Chinese property sales are up over 60% so far this year, the nation’s National Bureau of Statistics proclaimed yesterday. That puts the housing bubble here to shame. We’ve heard a bunch of nosebleed data points come outta there in the last few weeks… check these out:

• New loan issuance has tripled in the first half of 2009, to $1.1 trillion. That’s more than half of the entire Chinese GDP over the same period.
• 95% of those loans went to state-owned enterprises or provincial entities
• The Shanghai Composite is up 79% year to date, the best major market performance in the world
• Stocks on the Shanghai Composite trade for 35.4 times earnings, double that of the MSCI Emerging Markets index
• M2 money supply rose over 28.5% in the first half of the year
• The seven largest bond sales in the world this year were domestic transactions in China.

Damn near everything is up dramatically in China in 2009… except exports. Strangely, we don’t hear a lot of concern that the backbone of their economy has contracted 23% since this time last year.

“The Chinese government realizes,” adds Dan Amoss, “that its stimulus spending and pressure on banks to expand lending is inflating a massive bubble in the Chinese stock and property markets. The problem with unsustainable economy activity is, of course, that it must eventually end.

“But for now, the Chinese have much more room to borrow and inflate than the United States (which has spent the last few decades doing so). Eventually, the market will cut them off. The end will not be pretty, and at some point in the future, shorting Chinese stocks may be one of the best short-selling opportunities in history.

“In the meantime, it makes no sense to bet against China. The Communist government has proven very efficient at stealing the resources of its people (via inflation and taxation) and channeling them into whatever infrastructure project they deem necessary.

“This process could end next week or next year.”

Dan’s keeping an eye on China, but right now his focus is on a very well-known bank on the other side of the Pacific. He believes this major financial player will soon have to cut their dividend… crushing their stock price.

Source: China Bubble Version 2.0

Euro zone economic sentiment improved more than expected in June, data showed on Monday, as the European Commission predicted the worst could be over for the 16-country currency area.

“The ECB will find themselves affirmed that the economy is bottoming out and that the worst is over,” said Joerg Angele, analyst at Bayerische Landesbank.

“It’s bad, but it’s not getting worse.”

The FTSEurofirst 300 index rose 1 percent, led by energy companies and financials.

The MSCI world equity index edged up 0.12 percent towards 12-day highs hit on Friday. However, the index is down over 4 percent from the year’s highs set earlier this month.

U.S. stock index futures indicated a slightly higher open on Wall Street.

World stocks have shuffled sideways in the past few weeks as investors have questioned how quickly the global economy will return to growth, giving a boost to battered government bonds and pushing yields lower.

U.S. employment data are due on Thursday ahead of a U.S. holiday on Friday, and the European Central Bank and Sweden’s Riksbank issue policy statements this week.

“With the payrolls coming up, and the ECB and Riksbank, I don’t think there’s a great appetite to take on big risk this week,” said Maurice Pomery, managing director of Strategic Alpha.

Many investors are also sticking to the sidelines as the second quarter winds down and ahead of U.S. and European summer holidays.

CHINA WATCH

The dollar index, a gauge of its performance against six major currencies, dipped 0.05 percent to 79.833, but held off a two-week low struck on Friday.

The euro inched up 0.07 percent to $1.4059 , recouping losses earlier in the session, and the dollar was up 0.16 percent against the yen at 95.35 .

The dollar fell last week after China, which holds nearly $2 trillion of reserves believed to be concentrated in dollars, repeated its calls for an end to the dominance of a single currency in global finance.

China and Brazil said on the sidelines of a weekend meeting of central bankers in Basel they were discussing a currency arrangement to allow exports and importers to settle deals in local currencies, thereby avoiding the dollar.

Pressure from emerging market countries to seek an alternative to the dollar as reserve currency has contributed to weakness in the U.S. currency in recent weeks.

Crude oil rose 0.74 percent to $69.89 a barrel on supply concerns after Nigeria’s main militant group said it attacked a Royal Dutch Shell oil platform.

Euro zone government bond futures rose 20 ticks , helped by strong gains in UK gilts on month-end buying and weak UK data.

