Improved prospects for the Chinese economy allowed metal prices to rise, and the trend was reinforced by technical buying - encouraged by favourable chart patterns and momentum.
The latest data from China showed the country’s industrial production up by 10.1% between November of last year and November this year. This was up from 9.6% growth in October and ahead of expectations of a 9.8% increase.
Furthermore, retail sales were up by 14.9% year-on-year in November against 14.5% in October and expectations of a 14.6% rise. Inflation was up, but not seriously, to 2% year-on-year in November from a nearly three-year low of 1.7% in October. One observer described this as “a comfort zone”.
Elsewhere, the news was less good. Discussions in the US aimed at avoiding falling over the so-called fiscal cliff made as little progress as ever. But the markets took that calmly, assuming, at least for the time being, that a deal would be done without much damage to the economy.
Europe was mostly disappointing. GDP in the eurozone fell by 0.1% between the second and third quarters of this year, according to the European agency Eurostat, and GDP rose by 0.1% in the 27 members of the EU in that time. Compared with the third quarter of 2011, eurozone GDP was down 0.6% and down 0.4% in the EU27.
The European Central Bank forecast growth in the eurozone for next year at between -0.9% and +0.4%, following a decline of about 0.5% this year. But growth could return: the bank suggested that the eurozone could grow by between 0.2% and 2.2% the year after next.
Meanwhile, the indicator of economic sentiment compiled for Germany by the ZEW economic research institute improved by 22.6 points in the past month to stand at 6.9 points in December. This was the indicator’s first time in positive territory since May 2012. While an improvement, the data suggests that the German economy is bottoming out rather than moving into an upswing.
Expectations for the eurozone have also improved, according to ZEW, with the relevant indicator of expectations up by 10.2 points to 7.6 points in December.