Dow closes above 13,000

US stocks rose again on Tuesday, with the Dow Jones Industrial Average rising 23.61 points, or 0.2 percent, to 13,005.12. It was its first close above 13,000 since 2008. The S&P 500 rose 0.3 percent to 1,372.18.

The positive performance of US stocks came despite mixed economic reports on Tuesday. The Conference Board's consumer confidence index rose to 70.8 in February, a one-year high. However, new orders for durable goods fell 4.0 percent in January, the biggest decline since January 2009, and the S&P/Case Shiller index of home prices in 20 metropolitan areas fell 0.5 percent in December.

European stocks also rose on Tuesday, with the STOXX Europe 600 rising 0.2 percent to 264.33. This was despite the ECB suspending the eligibility of Greek debt as collateral on Tuesday following Standard & Poor's downgrade of Greece to "selective default" on Monday.

There was positive economic data for the euro area on Tuesday though. The European Commission's index of executive and consumer sentiment in the euro area rose for a second month in February, increasing to 94.4 from 93.4 in January.

Greece in selective default, S&P 500 climbs to highest since June 2008

Standard & Poor's has cut Greece's credit rating to "selective default".

However, Greece's debt problems are no longer weighing on markets. The S&P 500 edged up 0.1 percent to close at 1,367.59 on Monday, the highest since June 2008. The STOXX Europe 600 fell 0.3 percent.

The US stock market got a little boost from a report on Monday showing that pending home resales rose 2.0 percent in January, which provided yet more evidence of a recovering housing market.

Also positive for the US market was a report from the Dallas Federal Reserve showing that its general business activity index rose to 17.8 in February, its highest reading since November 2010, from 15.3 in January.

US economy gets boost from recovery in housing

Growth in the United States economy appears to have picked up pace again, thanks in part to a housing sector that appears to be finally seeing a sustained recovery.

The Commerce Department reported last month that real gross domestic product increased at an annual rate of 2.8 percent in the fourth quarter of last year, faster than the 1.8 percent rate in the prior quarter.

Among the contributors to the acceleration in growth was residential investment, which grew at a 10.9 percent rate in the fourth quarter compared to 1.3 percent in the third.

Data last week from the Federal Reserve Bank of Chicago showed that the US economy has continued to perform well at the start of this year. The Chicago Fed National Activity Index decreased from 0.54 in December to 0.22 in January but the three-month moving average increased from 0.06 in December to 0.14 in January, its highest level since March 2011. According to the Chicago Fed, this suggests that economic growth was slightly above its historical trend.

The economy is likely to continue to get a boost from the housing sector as data in recent weeks indicate that the recovery in housing has continued at the beginning of this year.

Housing starts rose 1.5 percent in January while building permits rose 0.7 percent.

Existing home sales jumped 4.3 percent in January to the highest level since May 2010.

Sales of new single-family homes slipped 0.9 percent in January to a 321,000-unit annual rate. However, that was still higher than the fourth quarter average of 318,000 units, which had been the highest quarterly rate since the second quarter of 2010.

Finally, the National Association of Home Builders/Wells Fargo housing market index rose to 29 in February from 25 in January. It was the fifth consecutive increase and brings the index to its highest level since May 2007.

US new home sales slip but consumer sentiment improves

US new home sales fell in January but the overall tone of Friday's economic data was positive. Reuters reports:

The Commerce Department said sales of new single-family homes slipped 0.9 percent last month to a seasonally adjusted 321,000-unit annual rate.

However data for October, November and December were revised to show a much higher sales pace than previously reported, giving the report a stronger tone and putting January's figure above economists' expectations...

The Thomson Reuters/University of Michigan's final index of consumer sentiment in February edged up to 75.3, the highest since February last year, from 75.0 in January.

In Europe, Germany and the UK confirmed earlier estimates that both their economies contracted 0.2 percent in the fourth quarter.

Meanwhile, Greece’s government has formally asked investors to exchange their holdings of government debt for new securities.