LONDON, June 29 (Reuters)

U.S. crude pricesraced above $71 a barrel, extending a 2 percent gain the day before, after rebel attacks on Nigerian oil facilities disrupted supply. Firmer oil prices supported metal prices, with gold edging above $940 to a one-week high.

Global equities were also in demand, with the MSCI world equity index advancing 0.9 percent and the pan-European FTSEurofirst 300 up 0.2 percent.

The MSCI world equity index is up more than 21 percent this quarter, on track for the biggest quarterly gain in its 20-year history.

“It is clear that the rebound in global equity markets has lost some steam,” Barclays Wealth said in a note.

“It appears to us that stocks are now broadly fairly valued, having erased their previous undervaluation faster than expected. Further share price gains may well relate more closely to the rate of underlying profit growth and the economic cycle.”

U.S. stock index futures were down between 0.2 and 0.3 percent, indicating a softer open on Wall Street.

Tokyo’s Nikkei average added 0.8 percent, shrugging off a record 1.1 percent fall in consumer prices in the year to May — another sign falling demand is pushing the economy deep into its second spell of deflation this decade.

“Most people will agree now that we won’t revisit the low point that we have seen this year any time soon,” said Luc Van Hecka, chief economist at KBC Securities.

“But there are still some problems to be resolved in the financial sector and as long as that is not out of the way in a convincing manner, we could still have intermediate corrections.”

UBS , the world’s largest wealth manager, said it planned to raise about 3.8 billion Swiss francs ($3.46 billion) by selling stock and expected to post a second-quarter net loss. The likelihood of a long road to global economic recovery remained a challenge to companies. Boeing Co , the world’s No. 2 plane-maker, suffered another heavy blow to its Dreamliner project when a major customer, Australia’s Qantas Airways , scrapped and deferred orders for 30 new planes.

DOLLAR SLIPS

The dollar fell against a basket of currencies, extending losses made the previous day after the U.S. Federal Reserve gave no hint of an imminent exit from low interest rates and other bold measures to stoke growth.

The euro was up 0.6 percent against the dollar at $1.4085, while the greenback fell 0.5 percent to the yen.

“Risk sentiment is back in full force,” said Christian Lawrence, currency strategist at RBC Capital Markets. “The dollar is being sold across the board.”

Yields on the benchmark 10-year U.S. Treasury added 2 basis points, while the 10-year euro zone benchmarkbund yield was unchanged at 3.428 percent.

In one measure of how investor sentiment has improved, the CBOE Volatility Index, a gauge of investor anxiety, on Thursday closed at its lowest level since just before Lehman Brothers filed for bankruptcy protection last September.

LONDON, June 26 (Reuters)

Gold was at $919/921 an ounce at 1242 GMT, down from $937.15 late in New York on Monday, when it fell more than 1 percent as investors moved away from safe-haven investments.

World stocks hit five-week highs on Monday as investors pocketed riskier assets on growing optimism that a U.S. plan to purge toxic assets from the balance sheet of banks could ease the misery of the financial sector.

“Sentiment (on gold) is a bit weaker off a perceived improvement in other forms of asset classes,” said Michael Khosrowpour, an analyst at Triland Metals, pointing to overnight gains in stock markets and gains in the dollar.

The U.S. plan helped boost Japan’s Nikkei average to a 2-1/2 month closing high on Tuesday. But European stocks dipped, breaking a three-day winning streak after euro zone and UK macro data showed job losses and higher inflation.

Traders said markets were watching out for testimony before Congress by Fed Chairman Ben Bernanke and U.S. Treasury Secretary Geithner at 1400 GMT.

Analysts said fears of inflation fanned by the Federal Reserve’s plans to buy long-dated U.S. Treasuries still lingered even if they had eased a little.

“Gold will probably continue to follow inflation expectations in the near term although remains vulnerable to improved risk asset sentiment,” UBS said in a note.

Analysts also said a higher dollar was putting pressure on gold prices.

Gold is often viewed as an alternative to holding the dollar, and often falls when the dollar rises because it makes metals priced in the U.S. currency more expensive for holders of other currencies.

Bullion has recovered ground from a six-week low of $882.90 marked on March 18 but still has some way to go before approaching the 11-month high above $1,000 reached in February.

