The metal markets were undermined by the deal concocted by the EU and the International Monetary Fund to bail out the banks in Cyprus. The decision to tax deposit accounts to provide part of the money for the rescue frightened investors beyond the island’s shores. The proposal was then changed to spare those with smaller accounts but it was still booted out by Cypriot MPs.
As a senior banker is reported to have said, it was not rational to start a bank run but sensible to join in once one had started. So it remained to be seen whether the Cypriot saga - with concerns about the viability of at least two Cypriot banks and substantial Russian investment - would damage confidence in the eurozone once more. As MRW went to press, Cypriot banks remained closed.
Industrial production in the eurozone was down by 0.4% between December 2012 and January 2013 and by 1.3% between January 2012 and 2013. Corresponding figures for the full EU27 showed a 0.4% drop in production between December and January and a 1.7% drop across the year.
Economic sentiment in Germany increased by 0.3 points in March, according to the ZEW economic research institute. After substantial increases in December, January and February, the indicator had stabilised at a nearly unchanged but respectable 48.5.
Industrial production in the US, meanwhile, rose by 0.7% in February, having been unchanged in January, according to the Federal Reserve. The central bank added that industry’s capacity utilisation had increased to 79.6% in February from 79.2% in January.
The Chinese economy was also making progress, even if the newly appointed prime minister Li Keqiang talked of the difficulties of achieving the previously announced target of 7.5% annual growth.
Other Chinese indicators were more reassuring. The leading indicator index compiled by US trade association Conference Board rose by 1.3% in February to 257.5 (2004 = 100), after a similar 1.3% gain in January and a rise of 0.4% in December. Equally, foreign direct investment in China increased by 6.32% year-on-year in February, according to the ministry of commerce. This was a vote of confidence in the country’s economy because it had been preceded by eight declines. A drop of 4.8% was expected by the markets for February.