Asia

· Japan Exports Up For Third Month In November, Boost To Economic Recovery. Japan's exports are expected to have risen for the third straight month in November thanks to solid demand from the United States, an encouraging sign for shipments and the broader economy's recovery from a recession. Exports are forecast to have increased 7.0% in November from a year earlier, according to a Reuters poll of 24 economists, following a 9.6% gain in October and 6.9% rise in September. Imports were seen up an annual 1.7% last month, slowing from October's 2.7 gain as falls in oil prices cut into import costs despite more weakness in the yen. That would result in a trade deficit of 1 trillion yen in November, the 29th straight monthly deficit. (Reuters)

· Abe Faces Policy Balancing Act After Commanding Election Victory. Prime Minister Shinzo Abe’s gamble on early elections paid off with a sweeping victory that also puts pressure on the premier to reverse a recession and overcome resistance to his plans to boost Japan's defense. Abe’s ruling coalition gained more than two-thirds of the 475 seats in the lower house, winning about 325 seats, the same as before yesterday’s election. While the victory was overshadowed by the lowest turnout since World War II, he need not call another election until 2018, potentially making him the longest-serving premier in four decades. (Bloomberg)

· China's Factory And Investment Growth Flagging, More Stimulus Seen. China's economy showed further signs of fatigue in November, with factory growth slowing more than expected and investment expansion hovering near a 13-year low, putting pressure on policymakers to unveil stronger stimulus measures. Factory output rose 7.2% in November from a year earlier, slowing from October's 7.7%, the National Bureau of Statistics said on Friday. The reading missed analysts' forecasts of 7.5% and marked the second lowest expansion since the depths of the global crisis in December 2008. Fixed asset investment, an important driver of growth, expanded at its slowest rate in nearly 13 years. It grew 15.8% in the first 11 months from the same year-ago period, in line with market expectations but slowing from a 15.9% rise in the first 10 months. Growth in real estate investment slowed to 11.9% in the first 11 months of 2014 - the slowest in more than five years - from 12.4% in January-October. Property sales hit 132.2 million square metres in November, the highest level in the past 11 months, though they were still down 11.1% from the same period a year earlier. Consumption was the only bright spot, with retail sales growth quickening slightly to 11.7% from 11.5% in October, which was the slowest pace since early 2006. (Reuters)

· India's October Industrial Output Contracts, Builds Case For Rate Cut. India's industrial output contracted in October, its worst performance in three years, while retail inflation continued its declining trend, building the case for the Reserve Bank of India to lower interest rates early next year. Prime Minister Narendra Modi, who swept to power six months ago promising to oversee an economic revival, faces a challenge to revive investment in Asia's third largest economy. Industrial output unexpectedly contracted 4.2% year-on-year in October, dragged down by a fall in manufacturing and the capital goods output, government data showed on Friday. (Reuters)

USA

· U.S. Consumer Sentiment At Eight-Year High. U.S. consumer sentiment rose in December to a near eight-year high on improved prospects for jobs and wages and on lower gasoline prices, a survey released on Friday showed. The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment for this month came in at 93.8, the highest reading since January 2007 and above the median forecast of 89.5 among 70 economists polled by Reuters. The final November reading was 88.8. The survey's gauge of consumer expectations rose to 86.1 from 79.9, also the highest since January 2007, and beating the 80.5 forecast. The survey's barometer of current economic conditions rose to 105.7 from 102.7 and above the 101.4 forecast. It was the highest level since February 2007. (Reuters)

· U.S. Producer Prices Fall, Signal Weak Inflation Pressures. U.S. producer prices fell in November and were muted even outside of energy, a sign of weak inflationary pressure that could point to persistent slack in the economy. The Labor Department said on Friday its producer price index for final demand dropped 0.2%, a sharper fall than expected. When compared to a year earlier, that core index was up just 1.5%, and the annual reading has been dropping a tenth of a point each month since September. Another core reading that only strips out food and energy was also flat on the month and up 1.8% from November 2013. (Reuters)

· Senate Passes Spending Bill, Ends Government Shutdown Threat. The U.S. Senate on Saturday passed a $1.1 trillion spending bill that lifts the threat of a government shutdown as Congress attempts to wrap up a two-year legislative session marked by bitter partisanship and few major accomplishments. The Senate's 56-40 vote sends the measure to President Barack Obama, who is expected to sign it into law before federal spending authority expires at midnight on Wednesday. Passage of the 1,603-page bill was a long, tough struggle in the Senate and the House of Representatives marked by bitter disputes over changes to banking regulations and Obama's recent executive order on immigration. (Reuters)

Europe

· Euro Zone Output Rises In October On Consumer Goods. A strong rise in output of consumer goods kept euro zone industrial production rising in October despite a deep fall in energy production, the European Union's statistics office data showed on Friday. Eurostat said industrial production in the 18 countries sharing the euro rose only 0.1% month-on-month in October for a 0.7% year-on-year gain. Economists polled by Reuters had expected a 0.2% monthly increase and a 0.6% annual rise. Eurostat also revised down its production data for September to 0.5% month-on-month from 0.6% and to 0.2% year-on-year from the previously reported 0.6%. Energy output fell 1.9% month-on-month and 2.5% year-on-year. (Reuters)

