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Required Reading

Five essential stories of the week Add to ...

Each week, Report on Business editors choose five stories that shouldn't be missed. Here are the 'must reads' for the week of Nov. 8, 2010:

Tension and mistrust at G20

Group of 20 leaders face a critical test at their Seoul summit as mounting fury over economic measures taken by the biggest players - the United States and China - threatens to hamper efforts to rebalance global trade and fashion a system less prone to crises.

Prime Minister Stephen Harper, U.S. President Barack Obama and their counterparts woke up Thursday to briefing books and nervous officials, hours away from what threatened to be the most tense session since the G20 met for the first time two years ago in Washington.

A backlash from developed and emerging economies against the Federal Reserve's plan to buy $600-billion (U.S.) in government bonds, to kick-start America's recovery, is casting a pall over negotiations on everything from exchange rate policies, the overhaul of financial regulation, and reviving dormant global trade talks.

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Irish bond woes send shock waves across Europe

Ireland's high debts and hard times have triggered a second wave of sovereign debt fears in Europe, as investors dump bonds in troubled parts of the euro zone.

Spooked investors bailed out of 10-year Irish bonds, sending yields soaring to deeply speculative levels. Worries are mounting that commercial bank losses will turn out to be far higher than previously estimated and that the fragile Irish government will be unable to reach a political deal on tough new budget measures.

Investors are also unnerved by a German proposal to make bondholders take a haircut on their holdings in the event of any restructuring in the euro zone.

Rumours circulated Wednesday that the International Monetary Fund has been called in to help sort out the Irish mess.

"That's basically the catalyst here," said Richard Kelly, senior global strategist with Toronto-Dominion Bank in London. "Any time the potential involvement of the IMF starts getting thrown around, the markets get very worried."

But even setting aside what some traders dismissed as market noise, Irish bonds have been under increasing pressure for days. And worries about Portugal and Greece have been reignited, sending bond yields for those countries soaring.

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Is the commodities surge sustainable?

The accelerating bull market in commodities may be a boon to Canada if it can be sustained, but some of the country's top economists suspect the stampede is a market mirage.

"They've gotten a bit carried away," said Peter Buchanan, senior economist at CIBC World Markets. "There may be a reality check coming for many of these commodities in the next few months."

The numbers, unquestionably, scream "bull": Thomson Reuters/Jefferies CRB index, the global benchmark for the commodity market, rose to a 25-month high Tuesday, extending its streak of gains to nine consecutive trading days. The index has risen in 18 of 22 sessions over the past month, during which time the index is up 8 per cent.

Those gains are just part of an even bigger upswing in the commodity market, which has soared 22 per cent since late August. Spot gold prices touched an all-time high of $1,420.90 on Tuesday before falling 1.14 per cent to $1,393. Copper is threatening its record peak and silver hit a 30-year high before falling 3 per cent. Oil hit a two-year high of $87.63 before falling to $86.40.

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U.S. border bridge project sidetracked again

A $5.3-billion (U.S.) megaproject to build a new bridge across the continent's busiest trade gateway between Windsor and Detroit has hit a fresh political roadblock in Michigan, to the frustration of Canadian officials who have been pushing the long-delayed plan.

After last week's elections returned a Republican to the state governor's mansion, the Michigan Senate put off a key vote on the bridge, possibly delaying final approval for months. It's a major setback for what would be the most vital piece of trade infrastructure linking Canada and the United States.

"Every week it's something else," complained David Bradley, president of the Canadian Trucking Alliance, who speaks for the thousands of truckers who cross the border every day. "It's gone on and on."

The bridge would relieve often heavy congestion along a border that already carries more than a quarter of all Canada-U.S. trade and create tens of thousands of jobs in a region ravaged by the decline of the auto industry. Ottawa is so committed to getting it built that it put up $550-million towards Michigan's share of the cost earlier this year. And the project enjoys the support of Washington, Ontario, the Detroit Three auto makers and most business groups on both sides of the border.

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Rush to cash in gold attracts tarnish

The gold frenzy has sparked a rush to sell everything from tooth fillings to old rings from ex-beaus, but it has also spawned a new type of gold digger.

As people rush to profit from a booming gold price - heading to gold parties, cash-for-gold stores and pawn shops - authorities are issuing warnings about seamier outfits luring consumers, through the Internet, to mail in jewellery.

"It's like the Wild West," said Jo-Ann Sperano, a mediator specialist at New York-based Jewelers Vigilance Committee (JVC), a watchdog for the jewellery industry.

"There are too many of these people ready to take advantage of consumers for a quick buck."

On Thursday, gold reached $1,403.30 (U.S.) an ounce.

The cash-for-gold phenomenon is gaining momentum in Canada, but the darker side of this unregulated industry is the mail-order business, companies offering cash to consumers who send them jewellery.

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