In US economic data, the ISM manufacturing index eased from 58.7 to 55.5 in December, well below the consensus estimate of 57.6. Construction spending fell by 0.3 per cent in November, below forecasts for a 0.3 per cent gain.
European shares eased on Friday. The FTSEurofirst 300 index fell by 0.4 per cent with the German Dax down by 0.4 per cent and the UK FTSE down by 0.3 per cent. But Italian, Spanish and Greek markets rose on hopes for stimulus from the European Central Bank. In London trade shares in BHP Billiton lost 0.8 per cent while Rio Tinto fell by 1.0 per cent.
US sharemarkets were mixed in thin trade on Friday with major indexes closing off session highs. Weaker-than-expected economic data weighed on sentiment. At the close of trade the Dow Jones finished up by almost 10 points, or 0.1 per cent, after trading higher by 128 points at one stage. The S&P 500 index was down by less than 0.1 per cent and the Nasdaq was down by 9.2 points, or 0.2 per cent. For the week the Dow lost 1.2 per cent, the S&P 500 fell by 1.5 per cent and the Nasdaq lost 1.7 per cent.
US longer-term treasuries rose on Friday (yields lower) in response to weaker-than-expected economic data. US 2-year yields fell by less than 1 point to 0.67 per cent while US 10-year yields fell by 6 points to 2.11 per cent. Over the week US 2-year yields fell by 3.5 points while US 10-year yields fell by 9 points.
Major currencies fell against the greenback in European and US trade on Friday. The euro fell from highs near $US1.2065 to lows near $US1.2000, and was around the lows in late US trade. The Australian dollar fell from highs near US81.45c to lows around US80.80c and was trading near US80.85c in late US trade. This morning the Aussie is near US80.70c. And the Japanese yen fell from 120.42 yen per US dollar to JPY120.74 before strengthening to JPY119.89 and then easing again to end US trade at JPY120.47.
World oil prices fell on Friday in response to a stronger US dollar and weak US and European economic data. Brent crude fell by US91c or 1.6 per cent to $US56.42 a barrel while the US Nymex crude price fell by US58c or 1.1 per cent to $US52.69 a barrel. Over the week, Brent fell by $US3.03 or 5.1 per cent while Nymex fell by $US2.04 or 3.7 per cent.
Base metal prices were mixed on the London Metal Exchange on Friday. Lead, zinc and tin rose up to 1.3 per cent while other metals fell up to 2.1 per cent. Over the week, metals were also mixed. Nickel lost 3.3 per cent and tin rose 3.3 per cent. Gold rose on Friday with the Comex gold futures price up by $US2.10 an ounce, or 0.2 per cent, to $US1,186.20 per ounce. Over the week gold fell by $US9.10, or 0.8 per cent. Iron ore was unchanged at $US71.20 a tonne on Friday. Over the week iron ore rose by $US4.50, or 6.3 per cent.
Ahead: In Australia, the Performance of Manufacturing index is released. In the US, December auto sales data is released.
Craig James is chief economist at CommSec.