After closing at the lowest level since Mar ’09 last Thursday, the Shanghai index bounced for a 2nd day, this time by almost 3%, to the highest since mid Dec after Dec bank loans grew by 640.5b yuan, 65b above expectations and the most since April. Also, M2 money supply grew by 13.6%, the most since July. Both are signs that Chinese officials are continuing the modest easing that began when the reserve requirement ratio was cut on Nov 30th. The euro is bouncing following Friday’s CFTC data that revealed for the week ended last Tuesday, net shorts rose 11k contracts to a new record high. The catalyst for today’s modest move higher was German Nov Exports which rose 2.5% m/o/m, better than estimates of up .5%. German IP fell .6%, about in line. Germany sold 6 month bills and buyers will be paying Germany for the privilege as the yield was -.0122%. Merkel/Sarkozy meet today to further the Dec 9th Summit discussion. Three of the measures of interbank lending in Europe continue to ease following the yr end ’11 funding pressures. Unicredit’s share rights are trading when issued today and sharply lower (UCGAA IM equity on Bloomberg) and Unicredit common is down another 10% after last week’s 39% drop.

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