Asian shares fell back towards their 2013 lows. The MSCI Asia Pacific index fell 0.7 per cent, towards its level in January. Japan’s Nikkei swung to a loss from a 1.7 per cent increase earlier, and the Topix fell more than 1 per cent, down 15 per cent from the five-year high it set in May. (Bloomberg)

The ESM will likely have a €50bn-€70bn limit on direct investments in banks. The condition on the bailout fund’s draft direct recapitalisation tool was outlined in a policy paper following six months of talks on breaking the “vicious circle” between sovereigns and banks. The limit to recapitalisation funds reflects the higher provisions on this kind of investment compared to the ESM’s more normal practice of lending to governments. (Reuters)

France is threatening to upstage talks on the EU-US trade pact. Paris is said to have made “l’exception culturelle” — protection of subsidies for local film, music and television — a “red line” in advance of the talks’ scheduled launch at this month’s G8 summit. (Financial Times) The French government has also led the charge over a budding EU trade war over tariffs on Chinese solar-power exports. Beijing retaliated with an investigation into imports of French wine. (Wall Street Journal)

Libor might become confused about its L under EU plans to supervise the rate from Paris. “Critical union benchmarks” including Libor and Euribor would come under the direct oversight of the France-based European Securities and Markets Authority under the draft proposal, which is due to be released this summer. (Financial Times)

The IMF conceded major mistakes over its handling of the Greek bailout. Failures to restructure Greece’s debt earlier and to forecast the extent of its economic collapse have dogged the programme since its beginning, the fund said in a paper published late on Wednesday. (Wall Street Journal)

SAC Capital told employees it expects to stay open following a wave of client redemptions. Although the fund will not release a number for the amounts withdrawn by investors after a deadline this week, it will remain open to outside money and does not plan large reductions of staff. Some investors may reconsider their redemption requests if the legal situation becomes clearer over the fund’s targeting by a government insider trading probe SAC founder Steve Cohen’s “decision not to throw in the towel is in keeping with his personality”. (Bloomberg)

Gabon is taking back assets from a subsidiary of Sinopec and two other international oil companies. The reclamation of a major onshore site from China’s Addax Petroleum comes before a licensing round for deep offshore discoveries in the Gabon Basin, said to rival the deep-water reserves lying off Brazil’s coast for size. (Financial Times)

Finra in the US has increased its scrutiny of dark pools. The requests for information from operators of the off-exchange share-trading venues are part of assessing whether their customers are being told how orders work, and to find out more about a fast-growing area of trading that remains relatively lightly-regulated. (Wall Street Journal)

The UK’s Help to Buy policy helped sell 4,000 new homes in its two months of existence, according to industry-produced data. The Home Builders Federation said it had received about 500 registrations a week under the scheme, which gives buyers a five-year interest-fee loan for up to 20 per cent of the value of a new-build home priced below £600,000. An extension of Help to Buy beyond new homes launches next year, allowing housebuyers to borrow with only a 5 per cent deposit with a government guarantee. (Financial Times)

A Kiev court has frozen local assets of Bank of Cyprus and Laiki after claims were filed by Ukrainian depositors hit by losses imposed as part of the Cypriot bailout. (Reuters)

COMMENT AND CURIOS

- A Chinese econblogger, the secret police, and a “tea chat”. (Bloomberg)

- Why Google today is like “General Electric in the late 19th century”. (Financial Times)

- Gerhard Schröder tells France to make German-style reforms. (Financial Times)

- Ford car parts, ultrasound devices, Barbie dolls: all 3D-printed. (Wall Street Journal)

- Robert Shrimsley on this year’s Bilderbergers: “Watford is often overlooked among Europe’s glamour sites…” (Financial Times)

OVERNIGHT MARKETS: DOWN

Asian markets
Nikkei 225 down -8.40 (-0.06%) at 13,006
Topix down -18.64 (-1.71%) at 1,071
Hang Seng down -252.25 (-1.14%) at 21,186

US markets
S&P 500 down -22.48 (-1.38%) at 1,608
DJIA down -216.95 (-1.43%) at 14,960
Nasdaq down -43.78 (-1.27%) at 3,401

European markets
Eurofirst 300 down -18.57 (-1.53%) at 1,192
FTSE100 down -139.27 (-2.12%) at 6,419
CAC 40 down -73.39 (-1.87%) at 3,852
Dax down -99.78 (-1.20%) at 8,196

Currencies
€/$ 1.30 (1.30)
$/¥ 99.16 (100.19)
£/$ 1.53 (1.53)

Commodities ($)
Brent Crude (ICE) down 0.06 at 102.98
Light Crude (Nymex) up 0.11 at 93.85
100 Oz Gold (Comex) up 0.60 at 1,399
Copper (Comex) down 0.01 at 3.36

10-year government bond yields (%)
US 2.09%
UK 2.01%
Germany 1.51%

CDS (closing levels)
Markit iTraxx SovX Western Europe at 84.67bp
Markit iTraxx Europe +3.3bps at 107.5bp
Markit iTraxx Xover +19ps at 443.4bp
Markit CDX IG +4.1bps at 85.5bp

Sources: FT, Bloomberg, Markit

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