· UK Construction Output Fell In October. The Office for National Statistics (ONS) said output dropped by 2.2% in October from the month before. However, there was a sharp upwards revision to construction output growth for the third quarter of the year, which doubled to 1.6%. The ONS said this could mean that overall economic growth in the quarter could be revised up to 0.8% from 0.7%. It said this assumed growth in manufacturing and services remained unchanged in the quarter. As well as falling in October, construction output grew by just 0.7% when compared with a year earlier, the slowest annual growth rate since May 2013. (BBC)

· Spain Consumer Prices Accelerate Fall In November. Spanish consumer prices fell 0.4% year-on-year in November, final data from the National Statistics Institute showed on Friday, their fifth straight month in negative territory and accelerating from a 0.1% fall in October. The decline in core inflation, which strips out volatile food and energy prices, was however lower at -0.1% year on year, as it was in October. (Reuters)

· Italy Final November HICP Revised Up Slightly. Italian EU harmonized consumer prices (HICP) fell 0.2% month-onmonth in November and were up 0.3% year-on-year, national statistics office ISTAT said on Friday, revising up a preliminary estimate. ISTAT previously reported a 0.3% month-on-month decline and a 0.2% rise in the HICP index. However the data showed an environment of very low inflation continues to weigh on the eurozone's third-largest economy, which is heading for a third consecutive year of contraction amid warnings that it risks tipping into outright deflation. (Reuters)

· Russia raises interest rates to 10.5%. Russia's central bank has raised its key interest rate by one percentage point to 10.5% as it steps up the fight to tackle inflation. It comes just six weeks after it raised the rate to 9.5% from 8%. The bank's official website added that it would continue raising the rate "in case of further aggravation of inflation risks". In its monthly economic update the Bank of Russia also said that, as of 8 December, annual inflation was 9.4%. A weak rouble and a ban on western food imports has kept inflation high. (BBC)

Currencies

· U.S. Data Underpins Dollar. The U.S. dollar cut its losses against the euro, extended gains against the yen and reached an 11-year high against the Norwegian crown on plunging oil prices and stronger-than-expected U.S. economic data on Friday. The U.S. dollar index bounced from its session lows on the data, trading at 88.348, still off 0.35% on the day. The dollar erased early losses to trade up 0.04% at 118.70 yen. However, the euro maintained its lead on the greenback, trading off its highs for the day but still up 0.35% at $1.2453. The dollar hit 7.3950 crowns on Friday, its strongest since September 2003, before slipping to 7.3672, up 1.10% on the day. Lower oil prices undermined the Canadian dollar. The greenback rose 0.42% to C$1.1568, just off a 5-1/2 year high of C$1.1591. (Reuters)

Commodities

· U.A.E. Sees OPEC Output Unchanged Even If Oil Price Drops to $40. OPEC will stand by its decision not to cut output even if oil prices fall as low as $40 a barrel and will wait at least three months before considering an emergency meeting, the United Arab Emirates’ energy minister said. OPEC won’t immediately change its Nov. 27 decision to keep the group’s collective output target unchanged at 30 million barrels a day, Suhail Al-Mazrouei said. OPEC’s 12 members pumped 30.56 million barrels a day in November, exceeding their target for a sixth consecutive month, data compiled by Bloomberg show. Saudi Arabia, Iraq and Kuwait this month deepened discounts on shipments to Asia, feeding speculation that they’re fighting for market share amid a glut fed by surging U.S. shale production. The Organization of Petroleum Exporting Countries supplies about 40% of the world’s oil. (Bloomberg)

· Oil Plunges 3% To New Five-Year Lows After Bearish IEA Outlook Crude oil markets fell 3% or more to plumb new five-year lows on Friday after the world's energy watchdog forecast even lower prices on weaker demand and larger supplies next year. Benchmark Brent oil settled at below $62 a barrel and U.S. crude slumped to under $58 to extend Thursday's landmark fall below $60. Brent settled down $1.83, or nearly 3%, at $61.85 per barrel. It fell to $61.35 during the session, the lowest since July 2009. U.S. crude finished down $2.14, or 3.6%, at $57.81. It fell earlier to $57.34, its lowest since May 2009. (Reuters)

· Gold Sees Biggest Weekly Rise In 2 Months As Stocks, Dollar Slip. Gold edged lower on Friday as some buyers cashed in recent gains, but the metal had its biggest weekly rise in two months as the dollar retreated and sliding oil prices hurt risk appetite. Gold was up 2.5% this week after Tuesday's big rally. Falling stock markets have prompted some investors to buy the metal as an alternative asset, while a drop in the greenback made dollar-priced bullion cheaper for holders of other currencies. Spot gold was down 0.5% at $1,221.66 an ounce by 3:38 p.m. EST (2038 GMT). Among other precious metals, silver was down 0.5% at $17.00 an ounce, while spot platinum fell 1.1% to $1,224.50. Spot palladium was down 0.7% at $810.30. (Reuters)