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 China's October industrial production growth cooled to 5.6 percent
year-on-year, slightly lower than the 5.8 percent gain economists
polled by Reuters had expected, though it was cushioned by a
just-above-forecast 11 percent jump in retail sales.
That left financial markets with a divided feel as the prospect of
the first rise in U.S. interest rates in almost a decade but also
another shot of stimulus from the European Central Bank continued to
muddy the waters too.
Europe's main markets were having the best day of the month so far
with London's FTSE <.FTSE>, Germany's DAX <.GDAXI> and France's
CAC40 <.FCHI> up 0.5, 1.1 and 0.8 percent respectively after a late
rally had helped Chinese shares <.CSI300><.SSEC> end Asia's session
marginally higher.
With risk appetite gaining, Wall Street <ESc1> was expected to
follow suit when it resumes, although trading is likely to be
thinned with Treasury bond and some other U.S. markets closed for
Veteran's Day.
Benchmark European bond market yields and the euro <FRX/> were
sliding again on the ECB bets as the wobbles in China left copper
<CMCU3> - China's growth hungry economy is its biggest consumer -
near its lowest since mid-2009 at $4,914 a tonne.
Zinc and lead, two other industrial metals, hit multi-year lows as
well.
"China's recovery is slow. It's really affecting all the base
metals," said analyst Helen Lau of broker Argonaut Securities in
Hong Kong.
In the currency markets, the dollar, which has been on a charge
since strong U.S. jobs data last week boosted the chances of Federal
Reserve rate hike next month, took a bit of a breather.
The dollar index <.DXY> eased away from a seven-month peak to slip
0.1 percent to 99.183 although it was starting to find some renewed
traction against the yen as it steadied itself at 123.13 <JPY=> in
the first flurry of New York deals.
Its earlier dip gave some respite to emerging market currencies and
the euro <EUR=> trudged back down toward $1.07 ahead of a speech in
London by ECB President Mario Draghi and in Madrid by the bank's
number two, Vitor Constancio.
"Market expectations of further ECB QE are high," said Alan Higgins,
chief investment officer at Coutts in London. "He (Draghi) has to
deliver (at next month's ECB meeting) and it has to be something
substantial otherwise the euro is going to shoot up."
STERLING STRUGGLES
Overnight in Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan <.MIAPJ0000PUS> ended barely changed as China's late
bounce and modest gains in Australia and in Tokyo <.N225> offset a
1.4 percent drop in Taiwan. <.TWII>.
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A Reuters survey showed confidence among Japanese manufacturers fell
in November for a third straight month to levels unseen in about
2-1/2 years, which was evidence that concerns about Chinese demand
linger.
Bank in Europe, sterling <GBP=> lost some of the ground it had made
overnight, dropping as low as $1.5131 after UK jobs data showed
wages growing more slowly than expected despite the lowest level of
unemployment since early 2008.
Portuguese bond yields rose back toward four-month highs after
left-wing parties ousted the austerity-minded center-right
government in Lisbon.
Two-year German government bond yields, meanwhile, slipped to within
a whisker of recent record lows amid mounting expectations of
further ECB stimulus.
The dollar's recent strength and the China uncertainty continued to
weigh on commodities prices.
Compounding at least half decade-lows for copper, zinc and lead, oil
prices resumed their decline on news that U.S. crude stocks jumped
last week. U.S. crude <CLc1> lost 60 cents to $43.60 a barrel, while
Brent <LCOc1> shed 32 cents to $47.12.
"I see some bright spots and some continued softness (in the China
data), however there is a definite bearish tone from Chinese and
Asian speculators," said Vivienne Lloyd, a metals analyst at
Macquarie in London.
(Additional reporting by Wayne Cole in Sydney and Nichola Saminather
in Singapore; Editing by Tom Heneghan)
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