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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.
Chinese shares <.CSI300><.SSEC> saw a late rally to end the day
marginally higher, while London's FTSE <.FTSE>, Germany's DAX
<.GDAXI> and France's CAC40 <.FCHI> started up 0.4, 0.9 and 0.6
percent respectively to put Europe on the front foot.
Benchmark U.S. and European bond market yields [GVD/EUR] and the
euro <FRX/> began to edge up as the appetite for risk started to
pick up again, though the wobbles in China left copper <CMCU3> near
its lowest since mid-2009 at $4,917 a ton.
 "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 - 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
0.4 percent to 98.883. The U.S. currency ran into a little
profit-taking against the yen, nudging it down 0.3 percent to 122.86
<JPY=>, from an early 123.15.
That gave some respite to emerging market currencies in Asia
[EMRG/FRX] and the euro <EUR=> traded back above $1.0740 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, evidence that concerns about Chinese demand linger.
Bank in Europe, sterling <GBP=> lost some of the ground it had made
overnight, drooping 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 towards four-month highs after
left-wing parties ousted the austerity-minded centre-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 U.S. Treasury market is closed on Wednesday for Veterans Day,
but Wall Street will be open.
In commodities, the firm dollar continued to weigh on prices with
zinc at its lowest in over five years.
Oil prices resumed their decline on news U.S. crude stocks jumped
last week. U.S. crude <CLc1> lost 46 cents to $43.75 a barrel, while
Brent <LCOc1> shed 22 cents to $47.22.
(Additional reporting by Wayne Cole in Sydney and Nichola Saminather
in Singapore; editing by John Stonestreet)
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