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Investors who were holding their breath in anticipation of the latest figures on U.S. retail sales can now exhale: the numbers for January rose unexpectedly, despite predictions from economists that sales would actually fall again after a disastrous December.

According to the U.S. Commerce Department, retail sales rose 0.3 per cent last month after a decline of 0.4 in the previous month. More importantly, the January figure is well above the 0.3 per cent decline that a consensus of economist had been expecting.

"Overall, core trend soft and slowing but could have been worse," said Ian Shepherdson, chief U.S. economist at High Frequency Economics, noting that clothing sales were up but sales of furniture and building materials were down.

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Now, economists arguing that the U.S. would avoid recession in the near future at least have some ammunition to back up their views, given that consumer spending represents about two-thirds of the U.S. economy. However, it will be interesting to see how these upbeat sales statistics feed into views on the U.S. Federal Reserve's next move on interest rates. Right now, most observers believe more cuts are on the way.

S&P 500 futures pointed toward a slight rise in the benchmark index of 5.4 points, to 1355 before the retail sales data were released. The Dow Jones industrial average futures pointed to a rise of 23 points, to 12,409.

In Europe, major indexes were down on Wednesday afternoon. The U.K.'s FTSE 100 fell 1.1 per cent and Germany's DAX index fell 0.8 per cent. In Asia, Japan's Nikkei 225 rose 1.1 per cent on Wednesday while Hong Kong's Sang Seng index rose 0.4 per cent.

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