Euro strengthens on positive Chinese economic output

Equities across Europe have started strong this morning for a fourth consecutive day following positive signs that China’s manufacturing is improving.Euro strengthens on positive Chinese economic outputThe release overnight signals the first expansion in China’s factory output in 13 months and boosted optimism that growth in the world’s second largest economy is on the road to recovery after a seven quarter slowdown.

The initial reading was 50.4 for a Chinese purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics and falls above the last reading of 49.5 in October. A reading above 50 indicates growth.

A recovery in manufacturing would support prospects for a continued pickup in economic growth that slowed last quarter to the weakest pace in more than three years.

Over to Europe and data tomorrow will indicate modest growth in Germany and the euro area, as leaders of the 27 EU nations gather for negotiations in Brussels.

Today we have a Spanish bond sale (€3.5 billion) maturing in 2015, 2017 and 2021 today.

The euro rose 0.23 percent to $1.2865 after earlier touching $1.2868, the highest since early November.

European politicians who are squabbling over Greece, the destiny of the euro, banking amalgamation and EU development need to reach agreement on a proposed $1.3 trillion package lasting until 2014.

The euro debt crisis and a deadlock over Greek aid raise the stakes for the talks, testing whether the bloc is heading for more integration.

Yesterday the Bank of England minutes were released revealing an 8-1 split on maintaining quantitative easing at £375 billion as David Miles sought an increase of £25 billion.

This comes in the wake of inflation being much higher than forecast than the targets that are set out by the BOE, for the next 2 years.

Eight members of the MPC decided that upholding the size of the asset purchase programme was appropriate.

Furthermore, the committee voted unanimously to keep its key lending rate at a record low 0.5%.

As for the rest of the day, we have the US Thanksgiving bank holiday so the headline calendar looks light.

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