It soared to an all-time peak of $1,030.80 in March 2008.

Receding interest in gold was also evident in the holdings of gold-backed exchange traded funds.

The world’s largest gold-backed ETF, the SPDR Gold Trust , said its holdings nudged down about a third of a tonne to 1,114.29 tonnes on March 23 from a record high 1,114.60 tonnes.

Silver was at $13.36/13.42 from $13.63, platinum was at $1,109/1,119 from $1,121, and palladium was at $203/208 versus $207.5.

March 24 (Reuters)

Reassurances over the health of the U.S. banking industry have sparked something of a recovery in investors’ appetite for risk and Wall Street looked set to join Asia and Europe with strong gains at the open.

Executives from Citigroup , Bank of America and JPMorgan Chase said last week their banks had been profitable for the first two months of the year.

Federal Reserve Chairman Ben Bernanke also said on Sunday that he sees the U.S. economic decline moderating and recovery beginning in 2010, though he said risks remain that politicians will lack the will to do everything needed to fix the fractured financial system.

Global stocks as measured by MSCI rose more than 1.3 percent, bringing gains to more than 11.5 percent since hitting a low a week ago.

“The eternal battle between the bulls and the bears will intensify this week,” said Chris Hossain, senior sales manager at ODL Securities.

“Whilst it is hard to say if we have seen the worst, we certainly haven’t seen a week like last week in a long time.”

European shares also rose for a fifth straight session, led higher by financial stocks.

The pan-European FTSEurofirst 300 and 14 percent this year after plunging 45 percent in 2008.

Earlier, Japan’s Nikkei average gained 1.8 percent to post its highest close in a month, with banks such as Mitsubishi UFJ Financial Group  jumping amid the easing fears about the health of U.S. lenders.

The benchmark rose 134.87 points to 7,704.15, its highest finish since Feb. 16. The broader Topix  climbed 2.4 percent to 741.69.

BONDS FOR SALE

The equity charge undermined demand for government bonds with June Bond futures down 73 ticks, two-year Schatz yields rising 5 basis points to 1.381 percent, and 10-year Bond yielding 3.127 percent, up 8 basis points.

“At least risk aversion is decreasing and there was no disappointment on the back of the G20,” said Patrick Jacq, interest rate strategist at BNP Paribas in Paris.

“Clearly, as financial stocks still remain the driving force, this is helping stock markets to rebound further.”

Over the weekend, finance ministers and central bankers from Group of 20 countries pledged to use their full fiscal and monetary firepower to combat the economic crisis, but the decisions taken focused more on funds for the IMF and regulating hedge funds.

The dollar fell broadly, reversing earlier gains made in the Asian session, as stock markets rallied.

The currency market was also looking ahead to policy meetings by the Federal Reserve and the Bank of Japan later in the week.

The dollar fell 0.65 percent against a basket of currencies to 86.687, while the euro rose 0.8 percent from U.S. trade on Friday to $1.3022 .

The U.S. currency, however, gained 0.49 percent to 98.43 yen .

March 16 (Reuters)

Concerns that Washington might nationalize big U.S. banks — which would wipe out shareholders and add to the fiscal burden — had weighed on stocks and other risky assets.

However, Bernanke said on Tuesday the significant value built up in the country’s banks would be lost if they were government-owned and though there could be a time when it became necessary to close banks down, now is not the time.

U.S. stocks rose more than three percent on Tuesday.

“It’s all about the equity rally we had last night and the U.S. shying away from nationalizing the banks,” said David Keeble, rate strategist at Calyon. MSCI world equity index rose 1 percent while the FTSEurofirst 300 index gained 1.5 percent.

Emerging stocks rose 1 percent. Oil rose 0.2 percent to $40.03 a barrel .

WANING STATUS

The yen fell as low as 97.33 per dollar , levels last seen in November. The Japanese currency also hit its weakest levels in almost seven weeks of 125.17 per euro .

A rapidly deteriorating domestic economy and political uncertainty has been hitting the low-yielding yen’s safe haven appeal, wiping out the inverse correlation between equities and the Japanese currency.

Wednesday’s data showed exports plunged a record 45.7 percent in January from a year earlier, with record slides in shipments to the United States, Europe and the rest of Asia pointing to a deepening recession across much of the world.