Dow at highest level in almost 4 years

US stocks rose on Thursday, with the Dow Jones Industrial Average gaining 46.02 points, or 0.4 percent, to 12,984.69, its highest level since May 2008.

The rise in stocks came amid a continued flow of positive US economic data on Thursday. Initial claims for state unemployment benefits held at 351,000 last week, the lowest level since March 2008. The Federal Housing Finance Agency reported that home prices rose 0.7 percent in December.

In contrast, the eurozone economy looks set to shrink in 2012. In its latest forecast released on Thursday, the European Commission said that economic output in the euro area will contract 0.3 percent this year. Its earlier forecast was for 0.5 percent growth in 2012.

Among the outperformers in the euro area is Germany, which is expected to grow 0.6 percent this year. Indeed, business confidence rose in February, with the Ifo's business climate index rising to 109.6, its fourth straight increase and the highest reading since July, from 108.3 in January.

Eurozone composite index falls, US existing home sales rise

Wednesday's economic reports show that the outlook for the euro area economy remains weak. While industrial orders rose 1.9 percent in December, the flash reading of Markit's manufacturing PMI rose to just 49.0 in February from 48.8 in January, indicating that the sector remained in contraction. With the services PMI falling to 49.4 in February from 50.4 in January, the composite index also fell to 49.7 from 50.4.

China's manufacturing showed greater improvement but also probably continued to shrink in February. The preliminary reading of HSBC's manufacturing PMI rose to 49.7 in February from 48.8 in January.

As usual, the US economy stood out on Wednesday with positive data. Existing home sales jumped 4.3 percent in January to the highest level since May 2010.

Greece gets bailout

Greece finally got its bailout on Tuesday. Bloomberg reports:

Greece reached an agreement with its private creditors to secure the biggest sovereign restructuring in history, paving the way for a second bailout of the debt- ridden nation and averting an economic collapse.

Investors will forgive 53.5 percent of their principal and exchange their remaining holdings for new Greek government bonds and notes from the European Financial Stability Facility, the International Institute of Finance said in a statement today after a final round of talks overnight. The coupon on the new bonds was set at 2 percent until February 2015, 3 percent for the next five years and 4.3 percent until 2042.

While there remains some doubt as to whether Greece can avoid default in coming years despite the restructuring, investors appear to be confident that there is little risk of contagion for the time being. Italian and Spanish bonds rose on Tuesday and both Spain and the European Financial Stability Facility successfully sold bills.

Meanwhile, consumer confidence in the euro area has also improved. The European Commission reported on Tuesday that its index of household sentiment in the euro area rose to minus 20.2 in February from minus 20.7 in January.

The US economy has performed better than the euro area recently and the trend appears to remain intact. While the Chicago Fed National Activity Index decreased to 0.22 in January from 0.54 in December, the three-month moving average increased to 0.14 in January, its highest level since March 2011, from 0.06 in December.

Greek bailout: Talks continue

The bailout for Greece did not materialise on Monday. European finance ministers continued to haggle into the night in Brussels over the terms of new loans to Greece.

Meanwhile, there were some positive economic data out in the euro area on Monday.

Frence business confidence ended a seven-month decline in February, with Insee's manufacturing index holding at 92. More encouragingly, the order books index rose to minus 26 from minus 28 and the production outlook index increased to minus 27 from minus 36.

A report from Italy on Monday showed that industrial orders rose 5.5 percent in December.

China cuts bank reserve requirement, Japan posts record trade deficit

China's central bank has cut its bank reserve requirement. The People's Bank of China announced on Saturday that it would cut commercial banks' reserve requirement ratio by 0.50 percentage points from February 24.

Also on Saturday, the National Bureau of Statistics reported that 48 Chinese cities out of 70 tracked saw home prices fall in January. Prices for the remaining 22 were flat.

Meanwhile, in neighbouring Japan, exports declined again in January, leaving it with a record trade deficit of 1,475 billion yen. Exports fell 9.3 percent from a year ago while imports rose 9.8 percent.

