Chinese manufacturing indexes rose in January as the world's second-biggest economy withstood weaker exports driven by Europe's debt crisis and a government-induced property slowdown.

The official purchasing managers' index increased to 50.5 from 50.3 in December, exceeding the median estimate in a Bloomberg News survey for a reading below the 50 level that divides expansion from contraction. The data may have been distorted by a weeklong holiday. A separate gauge from HSBC Holdings Plc. and Markit Economics rose to 48.8. India's manufacturing grew at the fastest pace in eight months.

Premier Wen Jiabao yesterday reiterated his government will “fine-tune” economic policies as needed after the central bank held off on a reduction in bank-reserve requirements that some analysts had forecast for January. Indexes for export orders, imports and employment in the official PMI showed a deeper decline, underscoring an International Monetary Fund warning last week that the euro area's crisis could trigger another global recession.

“Today's data further confirmed a soft-landing story for China,” said Ken Peng, a Beijing-based economist at BNP Paribas SA. “However, consumer demand may weaken after holiday effects disappear,” and global “uncertainties” and the Chinese government's efforts to curb property prices “will continue to weigh on exports and industrial production,” Peng said.

That will result in a bigger slowdown in China's growth in the coming months, he said.

Eoin Treacy's view China is walking a fine line between curtailing speculation in the property market and weighing too heavily on the manufacturing sector. Today's additional announcement of support for small to medium sized businesses is to be welcomed and suggests that “fine tuning” of economic policy is already underway. Lower bank reserve requirements and interest rates can also be expected.

Investors globally appear to be positioning themselves to avail of further monetary easing not least in Asia. The performance of industrial commodities and Latin American national indices highlight this contention. The Eurozone debt crisis continues to weigh on sentiment and global growth expectations, Asian countries are moving to insulate their economies by announcing infrastructure development projects and cutting interest rates. This has been welcomed in the industrial metal markets.

Copper has pushed back above its 200-day MA and continues to hold a progression of higher reaction lows from the October nadir. This sequence would need to be broken, with a sustained move below $3.40 to question medium-term scope for continued upside. Aluminium found support in the region of $2000 from December. It has since rallied to break the seven-month progression of lower rally highs and closed the overextension relative to the MA. Provided it holds most of the recent advance, on the next pullback, the medium-term upside can continue to be given the benefit of the doubt. Nickel has also broken a progression of lower rally highs and a sustained move below $20,000 would be required to question potential for additional upside. Lead has completed a four-month base and a sustained move below $2150 would be required to question recovery prospects. Zinc has a similar pattern. Tin rallied emphatically last month and will need to hold above $2000 on the next pullback to confirm a return to medium-term demand dominance. (Also see David's review in Comment of the Day on January 12th).

As a major industrial metal exporting region Latin America has not only hosted some of the better performers of late but also displays a high degree of commonality.

December's announcement of Brazil's efforts to stimulate the economy through lower taxes and removal of the IOF levy acted as a catalyst for investor interest. The Bovespa Index has since rallied back above the psychological 60,000 level which also represented the 200-day MA. A sustained move below that area would be required to question medium-term scope for continued higher to lateral ranging. The US Dollar has fallen back to test the region of the MA against the Real and while some steadying is likely, a sustained move above BRL1.8 would be needed to suggest a return to demand dominance beyond the short term.

The Mexican market held onto the majority of its prior advance in 2011 and has held a progression of higher reaction lows since July. A sustained move below the trend mean, currently near 35,750, would be required to question medium-term potential for a successful move to new highs. In common with the Real above, the Mexican Peso has strengthened to test the MA.

The Colombian General Index trended steadily lower from late 2010, but rallied in January to break the progression of lower rally highs. A sustained move below 13,000 would now be required to question medium-term scope for continued upside. The US Dollar has returned to test the lower side of the more than two –year range against the Colombian Peso near COP1800. It is somewhat oversold in the short-term but a clear upward dynamic would be required to suggest anything more than temporary steadying in this area.

There was a great deal of uncertainty last year surrounding the Peruvian elections but President Humala has so far provided a steady pair of hands for the economy. Despite political uncertainty, the New Sol appreciated relatively consistently throughout 2011 and is now testing the 2008 peak versus the US Dollar. A sustained move above PEN2.7 would be required to begin to suggest anything more than short-term potential for some steadying in this region. The Lima General Index rallied impressively from the October low and is now testing the 22,000 area. While somewhat overbought in the very short-term, a sustained move below 20,000 would be required to question medium-term scope for additional upside.

Chile's General Index has held a progression of higher reaction lows since October and has been consolidating below the overhead top formation for much of the last two months. It needs to sustain a move above 21,000 to reassert the medium-term demand dominance. The Chilean Peso has a similar pattern to the Real and Mexican Peso.

The Argentine MERVAL Index does not have the support of a strengthening currency with the Argentine Peso in a steady devaluation versus the Dollar. The stock market Index found support in October and has rallied to test 3000 area. It needs to hold above 2500 on the next pullback to support the medium-term bullish outlook.

In local currency terms, the Venezuela Stock Market Index has been in a steep uptrend since early 2009. Even allowing for the devaluation of the Bolivar in early 2010 the subsequent rally has been impressive. In US dollar terms, the Index is now testing the 2007 peak. Despite this performance, investors are likely to remain wary given the uncertainty surrounding political, monetary and corporate governance.