US economy expands, Japanese stocks plunge

US economic reports on Wednesday were mostly positive. Industrial production rose 0.3 percent in December, with manufacturing in particular jumping 0.8 percent. The Federal Reserve's Beige Book reported that economic activity expanded last month in all 12 districts at either modest or moderate pace. The National Association of Home Builders/Wells Fargo housing market index was unchanged at 47 in January. Consumer prices were unchanged in December.

However, in the euro area, consumer prices rose 0.4 percent in December, leaving the inflation rate unchanged at 2.2 percent.

China saw foreign direct investment fall 4.5 percent in December from a year earlier, leaving total inflows for 2012 down by 3.7 percent compared to the previous year, the first full-year decline since 2009.

There were mixed data from Japan. Core machinery orders jumped 3.9 percent in November, the second consecutive increase. However, the consumer confidence index for general households fell to 39.2 in December from 39.4 in November.

Japanese stocks plunged on Wednesday. The Nikkei 225 fell 2.6 percent after the yen rose for a second day.