US stocks moves close to last peak as leading index rises

US stocks rose on Friday, the S&P 500 rising 0.2 percent to 1,361.23 and leaving it just 0.2 percent below its April peak of 1,363.61.

The gain in stocks came as US economic data continued to come in positive.

The Conference Board reported on Friday that its index of leading indicators rose 0.4 percent in January. This followed a 0.5 percent rise in December. The latest increases were the strongest back-to-back gains in almost a year.

Another report on Friday showed that the consumer price index rose 0.2 percent in January, as did the core index that excludes food and energy. The year-on-year change in the overall index was 2.9 percent, the smallest increase since March 2011. However, the year-on-year change in the core index was 2.3 percent, the biggest since September 2008.

There was also positive data in the UK, where retail sales volumes rose 0.9 percent in January.

Riksbank cuts interest rate

Sweden's central bank, the Riksbank, cut its benchmark interest rate by a quarter of a percentage point to 1.5 percent on Thursday and predicted that the rate will remain at that level through the first quarter of next year. It said: “Sluggish growth in the euro area has subdued demand for Swedish exports.”

While the eurozone economy did indeed contract in the fourth quarter, just outside the euro area, Nationwide's consumer confidence index for the UK jumped to 47 in January from 38 in December.

Meanwhile, across the Atlantic, US economic data on Thursday continued their positive trend. Initial claims for state unemployment benefits fell 13,000 to 348,000, the lowest level since March 2008. The Philadelphia Federal Reserve Bank's business activity index rose to 10.2 in February from 7.3 in January. Housing starts rose 1.5 percent in January.

Data on US inflation were mixed though. Overall producer prices rose just 0.1 percent in January but producer prices excluding food and energy rose 0.4 percent, the largest gain since July.

Greece bailout in doubt as eurozone economy shrinks

China appears ready to help the euro area overcome its debt crisis, with Premier Wen Jiabao and People's Bank of China Governor Zhou Xiaochuan both expressing support for the region in recent days.

The euro area's support for Greece, however, is in doubt. From Reuters:

After a three-hour teleconference between finance ministers of countries that share the euro, questions remain over the euro zone's bailout of Greece, a German government official said on Wednesday...

"Along with the examination of information made available at short notice, questions remain that are very important to Germany and other member states about the sustainability of the program," the official said.

The questions had to do in part with Greece's ability to work off its mountain of debt in the years ahead. Further information regarding this matter must be examined by Monday, the official added.

Greece's ability to reduce its debt to GDP ratio is being undermined by a shrinking economy that some analysts think could turn into one of the deepest economic slumps of modern times.

Meanwhile, the rest of the eurozone economy is only a little better off. Economic output in the euro area fell 0.3 percent in the fourth quarter, the first contraction since the second quarter of 2009. France managed to grow 0.2 percent while Germany shrank just 0.2 percent. However, Italy's economy contracted 0.7 percent while Portugal's shrank 1.3 percent.

Elsewhere in Europe, claims for jobless benefits in the UK rose by 6,900 in January to 1.604 million, the highest level since January 2010.

US data on Wednesday, though, were mostly positive.

Unusually warm weather caused a fall in utility output in January and left overall industrial production unchanged but manufacturing production increased 0.7 percent.

Strength in manufacturing was also indicated by the February Empire State manufacturing survey, which showed the general business conditions index rising six points to 19.5, its highest level in more than a year.

Housing also appears to be recovering. The National Association of Home Builders/Wells Fargo housing market index rose for the fifth consecutive month to 29 in February from 25 in January, reaching its highest level in more than four years.

BoJ QE expands, Greek economy contracts

The Bank of Japan has become the latest central bank to boost monetary stimulus. On Tuesday, it increased its asset purchase programme by 10 trillion yen to about 65 trillion yen even as it kept its benchmark interest rate unchanged at between zero and 0.1 percent.

