Morning traders.Market wrap: A negative start to local trade is...

Morning traders.

Market wrap: A negative start to local trade is likely after a rising U.S. dollar and European debt concerns trimmed recent gains on Wall Street overnight.

At 8 am, the December SPI futures contract was 23 points or 0.5% off at 4783, following a mixed session for commodity prices. Gold and silver marked new highs, oil inched north and industrial metals split between gains and losses.

The major U.S. share indexes retreated for the first session in seven as the U.S. dollar benefitted from growing concerns over sovereign debt problems in Europe. The Dow slid 38 points or 0.34% from Friday's two-year closing high. The S&P 500 eased 0.21% and the Nasdaq managed a one- point or 0.04% gain.

"Everybody is starting the week asking themselves, 'What is it that is going to move the market farther?' I think it's very predictable that we're going to get some profit taking. It takes courage to step in and buy the stock market when it's up 10.5% over eight weeks," Hugh Johnson, chairman and chief investment officer at Hugh Johnson Advisors told MarketWatch.

Market commentators said risk appetite was capped by renewed attention on indebted European nations as the cost of insuring Irish and Portuguese debt against default climbed to record levels. A European Union official flew to Ireland yesterday to examine the Irish government's plans to avert an EU bailout.

"We had a spike last week after a series of up days, but the [U.S.] dollar strength this morning gets everybody looking at their screen and thinking to maybe take a little bit off," the president of Axiom Capital Management in the U.S. told Bloomberg. "There are elements keeping stocks from running meaningfully higher - issues related to the debt overhang, U.S. and European. It's not a clean picture."

The U.S. dollar index, which tracks the greenback against a basket of currencies, was recently up 0.65% at 77.05. European markets eased as the euro slumped. Britain's FTSE fell 0.43%, Germany's DAX 0.06% and France's CAC 0.08%.

Precious metals, seen as a safe haven in times of economic worry, charged to new highs. Gold smashed through the $1,400-an-ounce level and silver hit a fresh 30-year record. Spot gold was recently $15.20 higher than Friday's New York close at $1,409.30 an ounce. Silver for December delivery spiked 68 cents or 2.6% to $27.43 an ounce.

Oil overcame early U.S. dollar-related weakness to edge higher. Crude futures were recently up 7 cents or 0.1% at $86.92 a barrel.

Industrial metals were mixed, with copper recovering to end flat despite the rising dollar. In late trade in London, copper was unchanged, lead up 0.2%, tin up 0.2%, aluminium down 0.9%, nickel down 1.4% and zinc down 3.3%.

TRADING THEMES TODAY

CONSOLIDATION: World markets have run hard since late August and profit-taking was inevitable. Last night's action was mildly negative but set no alarm bells ringing. U.S. investors continued to "buy the dip", but perhaps with less conviction than has been standard these last few weeks. Oil and metals held up well, considering the rebound in the U.S. dollar, and that's a clue that the big money doesn't attach much importance to the latest moves on currency markets. At least not yet. A few weak sessions may lie ahead but there's no evidence yet of a change in the medium-term up-trend.

PRECIOUS METALS: There doesn't seem to be much this year that hasn't been good for gold and silver. Even a rebound in the U.S. dollar this week hasn't dented this long run of record highs for gold and 30-year highs for silver. The catalyst overnight was European debt. That isn't going to clear any time soon, so gold/silver miners continue to look like sound medium-term buys.

ECONOMIC NEWS: Monthly local business confidence figures are scheduled for release at 11.30 am. A slow start to the week in the U.S. continues tonight with monthly wholesale inventories and consumer confidence.

Good luck to all.