In December, Italian industrial production rose for a second consecutive month. On a monthly basis, production rose by 1.4% M/M, while the consensus was looking for a 0.5% M/M decline. The breakdown shows that strength was based in manufacturing (1.6% M/M), while mining & quarrying stabilized and electricity and gas dropped by 2.7% M/M. Looking at the details of the manufacturing sector, production of durable (3.0% M/M) and non-durable (1.6% M/M) consumer goods rose in December and also production of capital goods was strong (3.6% M/M), while output of intermediate goods stabilized. Italian production is now up for a second straight month, suggesting that not only in the core EMU counties, but also in the Southern Europe, the worst might be behind us. French data were however less optimistic. In France, industrial production dropped for the first time in three months, but twice as much as expected. Weakness was broad-based as manufacturing output (-1.4% M/M), construction (-6.6% M/M) and water and utilities (-2.5% M/M) all weakened in December. The overall euro zone reading is forecast to show a drop by 1.2% M/M, the fourth consecutive decline.