Last week, the Bank of England had made a similar move, a move seemingly justified by the latest UK inflation figure. The Office for National Statistics reported on Tuesday that consumer price inflation fell to 3.6 percent in January -- the lowest rate since November 2010 -- from 4.2 percent in December.

The euro area reported a less welcome fall on Tuesday. Industrial production fell 1.1 percent in December after having been unchanged in November.

Meanwhile, Europe's bailout of Greece is back in doubt after its finance ministers cancelled a Brussels meeting slated for Wednesday that had been scheduled to discuss the bailout.

And that was not the only bad news for Greece. It reported on Tuesday that its economy shrank 7 percent from a year ago in the fourth quarter, worse than the 5 percent contraction in the third quarter.

The US, though, provided some positive data on Tuesday. Retail sales rose 0.4 percent in January.

OECD sees positive change in economic momentum

Japan may have reported a contraction in its economy for the fourth quarter on Monday but it remains one of those that is driving an improvement in the world economy, according to the report on the OECD's composite leading indicators for December.

Composite leading indicators (CLIs), designed to anticipate turning points in economic activity relative to trend, point to a positive change in momentum for the OECD as a whole, driven primarily by the United States and Japan, but similar signs are beginning to emerge in a number of other developed economies. The CLIs for India and Russia also show signs of an upward change in growth momentum.

OECD composite leading indicators
	Ratio to trend, amplitude adjusted			Change from previous month
	Oct	Nov	Dec	Oct	Nov	Dec
OECD area	100.1	100.2	100.4	-0.1	0.1	0.2
United States	100.8	101.3	102.0	0.2	0.5	0.7
Euro area	98.8	98.5	98.3	-0.5	-0.3	-0.1
Japan	101.5	101.7	101.9	0.0	0.1	0.2

The CLI for the euro area continued to decline in December but by a smaller amount than in previous months. The OECD noted that the CLIs for seven of the fifteen countries in the euro area “are now pointing towards a positive change in momentum”.

Souring the mood somewhat was Moody's, which cut the debt ratings of Italy, Portugal, Spain, Slovakia, Slovenia and Malta on Monday.

Moody's also downgraded the rating outlooks of France, the UK and Austria to negative.

Greek parliament approves austerity, Japanese economy shrinks

The Greek austerity bill was approved by parliament on Sunday amid spreading violence. Reuters reports:

Greece's parliament approved a deeply unpopular austerity bill Monday to secure a second EU/IMF bailout and avoid national bankruptcy, as buildings burned across central Athens and violence spread around the country.

Cinemas, cafes, shops and banks were set ablaze in central Athens and black-masked protesters fought riot police outside parliament before lawmakers voted on the package that demands deep pay, pension and job cuts - the price of a 130 billion euro bailout needed to keep the country afloat.

On Monday, Japan reported that its economy shrank in the fourth quarter. Again from Reuters:

Japan's economy shrank a bigger-than-expected 0.6 percent in October-December, hurt by slowing global growth, Thai floods and a strong yen, casting doubt about expectations that growth will resume this quarter as Europe's debt crisis clouds the outlook.

Domestic demand also weakened in a worrying sign that the economic boost from rebuilding the country's earthquake-devastated northeast coast is slow to materialize.

The weakness in the economy at the end of last year has not stopped the Japanese stock market from rising at the start of this year. From Bloomberg:

Japan’s benchmark Topix index has climbed 6.9 percent this year, following a 19 percent slump in 2011, partly on optimism the losses at consumer electronics makers would accelerate job cuts and an exit from money-losing businesses.

The rally also shows analysts are looking beyond the gloomy economic and earnings forecasts for the current fiscal year, said Mark Matthews, head of research for Asia at Bank Julius Baer & Co. in Singapore. The gains by shares in Asia this year have further to go, he said.

Greek cabinet approves austerity plan

Greece has taken another step closer to getting a second bailout. Its cabinet approved the austerity plan on Friday despite strikes by Greek workers protesting the plan.

