China tightens temporarily

It is an indication of how fragile the global economy is perceived to be that while the Fed and BoJ have announced monetary accommodation for extended periods, the PBC is tightening for a temporary period. From Reuters on Monday:

China has raised reserve requirements for six large commercial banks on a temporary basis, a surprise move to drain cash from the economy but avoid over-tightening, four sources told Reuters on Monday.

The 50-basis-point increase, which takes required reserve ratios to 17.5 percent for the country's biggest lenders, is the first since May this year. The rise will be in place for two months before ratios are returned to their original levels, the sources said.

Data on Monday at least suggest that the UK economy is among the fragile ones. Reuters reports that house prices have been falling recently.

House prices in England and Wales suffered their sharpest fall last month since May 2009, a survey from the Royal Institution of Chartered Surveyors indicated on Tuesday.

The RICS house price index dropped to -36 in the three months to September from -32 in the three months to August, a drop the institution blamed on supply pressures as homeowners' rushed to sell before painful public spending cuts kick in next year.

And UK retail sales have weakened. Again from Reuters:

British retail sales growth halved last month, led by a drop in big-ticket items as uncertainty ahead of government spending cuts made consumers nervous, a survey showed on Tuesday.

The British Retail Consortium said retail sales values were 0.5 percent higher than a year ago in September on a like-for-like basis, down from 1.0 percent in August. Total sales, which include new floorspace, were 2.2 percent higher against 2.8 percent in August.

Economic data from the euro area on Monday were mixed.

Bloomberg reports that French industrial output stalled in August.

French industrial production unexpectedly stalled in August, suggesting a recovery in the euro region’s second-largest economy is losing momentum.

The increase in output in July was revised lower to 0.8 percent from the 0.9 percent originally reported, Paris-based national statistics office Insee said today. Economists had forecast a 0.3 percent increase in August, according to the median of 13 estimates in a Bloomberg News survey. Output climbed 3.2 percent from a year earlier.

However, Bloomberg reports that Italian industrial output rose by the most in seven months in August.

Italian industrial production rose the most in seven months in August as gains in exports more than offset weak domestic demand.

Output climbed 1.6 percent from July, when it increased a revised 0.3 percent, Rome-based statistics office Istat said today. Economists had forecast a 0.1 percent gain in August, according to the median of 20 estimates in a Bloomberg survey. Output jumped 9.5 percent from a year earlier.