Financial markets climbed in European session after the success of the Spanish bond auction. Market sentiment was also lifted after data showed that Chinese inflation eased further in December. Moderation in general price level should pave the way for growth-stimulating accommodative measures. As the US strived to tighten sanctions on Iran, it won support from Japan while China rejected to limit oil import from the country. In Nigeria, protests intensified and union said they would close facilities and start a strike. Geopolitical tensions in oil producing countries should give backing to oil prices in the near- to medium-term.

Twice the maximum target of 5B euro, Spain sold 9.98B euro of bonds today. The yield on bonds maturing in July 2015 was 3.384%, lower than 5.187% of bonds maturing in April 2015 sold last month. The result came after Germany's auction which received more than double the original target yesterday. On the dataflow, the Eurozone's industrial production dipped -0.1% m/m in November, better than consensus of a -0.2% slide.

In China, headline CPI eased to +4.1% y/y in December from +4.2% a month ago. While it came in higher than market forecast of +4.0%, the moderation signaled that the price problem in the world's largest growth driver is over. Decline in energy price and slowdown in economic growth were drivers of the ease in CPI. In coming months, consumer prices may ease further as lower commodity prices and producer prices (PPI eased to +1.70% in December from +2.70% in November) feed through downstream CPI. Moderation in consumer prices also drove speculations of further easing in the PBOC's monetary policy.

Tensions in Nigeria have probably helped sustain oil trade above $100/bbl. It's reported that members of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have stopped delivering crude oil production data to the government. This is expected to be a prelude of the shutdown of the country's oil exports. According to the DOE/EIA, Nigeria, an OPEC member, has the 2nd largest oil reserves in Africa. Nigeria produced about 2.6M bpd 4Q11 of crude oil and condensates and almost 90% of output was for export. The US is an important market of the African producer and indeed Nigeria is the 4th largest foreign oil supplier to the United States, In 2010, over 40% of Nigeria's oil production was exported to the US. Therefore, disruption of oil output in Nigeria would affect the US, hence the world market, in both refinery activities and trades.

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