Risky assets got supports on Friday as investors were optimistic that the White House and the Congress would find a way out for handling the fiscal cliff, which might remove as much as US$ 600B from the US economy if the government allows the Bush-era tax holiday to end and automatically begin the spending cut in January 2013. Financial markets were also lifted by encouraging economic data from China and the Eurozone. In China, the flash manufacturing PMI compiled by the HSBC/Markit rose to 50.4 in November, the first time in 13 months. Details of the report sent a mixed picture, while the "new export orders" index soared to 52.4 while the "new orders" index grew at a slower rate. The HSBC noted "that the economic recovery continues to gain momentum towards the year end" but the recovery remains "fragile" as it's still in its early stage. The government needs to continue its policy easing to stimulate the economy. Eurozone's PMI data was also mixed. While the manufacturing PMI improved to 46.2 in November from 45.4, the services data slipped -0.3 point to 45.7 during the month. There have been concerns that Germany, the Eurozone's biggest economy, would be dragged down by the debt-ridden peripheral economies. While it has been evidenced in some data that this worry has come true, the IFO data for November did offer some surprises. The business climate index soared +1.4 points to 101.4 in November. The current assessment index added +0.8 point to 108.1 while the expectations index jumped to 95.2 from 93.2 in October.
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