“The fundamental case for a weaker yen has become more pressing with Japan reporting its fourth monthly trade deficit in a row, suggesting that the current account surplus will melt down further, reducing commercial yen buying needs,” BNP Paribas said in a note to clients.

LONDON, Feb 25 (Reuters)

World stocks fell on Monday as optimism after Britain’s multi-billion rescue plan gave way to concerns about the banking sector after Royal Bank of Scotland reported the biggest ever loss in UK corporate history.

The euro tumbled after Standard & Poor’s cut Spain’s credit rating, following its downgrade of Greece last week. Oil fell 6 percent below $35 a barrel, hit by worries about weakening energy demand in a slowing economy.

Britain will allow banks to insure against steep losses and guarantee their debt to stop the credit crunch pushing the economy into a deep slump. The plan raises the government’s stake in RBS, which said it lost over 20 billion pounds last year, sending shares down nearly 70 percent.

“Whilst today’s measures will be widely welcomed, significant risks remain,” said Keith Bowman, equity analyst at Hargreaves Lansdown.

“All in all, should these measures fail, a further ratcheting-up of bank sector nationalization in order to force lending would appear to be the next step, a conclusion seen beyond all possibility just 12 months ago.”

The FTSEurofirst 300 index of leading European shares fell 2 percent, reversing gains of more than 1 percent earlier. The MSCI world equity index fell 0.8 percent, after making its biggest weekly loss since late November last week.

Emerging stocks fell 0.6 percent. UK banking woes knocked sterling to a two-week low of $1.4452 .

EURO AND DOWNGRADES

S&P cut Spain’s long-term sovereign credit ratings to AA+ from AAA, after it downgraded Greece last week and gave recent warnings on Ireland and Portugal. Worries about European government debt burdens have been growing as countries fund packages to boost local economies.

“It’s a theme in general … and it will continue to run for a while. Looking at the fiscal balances in Europe, that’s where the economic crisis is hurting at the moment – Ireland and Southern Europe,” said Niels From, chief analyst at Nordea in Copenhagen.

The euro fell 1.4 percent to $1.3139 . The dollar fell 0.7 percent to 90.31 yen while it rose 0.7 percent against a basket of major currencies.

The yield premium investors sought for holding the 10-year Spanish benchmark bond compared with the more liquid German government bond held at 114 basis points, having hit a record 122 bps earlier.

U.S. crude oil fell 6.2 percent to $34.25 a barrel, pressured by concerns about weakening oil demand, as well as signs of a resolution of a gas row between Russia and Ukraine and a ceasefire between Israel and Hamas in Gaza.

The March bund future fell 52 ticks.

LONDON, Jan 19 (Reuters)

What a beautiful day it is in Paris. It’s snowing. The streets are white. And the streetlights, shoplights, and automobile lights make everything glow. It would be a nice morning to sit in a café and drink a cup of coffee.

But we don’t have time for that. We’re back at our desk…there is another year to be reckoned with…and it promises to be a doozy. The trouble with this year so far is that it is missing the question marks. What lies ahead seems obvious…too obvious…

“World stocks rise on US rally, stimulus hopes,” comes the headline from CNN/Money.

The Dow flew up 258 points on Friday – stocks have been up in the last three trading sessions. Oil rose to $46. Gold fell to $879.

The expected rebound seems to be underway. Even dead cats bounce. And considering the height from which this one fell, it would not at all be surprising to see it bounce up 30% or even more…over the next three months.

Investors took a terrible beating in ‘08. It was the worst year in stock market history. They’ll figure that this year is bound to be better. And along will come many reasons to believe that things are looking up.

President-elect Obama is talking about relief on a Rooseveltian scale. He wants to spread unemployment and Medicare benefits around more freely, for example. But he knows he can’t just toss out a few dimes to bums on the street corners; he needs a stimulus plan that knocks peoples’ socks off.

“Economists from all across the political spectrum agree that if you don’t act swiftly and boldly we could see a deepening economic downturn,” he said recently.