Among economic data released on Friday, China reported a higher trade surplus for January as imports plunged 15.3 percent from a year earlier while exports declined 0.5 percent. The fall in both exports and imports could be signs of a slowing economy, although it should also be noted that the figures may have been distorted by the Chinese Lunar New Year.

In contrast, an increase in the US trade deficit in December probably reflected stronger economic growth. Exports increased 0.7 percent while imports increased 1.3 percent.

However, the Thomson Reuters/University of Michigan preliminary index of US consumer sentiment dropped to 72.5 in February from 75 in January.

Greek bailout deal: Still not quite there yet

Greek political leaders settled their differences on an austerity plan on Thursday but still couldn't get the required bailout. From Reuters:

Greek political leaders said they had clinched a deal on economic reforms and spending cuts needed to secure a second bailout, but euro zone finance ministers demanded more measures and a parliamentary seal of approval before providing the aid...

Jean-Claude Juncker, who chairs the Eurogroup, set three conditions, saying the Greek parliament must ratify the package when it meets on Sunday and a further 325 million euros of spending reductions needed to be identified by next Wednesday, after which euro zone finance ministers would meet again.

"Thirdly, we would need to obtain strong political assurances from the leaders of the coalition parties on the implementation of the program," Juncker told a news conference after six hours of talks in Brussels. "Those elements needs to be in place before we can take decisions."

"In short, no disbursement before implementation."

There is a possibility, though, that the European Central Bank could help Greece. Again from Reuters:

European Central Bank President Mario Draghi opened the door on Thursday to helping Athens indirectly after Greek politicians finally signed up to an austerity package following days of dither and delay...

After the ECB left interest rates at a record low 1.0 percent, Draghi spent much of his hour-long news conference refusing to show his hand, before indicating at the very end that the bank could pass profits from its Greek bonds to euro zone countries.

The countries could then funnel the money to Greece. The ECB is forbidden from financing governments directly.

Also likely to help ease the sovereign debt crisis generally will be the ECB's second offering of three-year loans that will come with rules that expand the range of assets eligible as collateral.

Somewhat more direct in easing monetary conditions has been the Bank of England. On Thursday, it added 50 billion pounds into its bond buying programme despite a 0.5 percent increase in industrial production and a narrowing in the trade deficit.

Indonesia's central bank also eased monetary policy on Thursday, cutting its benchmark interest rate to a record low of 5.75 percent.

China, though, may be slow in easing monetary policy after its inflation rate rose to 4.5 percent in January, the highest level in three months.

Elsewhere in Asia, there were mixed data from Japan. Core machinery orders fell 7.1 percent in December but the consumer confidence index rose to 40.0 in January from 38.9 in December.

Greek bailout: Still no deal

The drama on Greece's rescue package drags on yet again after Greek Prime Minister Lucas Papademos failed to get full agreement from his coalition supporters on Wednesday on measures needed for a second aid package. The reduction of pensions has been cited as the area of contention.

On another front, there was somewhat more hopeful news for Greece. There are reports that the ECB may agree to exchange the Greek bonds it purchased in the secondary market last year at a price below face value provided that there is agreement on the debt-restructuring plan.

Economic data on Wednesday were mostly weak.

In Germany, exports fell 4.3 percent in December.

In France, the Banque de France's business sentiment indicator for industry was unchanged at 96 in January but the business sentiment indicator for services fell to 93 from 94 in December.

Outside of Europe, Japan reported mixed economic data on Wednesday.

Japan's current account surplus fell 43.9 per cent in 2011 as the trade balance fell into deficit.

This year has not started too well for Japan either. The economy watchers survey's current service sector sentiment index fell to 44.1 in January from 47.0 in December. However, the outlook index moved in the opposite direction, rising for the first time in seven months to 47.1 from 44.4.

Greece rescue package delayed again

Tuesday brings news that the Greek bailout has been delayed yet again. Bloomberg reports:

Greek Prime Minister Lucas Papademos postponed a meeting with heads of the political parties supporting his caretaker government a second time in as many days as the government and international creditors haggled over terms to secure a second aid package.

