By Greg Peel

In the most anticipated come-back since Nellie Melba, China's manufacturing PMI is back in expansion territory after thirteen consecutive months of contraction. That's assuming we take the independent HSBC measure as gospel, given Beijing called a PMI of 50.2 in October, up from 49.8. HSBC's "flash" estimate for November released yesterday showed 50.4, up from a confirmed reading of 49.5 in October.

For the first six months of 2012 the world and its dog assumed the Chinese slowdown would reverse in the second six months. Recent signs have indicated such, and this PMI read adds to confidence. China's left its run a little late but the good news is that turnaround expectations were built solely on the assumption Beijing would step up monetary policy easing. Aside from some liquidity injections into the banking system, it hasn't. Hence unlike the US, UK, Japan, Europe and even Australia (on a rate cut basis), China's economy has recovered without the aid of sugar pills.

It's early days, of course, and there is little reason to expect China's major export markets of Europe and the US will show much increase in demand for some time (and China is boycotting Japan), but if China can return to steady, if not runaway, growth on the strength of domestic demand and regional trade then the world will be a happier place in 2013. There remains expectation that Chinese stimulus may reemerge once the new regime has located the coffee machine and settled in.

The HSBC result was good news for Australia yesterday, although the market didn't need it. The index was already up over 1% at the release on what looked like portfolio buying, or maybe just enthusiasm for Clarke's double-double.

Europe liked the news, helping the major European indices up 0.6-0.8% overnight despite no lead from Wall Street. European markets have shrugged off concerns over the Greek bail-out tranche, confident that it will be paid in due course. The euro was a little higher last night, sending the US dollar index down 0.3% to 80.69 in thin trade.

The Aussie kicked up along with the stock market, adding 0.2% to US$1.0385, while gold is again steady at US$1729.70/oz.

Base metals barely troubled the scorer in London but the spot iron ore price has fallen US$1.90 to US$118.70/t. Seems the Chinese aren't as enthused over the HSBC number as the rest of us.

[Please note: Daily spot iron ore prices are now displayed in the FNArena Cockpit.]

The oils had a bit of a breather, with Brent falling US44c to US$110.55/bbl and West Texas falling US54c to US$87.15/bbl.

The SPI Overnight closed up 4 points.

The NYSE open tonight for a largely redundant half session, closing at 1pm NY. Germany will release GDP and trade data tonight which could be interesting while the Campbell boys, now known as ALS ((ALQ)), will release their interim result on the local bourse today.