We must be somewhere on the political spectrum. But he didn’t ask us. If he had, we would have explained that every penny spent on a bailout has to be taken out of the spending of the person who earned it. We’d add that there is no economic problem at all. The markets are doing what they’re supposed to do…clearing away the mistakes of the Bubble Epoch.

It’s a political problem, not an economic one. People don’t like to have to pay for their mistakes. So, they whine to politicians. And then the politicians make things worse…by trying to prevent the correction from taking place.

But, our “Head of State Hotline” has been silent, here at The Daily Reckoning headquarters. So we have to assume it was Barack Obama who was not calling – along with every other government leader on planet earth.

Mr. Obama figures he needs to do something spectacular…something that will give the impression of really turning things around. He calls his project the ‘American Recovery and Reinvestment Plan.’

Ahh…here are some question marks: What is it meant to recover? We don’t know…maybe the glory days of the Bubble Epoch. What is being reinvested? We can’t figure that out either. Typically, you reinvest a profit. But you have to have a profit to reinvest it. As near as we can tell, 2008 was a year of losses. You can’t reinvest losses.

Nevertheless, we know what American Recovery and Reinvestment Plan is…political claptrap. And now it’s expected to cost as much as $1 trillion. At least, that is what state governors are calling for. Congressional leaders say they want to stay below the “politically charged” one trillion dollar level. But they also say the bill won’t be ready for Obama’s signature until February. Congress needs time to pry open the pork barrel and spread it around – no question about that, either. By the time they’re finished, there’s almost sure to be $1 trillion work of grease in the package.

“US Debt Expected to Soar,” says the Washington Post, stating the obvious.

All this extra debt will do no good for the economy, but investors will probably feel like the good old days are back. And for a while, they will be…

*** This time of year you’ll find a lot of looking back at the year that just passed…and with good reason. Strategic Short Report’s Dan Amoss offers his views on 2008…and what lies ahead for us in 2009:

“When asked by family and friends over the holidays what I think about the 2008 stock market and economy, my response has been, ‘I expected a nasty bear market in 2008, but the carnage since September took me by surprise. The economy will remain weak, but I think the worst of the widespread market carnage is behind us. Future damage should be concentrated in sectors with horrible fundamentals. Thankfully, 2009 should be a year when fundamental analysis should start to matter once more.’

“This will be a welcome development, because 2008 was a year when the following strategy worked best:

1) Sell short any stock or ETF, without bothering to do any fundamental research
2) Invest the proceeds in Treasury bonds, preferably with as much margin as possible
3) Repeat Steps 1 and 2, over and over.

“Clearly, this ‘deflation trade’ strategy is not sustainable over longer time frames — not in an era of worldwide paper money standards. In fact, I’d expect that such a shotgun-based investment strategy of short S&P 500/long Treasuries could lead to big losses in 2009.

“Overall, I’m happy with Strategic Short Report’s performance. Obviously, I could have done even better, had I been more bearish since September. But it certainly felt unwise to sell short into an already panicked market. Let’s learn as much as we can from our experiences and move on; it never helps your trading discipline to dwell on past mistakes and missed opportunities.”

You can check out Dan’s full track record, and learn more about his trading strategy here.

*** It all seems so simple. After the crash comes the bounce. And the bailouts. The bailouts cost money we don’t have. So, we get more debt…and more printing press money. What’s to wonder about?

In the last two months of last year, MZM – a measure of the money supply – grew at 11% per year. Gold rose. With the Obama bailout…and the Fed’s bailouts…it seems a cinch that the price of gold will go up.

At $879 an ounce, gold is today no higher than it was 29 years ago. In January 1980, it briefly hit $875. If it were just to reach the same level now, adjusted for inflation, it would have to go to $2,400.

What bothers us about this is that it is so obvious. Looking at the facts, a sensible person would conclude: the price of gold is going up. Most likely, it will go to three times its current price.

And so, sensible people seem to be doing the sensible thing; the World Gold Council says demand for gold is increasing fast. The price of gold rose more than $100 – while every other asset, save U.S. Treasury paper – fell. Gold coins have become difficult to buy; the premium on a bullion coin has risen to about 10% over the gold price.

Still, the price of an ounce of gold is under $900…not over $2,000. Does the big money…the inside money…see something we don’t? Or do we see something it doesn’t? We don’t know…but it worries us.

