• Shanghai share index ends up 3.2%, biggest one-day gain in 7 weeks
  • French Oct PPI +0.8% m/m, -6.6% y/y, stronger than median forecasts +0.2%, -7.3% respectively
  • Japan PM Hatoyama: Should act swiftly in responding to yen rise. Fears of double-dip recession have not disappeared. Will remain cautious over Dubai credit worries
  • Russia is seriously concerned by Iran plans for expanding uranium enrichment -IFAX quoting Foreign Ministry source
  • UK mortgage approvals 57,345 in October vs 56,205 in September, highest since March 2008
  • Japan Strategy Min Kan: Govt agrees to measures to stop yen rise. Agrees to cooperate with BOJ as much as possible.
  • Japan Bank Min Kamei: Intervention by Japan alone would have affect of just sending money to U.S.
  • Euro zone November inflation estimated at +0.6% y/y, stronger than median forecast +0.4%
  • German Ifo institute survey shows more firms find credit conditions restrictive in November versus October. Corporate finance situation remains critical in Germany and is a risk for the recovery
  • Top Dubai finance official: There is a big confusion between Govt of Dubai and Dubai World. Govt does not guarantee Dubai World’s debt. Creditors carry part responsibility for their lending decision. Restructuring might affect creditors in short-term, but there are long-term benefits

The USD is a little firmer across the board. The Dubai government has come out and said it won’t guarantee Dubai World’s debt. A top Dubai finance official has stated “Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the government, which is not correct.” Whoops.

EUR/USD is down at 1.5025 from early 1.5050, not helped by late morning comments from top Dubai finance official. Stood around unchanged when comments hit the wires.

Cable is down at 1.6475 from early 1.6535, EUR/GBP up at .9120 from .9095. Cable has seen a volatile morning. It came under some early pressure as the Bundesbank bought its month end EUR/GBP, trading well below 1.6500.

However strong buying from a UK clearer down at 1.6480/90 and selling of the EUR/GBP cross by a major German name up at .9125/30 helped cable back above 1.6500.

There it sat until the Dubai comments came out and sterling came under heavy pressure given UK banks’ exposure there. Cable went as low as 1.6457 and EUR/GBP as high as .9138 before steadying.

USD/JPY sits a little firmer, up at 86.35 from an early 86.10. The comment from Japanese Strategy Minister Kan (see above) seemed to unnerve the yen bulls, with USD/JPY rallying to 86.50/60 area, before comment from Japan Bank Minister Kamei (see above) helped settle intervention fears.

Talk of general month end USD sales, especially against AUD and JPY has helped limit USD gains.