Papademos will meet with the leaders in Athens tomorrow, instead of tonight as previously scheduled, a spokeswoman for his office said. Instead, he will meet tonight with the so- called troika, comprising the European Commission, the European Central Bank and the International Monetary Fund, to put the final touches to terms required for a 130 billion-euro ($172 billion) rescue package, the spokeswoman said.

Elsewhere in Europe, Germany reported a surprisingly sharp 2.9 percent fall in industrial production in December. It was the biggest drop in production since January 2009.

There was better news in Japan though. The index of coincident economic indicators for Japan rose 2.9 points in December while the index of leading economic indicators rose 0.6 point.

Eurozone investor confidence improves

Economic data out of Europe on Monday were relatively positive.

Investor confidence in the euro area rose to a seven-month high in February. The Sentix investor confidence index increased to minus 11.1 from minus 21.1 in January.

In Germany, factory orders rose 1.7 percent in December.

However, the talks on Greece's bailout drags on as the parties involved failed to reach agreement on Monday. Reuters reports:

German Chancellor Angela Merkel told Greece Monday to make up its mind fast on accepting the painful terms for a new EU/IMF bailout, but the country's political leaders responded by delaying their decision for yet another day...

The office of Prime Minister Lucas Papademos, a former central banker who heads a government of politicians, said a meeting of leaders from the conservative, socialist and far-right parties due Monday had been postponed to Tuesday.

Global economy gives no hint of recession at start of 2012

Last week's data showed that the global economy picked up pace at the start of the year, making a recession in early 2012 look very unlikely.

Surveys of purchasing managers around the world showed improvements in economic activity in most countries.

In the United States, the purchasing managers indices for both manufacturing and services rose further above the 50 mark that separates expansion from contraction. The Institute for Supply Management's manufacturing PMI rose to 54.1 in January from 53.1 in December while the non-manufacturing index jumped to 56.8 from 53.0.

In the euro area, the composite index from Markit Economics rose above the 50 mark for the first time in five months in January. It increased to 50.4 from 48.3 in December after the services index rose to 50.4 from 48.8. The manufacturing index also improved to 48.8 in January from 46.9 in December.

In Japan, Markit's composite output index rose to 51.1 in January from 50.1 in December. The Markit/JMMA manufacturing PMI rose to 50.7 in January from 50.2 in December while Markit's services business activity index rose to 51.0 from 50.4.

The worldwide improvement in purchasing managers indices pushed the JPMorgan global all-industry output index up for the third consecutive month to 54.6 in January from 52.7 in December. The new orders index jumped to 54.0 from 51.5.

JPMorgan Global All-Industry Indices
	December	January
Output	52.7	54.6
New orders	51.5	54.0
Input prices	56.2	56.7
Employment	50.3	52.6

Continued economic growth in the US at the start of 2012 was also signalled by the employment report released on Friday. The report showed that nonfarm payrolls increased by 243,000 in January, the fastest pace in nine months. The unemployment rate fell to 8.3 percent, the lowest since February 2009, from 8.5 percent in December.

Even the eurozone economy may be able to avoid a recession. In his commentary on the purchasing managers' data, Markit's chief economist Chris Williamson said that the January data indicated that business conditions have stabilised and that “a more definitive return to growth is possible in February”.

Stocks jump with US employment

Friday was a good day for stocks, the S&P 500 gaining 1.5 percent as investors responded to some strong economic data from the US.

US nonfarm payrolls increased by 243,000 in January, the fastest pace in nine months, pushing the unemployment rate down to 8.3 percent, the lowest since February 2009, from 8.5 percent in December.

Providing further evidence of a strengthening economy, the Institute for Supply Management’s non-manufacturing index rose to 56.8 in January from 53 in December.

And in manufacturing, US factory orders rose 1.1 percent in December after an upwardly-revised 2.2 percent gain in November.

