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China data add to growth hopes

China data add to growth hopes

China’s economy strode further along the road of recovery from its slowest growth in three years. As Chinese economic data offered some upbeat news as industrial production and other measures posted an expectations-beating pick-up in October, while consumer-price inflation cooled to a 33-month low, possibly opening the door to more easing measures.  The stabilization looks to be on firmer ground making it pretty clear that there is no hard landing risk, that the economy will improve in the fourth quarter. Analysts expect to  see 9 percent year-on-year growth in the first half of next year.

In spite of strong and rebounding figure from Chinese data, the  world stock markets struggled on Friday as fears persisted over the so-called U.S. “fiscal cliff” that’s seen as a big threat to the economic recovery.

In the UK, the Bank of England has decided not to extend its quantitative easing (QE) stimulus programme, which has injected £375bn into the UK financial system and the MPC also decided to keep interest rates at 0.5%, the record low they have been held at since March 2009. The European Central Bank (ECB) has held the benchmark eurozone interest rate at the record low of 0.75%, as expected.

In US markets the trade deficit has fallen to its lowest level in almost two years, as exports reached an all-time high, official figures have shown. The deficit shrank by 5.1% to $41.5bn, the smallest since December 2010, as growing demand from emerging markets in South and Central America helped offset softer orders from Europe.

On the FX markets, GBP/EUR hit a five week high of €1.2562 following the BoE decision to leave monetary policy unchanged. In contrast, the ECB’s decision to keep rates on hold despite a worsening of eurozone data saw EUR/USD slip to a two month low of €1.2716 before staging a modest recovery early this morning.

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