Will there be no run-up in gold? Or will it come on sooner and more violently than even we ever imagined?

There’s bound to be a surprise waiting for us somewhere…but, just to be on the safe side, we’ll hang onto the gold we have. And we urge our dear readers to do the same. No gold? There’s still time to pad your portfolio with our favorite yellow metal. See here.

*** It also troubles us that so many people expect a bounce…followed by a further collapse. How can Mr. Market work his mischief if so many people see what he is up to? Where’s the surprise? Will the bounce not come at all? Or, will it come much more emphatically than people expect?

Perhaps markets will rally strongly all over the world. Chinese manufacturing will show signs of recovery. Housing in the United States will appear to have stabilized. Commodities will edge up. Investors may begin to believe they have another bull market on their hands – or at least a tradable rally. They won’t want to miss the opportunity to ‘get even.’ And then, as stock prices rise, investors will slip back into their old habits. They will turn to risky investments in order to boost their profits. Among other things, they are likely to invest in emerging markets, which will probably rise more than the U.S. market itself. Currencies such as the Brazilian real and the ruble will go up against the dollar.

As the rally recovers 40%…50%…maybe even 60% of last year’s losses, investors will be suckered into seeing it not as a bear market rally, but as a genuine new boom. They will think it is real…and durable. And they will forget to sell.

Mr. Market will have pulled another fast one.

*** “In a severe crisis, orthodoxy can prove a very bad strategy,” said Ben Bernanke last week.

We are as puzzled by this as by Obama’s American Recovery and Reinvestment Plan. Economics is not improv theatre. You can’t just make it up as you go along. You make a change in banking regulations or fiscal policies, for example, and it will take months or years before you know if it has worked. That’s why you need theories to guide you…you can’t wait to see how an economy reacts. In the absence of a theory about the way things work, you are just committing random acts of kinkiness.

Today’s news from Bloomberg also tells us that the “Fed has abandoned monetary policy.” We’re puzzled by that too. With rates at zero, what monetary policy did the Fed have left? Not much.

*** Poor Ireland. The Celtic Tiger has been de-clawed and spayed. House prices have fallen as much as 50%. Bank shares are down 90%. Unemployment – which had all but disappeared in the boom years – is headed back to 10%.

Source: An American Recovery: How High Will this Dead Cat Bounce?

Firmer Asian, British and emerging market shares pushed world stocks to a one-month high on Thursday with the focus on the fate of U.S. automakers, while doubts over deep euro zone interest rate cuts boosted the euro.

Oil rose 5 percent, extending earlier gains, while the index of leading European shares fell. U.S. stock futures were pointing to a firmer open on Wall Street with investors focusing on the $14 billion plan to bail out the big three U.S. automakers.

The proposal passed the House of Representatives but its prospects looked grim in the Senate where supporters, who say the measure is necessary to avoid another jolt to an already contracting economy, struggled to keep it alive.

“Most of the bad news is already in the market. It is going to get worse? Sure. The economic news is going to get awful worse,” said Peter Dixon, UK economist at Commerzbank.

“But the market will only react if the numbers continue to get worse.”

MSCI world equity index rose 0.7 percent. Asia rose 0.7 percent and Britain gained 0.3 percent. Emerging stocks  rose more than 1 percent. The FTSEurofirst 300 index of leading European shares was down 0.7 percent. U.S. stock futures were up around 0.1 percent on the day .

The euro rose 1.5 percent to a six-week high of $1.3222 after European Central Bank Executive Board member Juergen Stark said the central bank does not have a lot of room for manoeuvre after its interest rate cut last week. Stark also said further rate reductions could be done only in small steps.

The region’s interest rate futures are now showing that the euro zone cost of borrowing to bottom out at 1.75 percent, from just over 1.5 percent after the ECB’s move last week to cut rates to 2.5 percent.

“If the euro zone is being perceived to still have rates at substantially higher levels then obviously there’s a positive rate spread,” Rabobank markets strategist Jeremy Stretch said.

“But I’m not convinced that its ultimately going to be positive as the dynamics of the euro zone economy are pretty weak.”