Economic data from the euro area on Friday were not as positive, with retail sales falling 0.4 percent in December.

However, there was indication of improvement in the economy in January. Markit's composite index for the euro area rose to 50.4 from 48.3 in December after the services index rose to 50.4 from 48.8.

Meanwhile, the UK services sector also improved in January. The Markit/CIPS services PMI rose to 56.0, the highest in ten months, from 54.0 in December.

Analysts turning bullish on stocks

In a commentary on 2 February, Doug Kass says it is time to be contrarian and go long on stocks.

Today's dominant investor classes -- individual investors, hedge funds and pension funds -- have de-risked and are relatively uncommitted to equities.

A re-allocation into stocks (and out of bonds) represents an underappreciated and potentially massive (and latent) demand that could easily be the catalyst for a move to all-time highs in the S&P 500 in 2012.

Ironically enough, that appears to be what some other analysts are also saying, according to a Bloomberg article.

Strategists at the biggest banks are capitulating on their bearish forecasts after the best start to a year for global stocks since 1994 and gains of more than 7 percent in emerging-market currencies.

Just two weeks after saying that investors should “remain cautious,” Larry Hatheway, the chief economist at UBS AG (UBSN), raised his recommendations on global shares and high-yield bonds in a Jan. 23 note to customers entitled, “Wrong, but not too late.” Royal Bank of Scotland Group Plc (RBS), and Benoit Anne, the global head of emerging-markets strategy at Societe Generale (GLE) SA, said their estimates for developing nations were proven wrong.

Global manufacturing improves

Wednesday's economic reports showed that global manufacturing activity accelerated in January as JPMorgan's global manufacturing index improved to 51.2 in January from 50.5 in December.

The US led the way among developed economies as the Institute for Supply Management’s manufacturing PMI climbed to 54.1 in January from 53.1 in December.

The positive picture for the US economy was supported by reports of a 170,000 increase in private sector employment and a 1.5 percent increase in construction spending.

UK manufacturing also improved in January. The Markit/CIPS manufacturing PMI rose to 52.1 from 49.7 in December.

Manufacturing in the euro area was not as strong but showed improvement nevertheless. Markit's eurozone manufacturing PMI rose to 48.8 in January from 46.9 in December.

China's manufacturing also improved in January. The China Federation of Logistics and Purchasing manufacturing PMI rose to 50.5 from 50.3 in December while the HSBC's preliminary PMI stood at 48.8 in January, up only marginally from 48.7.

However, China's improvement paled in comparison with India's where the HSBC manufacturing PMI jumped to 57.5 in January from 54.2 in December.

Real Time Economics has a summary of the world's manufacturing PMIs.

Japanese industrial production rises, US consumer confidence falls

Tuesday's economic data were mixed.

The day started positively in Japan where the Markit/JMMA manufacturing PMI rose to 50.7 in January from 50.2 in December. Industrial output rose 4.0 percent in December, reversing a 2.7 percent fall in November. Household spending rose 0.5 percent in December from a year earlier, the first rise since February 2011. The jobless rate edged up to 4.6 percent in December from 4.5 percent in November but the ratio of job offers to job seekers also rose to 0.71 in December from 0.69 in November.

In the euro area, the December unemployment rate was unchanged from an upwardly-revised rate of 10.4 percent in the previous month but German retail sales fell 1.4 percent in December and French consumer spending fell 0.7 percent.

In the UK, the GfK NOP consumer confidence index rose to -29 in January from -33 in December but consumer credit posted its sharpest drop in nearly two decades in December even as mortgage approvals rose to the highest level since December 2009.

In the US, the Conference Board's consumer confidence index unexpectedly fell to 61.1 in January from 64.8 in December while the Institute for Supply Management-Chicago's business barometer declined to 60.2 in January from 62.2 in December. The S&P/Case-Shiller index of home prices in 20 cities declined 3.7 percent in November from a year earlier after decreasing 3.4 percent in October.