The US consumer price index rose 0.5pct in December, ahead of forecasts centred on a rise of 0.4pct. The core rate (excludes food and energy) rose 0.1pct. Retail sales rose 0.6pct in December, below forecasts tipping a rise of 0.8pct. Industrial production rose 0.8pct in December, ahead of forecasts for a 0.5pct gain. And consumer sentiment eased from 74.5 to 72.7.

The People´s Bank of China has raised the bank reserve requirement ratio for the seventh time since early 2010. The lift of 50 basis points takes effect on January 20.

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European shares eased slightly on Friday as investors digested the latest news on Chinese monetary policy. Mining shares fell after the news from China. In London trade shares in Rio Tinto lost 1.5pct while BHP Billiton lost 1.8pct. The FTSEurofirst index fell by 0.1pct, with the UK FTSE lower by 0.4pct while the German Dax edged 0.01pct higher. But over the week the FTSEurofirst index rose by 1pct.

US sharemarkets rose on Friday with investors heartened by solid earnings from JP Morgan and Intel. The Dow Jones index rose by 55.5pts or 0.5pct to 30-month highs with the S&P 500 up 0.7pct to 28-month highs and the Nasdaq rose by 20pts or 0.7pct. Over the week the Dow rose by 1.0pct while the S&P 500 was up 1.7pct and the Nasdaq finished higher by 1.9pct.

US longer-term treasuries fell on Friday (yields higher) as investors squared positions ahead of a holiday weekend. US 2yr yields were steady near 0.58pct and US 10yr yields rose 3pts to 3.33pct. Over the week US 2yr yields fell 2pts and US 10yr yields were steady.

The US dollar firmed against the Japanese yen and Aussie dollar in US trade on Friday but the Euro tracked sideways. The Euro held between US$1.3310 and US$1.3455, ending US trade US$1.3375. The Aussie dollar eased from highs near US99.80c to US98.55c, before ending US trade near US98.95c. And the Japanese yen eased from near 82.40 yen per US dollar to JPY83.05, ending US trade near its weakest levels.

US crude oil prices rose on Friday to 27-month highs with optimism on US earnings weighed against Chinese policy tightening. The Nymex crude oil contract rose by US14c to US$91.54 a barrel. The expiring Brent crude contract rose by US62c to US$98.58 a barrel. Nymex oil rose by 4.0pct over the week.

Base metal prices were mixed on the London Metal Exchange on Friday. Aluminium fell 0.5pct and zinc lost 0.3pct but other metals rose 0.4-2.0pct. Over the week base metal prices were generally higher. Nickel rose 6.9pct and other metals rose 0.4-2.4pct, except aluminium, down 2.0pct. And the gold price fell with the Comex gold futures price lower by US$26.50 an ounce to US$1,360.50. Gold fell by 0.6pct over the week.

Ahead: In Australia, data on lending finance, car sales and the monthly inflation gauge are released. In the US, markets are closed for Martin Luther King Jnr day.

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