The Swiss franc cut earlier gains to trade at 1.1927 per dollar after the Swiss National Bank cut interest rates by 50 basis points. Switzerland, Canada and Korea joined a growing number of central banks worldwide in cutting interest rates over the past 24 hours.

The dollar fell 1.3 percent against a basket of major currencies. The December Bund futures fell 18 ticks.

U.S. crude oil was up 5 percent at $45.70 a barrel, helped by favourable demand forecast by the International Energy Agency and signs that top oil exporter Saudi Arabia has slashed January supplies ahead of next week’s OPEC meeting have underpinned prices.

Natsuko Waki

LONDON, Dec 11 (Reuters)

U.S. stocks were mostly higher in thin trade on Friday, as investors eyed retail sales on the first day of the shopping season after the Thanksgiving Day holiday, to gauge the extent of weakening consumer demand.

European and Asian shares were also higher, despite the attacks in Mumbai, India, while U.S. Treasury debt prices and the U.S. dollar both gained as investors continued to look for safe-havens as global economic growth slows.

“It’s a light volume day so you’re going to see some choppy trading, with so many people out,” said Robert Finkel, consumer trader at Stifel Nicolaus in Baltimore of the U.S. stock market.

“I’m watching how things go from a retail standpoint today – we’ve heard a lot of speculation about how bad it’s going to be, now we’ll get some proper feedback.”

The U.S. holiday weekend will test the strength of consumer sentiment, a main driver of the U.S. economy, as the country faces its worst financial crisis since the Great Depression. If the U.S. consumer fails to buy, companies across the globe can expect to see fewer exports and profits.

The Dow Jones industrial average rose 32.42 points, or 0.4 percent, to 8,759.03. The Standard & Poor’s 500 Index rose 0.66 points, or 0.1 percent, at 888.34. The Nasdaq Composite Index shed 11.99 points, or 0.8 percent, to 1,520.11.

The S&P’s retail index dipped 2.3 percent.

The U.S. stock market was closed Thursday for the Thanksgiving holiday and is trading for half the day on Friday. On Wednesday, stocks ended higher, capping the Dow’s biggest four-day percentage gain since 1932.

Technology shares slid after signs of a downturn in global chip demand as STMicroelectronics cut its fourth-quarter outlook. Industry sources said Taiwan companies want to slash costs. The semiconductor index shed 1.1 percent.

OPEC MEETS

U.S. light crude for January delivery stood at $51.52 a barrel, down $2.90, on course to end the month down more than 20 percent, as OPEC ministers prepared to meet in Cairo to discuss potential further supply cuts to combat a global fall in demand .

In the U.S. Chevron fell 1.9 percent tracking oil lower.

Indian stocks ended higher despite the attacks in Mumbai, but India’s 10-year bond yield fell to its lowest level in three years on expectations that the attacks will an impetus to central bank interest rate cuts.

Globally, the MSCI all-country world index was 0.1 percent firmer, although it has gained more than 10 percent this week, the first weekly gain in four weeks.

“On a range of measures, there is undoubted value to be found in many of the world’s equity markets,” said Sarah Arkle, chief investment officer with Threadneedle Asset Management.

The pan-European FTSEurofirst 300 was up 0.7 percent, as buoyant pharmaceutical shares eclipsed a drop in cyclical mining and industrial sectors.

Earlier, Japan’s Nikkei average climbed 1.7 percent to close out its best week in a month.

The U.S. dollar regained traction against major currencies after early losses. The euro lost 1.8 percent to $1.2656 . The dollar was flat at 95.36 yen .

Benchmark 10-year Treasury notes traded higher in price for a yield of 2.9673 percent. The benchmark yield, which moves inversely to prices, fell to as low as 2.82 percent on Friday, according to Reuters data, marking the lowest in at least five decades.

Overall, benchmark yields are on track for the biggest monthly fall in at least 12 years, according to Reuters data, as investors have stampeded into lower-risk investments on signs of ever-deepening economic distress. The 10-year yield has shed more than a full percentage point since the end of October.

Euro zone government bonds rose, reflecting concern about the economy and expectations of interest rate cuts. Two-year Schatz yields were last down 3 basis points to 2.202 percent.

By Nick Olivari
NEW YORK, Nov 28 (Reuters)