiday on Thursday, with many traders taking the day off.

UK stocks declined after mining shares fell to their lowest levels since 2005 on concern over the ongoing situation in China. Anglo American Plc was down 8.2% and Rio Tinto Group 3.2%. Banks added to the losses before the Bank of England gives the results of its stress tests this week. Standard Chartered Plc, which is facing the highest hurdles, dropped 1.3%.

Headlines

The International Monetary Fund (IMF) is expected to announce today that China’s currency, the yuan, will join the fund’s group of international reserve currencies. Just the US dollar, the euro, Japan’s yen and the British pound are currently part of this select band. Earlier this month, IMF head Christine Lagarde backed the yuan’s inclusion. If the decision is made, the yuan is likely to join the basket next year.

The Federal Reserve Board will consider on Monday a proposal to curb its emergency lending powers, a change demanded by Congress after the central bank’s controversial decision to aid AIG, Citigroup and others in 2008. A proposed rule would require that any future emergency lending be only ‘broad-based’ to address larger financial market problems, and not tailored to specific firms.

Economists surveyed by Bloomberg unanimously predict the European Central Bank will boost stimulus again this week, less than halfway through a 1.1 trillion-euro bond-buying program. The institution’s president must now find a way to meet expectations or risk an investor backlash that could halt the euro-area recovery.

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