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US industrial production rose by 0.7pct in August, well above forecasts centred on a 0.2pct gain. Capacity use rose from 69.9pct to 70.5pct. But consumer sentiment surprisingly fell from 73.5 to 69.4 in October.

US Treasury Secretary Timothy Geithner warned that the US must live within its means once the economy recovers to preserve the status of the US dollar as the reserve currency. The US recorded a budget deficit of US$1.4 trillion or 10pct of GDP for the year to September 30.

European shares fell on Friday on investor disappointment about the latest rash of US corporate earnings results. There was also profit-taking ahead of the major week for US profit results. The FTSEurofirst index fell by 0.8pct with the UK FTSE down 0.6pct while the German Dax was lower by 1.5pct.

US sharemarkets fell on Friday after a number of company earnings results missed expectations. Shares in General Electric fell by 4.2pct with Bank of America down 4.6pct after earnings from both disappointed investors. The US Dow Jones fell by 67 points or 0.7pct with the S&P 500 and the Nasdaq both down 0.8pct. All major indexes rose for the second straight week with the Dow Jones up 1.3pct while the S&P 500 rose 1.5pct and the Nasdaq gained 0.8pct.

US treasuries rose on Friday (yields lower) with a weaker consumer sentiment result and a lower sharemarket boosting investor interest in government bonds. US 10yr yields fell by 5pts to 3.41pct with US 2yr yields unchanged at 0.96pct. Over the week US 10yr yields rose by 3pts with US 2yr yields down 1pt.

Major currencies drifted against the US dollar in European and US trade on Friday. The Euro broadly held between US$1.4845 and US$1.4930, before ending US trade near US$1.4895. The Aussie dollar held between US91.25c and US92.30c, ending US trade near US91.70c. And the Japanese yen gravitated between levels around 91.30 yen per US dollar to near JPY90.55, ending trade near JPY90.90.

Crude oil prices rose on Friday after solid US industrial production figures provided further confidence about global economic recovery. The Nymex oil contract rose by US95c to US$78.53 a barrel, just off highs of US$78.67. And London Brent crude rose by US76c to US$76.99 a barrel.

Base metal prices were slightly lower on the London Metal Exchange on Friday, the exception being zinc, up 0.9pct. Metals fell up to 1pct. Over the week base metal prices were generally slightly weaker except zinc, up 0.7pct. And the price of gold was little-changed on Friday with the Comex quote up US90c an ounce to US$1051.50.

Ahead: In Australia, Reserve Bank assistant governor Phillip Lowe delivers a speech. In the US, no major data is released.

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