ECB - likely rate rise on Thursday could pull back commodity prices as the cost of financing metal starts to rise for key investors

• Euro may fall as investors worry about potential economic damage caused by higher ECB rates.
• Credit tightening in China may have more impact but indications of potential social unrest and some recent comments from unofficial government sources indicate that Chinese inflation is seen as under control and that the government may be easy on the economic brakes. Higher food prices in China generally lead to social unrest with the potential for violence in many regions if inflation rises beyond trigger levels.
• US rates look likely to remain low on comments from Bernanke on 'stabilisation' of 'transitory' inflation

Qingming - tomb sweeping festival keeping Chinese and HK investors busy creating quiet markets elsewhere

Japan - proposal to release radioactive water into the sea may spark international concern.

• China has already been seen quarantining Japanese visitors and banning the import of Japanese scrap on radiation concerns.
• The proposal to release some 10,000 gallons of radioactive water is sure to spark wider concerns and protests.
• China may take exception to the move and use it as reason to sanction Japanese key trade flows

What happens if the unthinkable happens?

• eg if oil prices rise to unfeasibly high levels and oil becomes scarce?
• If Middle Eastern states see so much unrest that pipelines are severed and supplies are disrupted so that Western Economies are forced to ration fuel supplies.
• Can the West feasibly intervene in a number of Libyan type conflicts?
• The UN led mission in the Ivory Coast might succeed relatively easily but other North African conflicts harder to resolve and the revolutionary fire in the Yemen has the potential to smoulder and spread further.

Equinox - management extend their US$4.8bn bid for Lundin Mining and postpones shareholder vote by two weeks as management wait for a formal offer from China Minmetals

ECONOMIC NEWS

Dow Jones Industrials +0.19% at 12,400.03

Nikkei 225 -1.06% at 9,615.55

HK Hang Seng +1.46% at 24,150.58

China - New forecasts from Aluminium Corp of China have stated that the country will maintain stable growth of around 7 to 8% over the next 5 to 10 years.

US - Expectations before a report due for release later today are that Service Industries probably grew in the March at the fastest pace in more than 5 years.

• Fed Chairman Ben Bernanke has raised the prospects of a rate rise, stating that inflation must be watched "extremely closely" Previously he had indicated that the Fed were prepared to respond "as necessary to inflationary pressures"

Japan - Tokyo Electric Power Company has reportedly been dumping radioactive water from its crippled Fukushima power plant into the sea.

Portugal - Moody's have cut the country's long term government bond ratings by one step to Baa1 from A3.

Ivory Coast - A significant escalation in international intervention in the country has seen both France and the UN striking targets at the compound occupied by incumbent President Laurent Gbagbo. Reports are emerging that Gbagbo may finally be trying to negotiate his surrender through the French Ambassador however with the national North, South divide in the country local regional violence may not be so easy to overcome.

UK - The fragile nature of the recovery was emphasised by the Reed Job Index that showed that job creation slowed last month and job insecurity rose.

• Markit Economics Ltd reported that construction activity expanded at a faster pace than estimated last month.

Australia - Central Bank have left interest on hold and the nation recorded a slightly unexpected trade deficit of US$212m in February.

Zambia - Officials have made a potentially very controversial decision by deciding not to pursue the case against two Chinese supervisors who shot 13 coal miners last year during a wage dispute at the Chinese owned Collum Coal Mine.

Currency - The pound rose against the majority of its counterparts today on the back of the positive construction data, implying that the property market may be experiencing a slight uplift in fortunes. The dollar is up this morning against the euro on the back of the inflation comments made by the Fed Chairman. The Aussie dollar fell this morning on the back of the central bank's decision to hold rates.

US$1.417/eur vs $1.422eur yesterday. Yen84.28/$ vs 84.05/$ SAr6.74$ vs 6.71/$ $1.614GBP vs 1.613/GBP

COMMODITY NEWS

Precious metals:

Gold US$1,434/oz vs US$1,433/oz on yesterday - Prices have moved up today as the inflationary concerns return to the forefront of investors minds

• SPDR gold trust holdings remain at 1,211.23 (38.942moz) Current value US$55,878bn

Platinum US$1,785/oz vs US$1,778/oz yesterday -

Palladium US$783/oz vs US$779/oz yesterday -

Silver US$38.49/oz vs US$38.37/oz yesterday - Prices have moved up to the most expensive level since the early 1980's relative to gold as investors lock into the duel value store and industrial appeal of silver.

Rhodium US$2,375/oz vs US$2,375/oz yesterday -

Base metals:

Copper US$9,373/t vs US$9,420/t - physical ETFs funds being planned are worrying copper producers

• Antofagasta's Marcello Awad comments that they will create a fictitious market which will lead to fantastic high prices when the market is in deficit and will lead to a longer length of time for the market to return to fundamentals when the market is in surplus

• Xstrata has stated that it expects buyers to return to the market in the coming months and the market will see a recovery in demand from China.

Aluminium US$2,642/t vs US$2,638/t yesterday -

Nickel US$25,495/t vs US$25,759/t yesterday -

Zinc US$2,433/t vs US$2,423/t yesterday -

Lead US$2,757/t vs US$2,761/t yesterday -

Tin US$31,730/t vs US$31,660/t yesterday -

Energy:

Oil US$120.80/bbl vs US$119.25/bbl yesterday - Prices have moved up to a record today in sterling terms, with the latest spate of production concerns emerging from Gabon in West Africa, as workers strike.

Gas US$4.284/MMBTU vs US$4.313/MMBTU yesterday -

Uranium US$62.50/lb vs US $60.00/lb last week -

Coal - The disruption to the coal industry in Australia has lead to the both India and China intensifying efforts to invest in coal assets in Africa, specifically South Africa according to Universal Coal. Indonesia, the world's largest exporter of coal for electricity generation is reportedly considering restrictions on mineral exports to safeguard its economy. China reportedly bought a record 165 million tons of coal in 2010

Mining this week:

Angle Mining (ANGM LN) 5p, mkt cap £23m - First gold imminent. Moves to raise A$8m in medium term note

Anglo Pacific (APF LN) 327p mkt cap £356m - Company admitted to the FTSE 250

Buy

China Minmetals bids $6.3bn for Equinox following the collapse of its bid for Lundin Mining

Cluff Gold (CLF LN) 116.5p mkt cap £153m - New exploration license granted in Mali

Coal of Africa (CZA LN) 84p mkt cap £444m - Vele Integrated water license granted

Mantra Resources (MRU AX) 6.68, mkt cap A$898m - ARMZ revised offer terms

New offer A$7.02/s (A$6.87/s + A$0.15 special unfranked dividend)

Pan African (PAF LN) 11.75p mkt cap £170m - Government awards mining license on Manica

Ormonde Mining* (ORM LN) 10.13p mkt cap £25m - Consolidation of 100% of Barruecopardo

Corporate - BUY - TP 19p

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