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Prospects Daily: Chinese equities rise to one-month high, Canadian consumer sentiment falls to 8-Month low, Turkey’s industrial production growth accelerates in December

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Financial Markets…Ukraine’s currency and bonds pared some of last week’s losses after the country’s central bank imposed capital control on some types of foreign-currency trades last Thursday. Meanwhile, Fitch ratings downgraded Ukraine’s sovereign credit rating to ‘CCC’ from ‘B-‘ on Friday as currency control were imposed. The Ukraine’s hryvnia was 1.05% higher at 8.4550 per dollar in afternoon trading, trimming year-to-date loss to 3.1%. The yield on the nation’s dollar notes maturing in June 2014 fell by 100 basis points to 15.79%, after reaching nearly two-month highs last week.

After the 7-day Lunar New Year holidays, Chinese equities advanced for a second day on Monday with the benchmark Shanghai Composite index adding 2% to close at the highest level since January 2. The gauge has advanced 4.8% since its price-to-earnings ratios slid to a record low on January 20. Today’s rally came after Chinas’ central bank pledged over the weekend to keep monetary policy stable and urged commercial banks to properly manage their liquidity and asset liabilities.

High Income Economies… U.S. consumer credit jumped much more-than-expected by $18.8 billion in December following a $12.4 billion increase in November. Non-revolving credit, such as student loans and car loans, increased by $13.7 billion in December, after rising by $12 billion in the previous month. Meanwhile, revolving credit, which largely reflects credit card debt, climbed by $5 billion in December after edging up by $0.5 billion in November.

Falling to the lowest since May on speculation the nation’s economic outlook is worsening, the Bloomberg Nanos Canadian Confidence Index declined to 56.0 in the week ending Feb. 7 from a previous reading of 56.6, the fourth consecutive decline, which has been attributed to persistently low inflation and a widening trade deficit.

Following a 1.2% (y/y) rise in December, merchandise exports of Taiwan, China, decreased 5.3% in January, making the more-than-expected decline, the first fall after growing for three months in a row. Exports of basic metals and articles; mineral products; plastics and rubber decreased during the month, while shipments of electronic products and chemicals increased. At the same time, goods imports fell 15.2% (y/y) in January, reversing the previous month's 10.1% increase. Overall merchandise trade in January resulted in a surplus of US$2.97 billion

Developing Economies… Europe and Central Asia: Turkey’s industrial production grew at a fast pace in December 2013, rising 7.1% (y/y) on a calendar adjusted basis, compared with 4.7% (y/y) in the previous month, driven by a 7.4% (y/y) increase in manufacturing output. Mining and quarrying rose 3.7% (y/y) and gas, steam and air conditioning increased by 6.5% (y/y). On a seasonally and calendar adjusted basis, industrial production remained the same in December compared with the previous month.

Middle East and North Africa: Egypt’s interim government introduced on Monday its second stimulus program, which will inject 33.9bn Egyptian pounds (US$4.87bn) in the economy. Financed mostly with aid pledged by the United Arab Emirates, the stimulus package includes spending on development projects and social programs. The first stimulus package was launched in August 2013 and amounted to 30bn Egyptian pounds.

Sub-Saharan Africa: Mozambique’s annual headline inflation, measured by the consumer price index, slowed to 3.2% in January after easing to 3.5% in December 2013. Month-on-month consumer price inflation accelerated to 0.98% in January, the highest rate in 11 months, up from 0.57% in December, driven by higher food prices.

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