Morning traders. Thanks very much for the support yesterday....

Morning traders. Thanks very much for the support yesterday. Very much appreciated. New day today.

Market wrap:

Stocks are set to open at their lowest level of the week as European concerns again drove US equities and key commodities sharply south.

The December SPI 200 futures contract ended the night session 51 points or 1.2% off at 4208 as oil slid back under US$100 a barrel and copper suffered its heaviest fall in three weeks.

Upbeat domestic economic news had US shares briefly ahead in early trade before gloomy European news helped send the market down for a second day. All 30 Dow components lost ground at some point overnight as the blue-chip index slumped more than 230 points before paring the loss to 135 points or 1.13%. The S&P 500 dropped 1.67% and the Nasdaq 1.94%.

The declines followed fresh signs of trouble in European bond markets and disagreement among euro-zone leaders over how to deal with the region's debt crisis. Spanish bond yields hit euro-era highs overnight, Italian 10-year yields remained stuck above the critical 7% level and the gap between German and French borrowing costs blew out to 2%. Adding to concerns that the crisis is once again getting away from European leaders, Reuters quoted a euro-zone official as saying there were no plans for the European bailout fund to help Italy, while Germany continued to rule out any role for the European Central Bank in IMF-EU bailouts.

The news helped fuel another global retreat from banks exposed to euro-zone debt. Britain's FTSE fell 1.56%, Germany's DAX 1.07% and France's CAC 1.78%.

US economic news mostly surprised to the upside, but investors were increasingly nervous about next week's looming deficit battle. A Congressional "super-committee" is next week due to deliver a plan to reduce the US's burgeoning deficit, but the two political parties appear as far apart as ever. The night's economic news included a dip in weekly jobless claims to a seven-month low, a pick-up in new home construction, an increase in building permits and a fall in business activity in the Philadelphia region.

"It's a risk-off day," the chairman of Marketfield Asset Management in the US told Bloomberg. "There's a lot of liquidation in the commodity space. You have the obvious story of European yields. The super-committee may disappoint."

Oil's foray above US$100 a barrel lasted less than 24 hours, as the bearish turn in equities and a manufacturing slowdown in Philadelphia undermined buying demand. Crude for December delivery was lately down $3.63 or 3.5% at US$98.96 a barrel.

Industrial metals were sucked down in a global retreat from risk, handing London copper its worst loss in three weeks. In London, copper lost 3.4%, aluminium 3.3%, lead 2%, nickel 1.6%, tin 2.3% and zinc 2.65%. US copper was recently down 3.4%.

Precious metals dropped sharply on low volume as traders locked in profits after several weeks of solid gains. Gold futures for December delivery was recently off $54.40 or 3.1% at US$1,719.80 an ounce. December silver fell $2.30 or 6.8% to US$31.52 an ounce.

TRADING THEMES TODAY

TESTING THE BULLS: Yesterday's surprisingly bullish mood on the Australian market faces a sterner test today. The market might be able to shrug off one heavy fall in the US, but can it afford to ignore two? That said, there was a promising up-tick in US markets in the dying minutes and this morning's ASX open should be near a natural support level, so I'll be tempted to buy significant weakness. Only for intraday purposes at present - next week is likely to bring a new set of worries, with the US deficit squabble likely to take centre stage. The politicians will muddle through in the end but we can expect a debilitating stand-off to weigh on world markets for at least a few days. We've seen this movie before.

ECONOMIC NEWS: A busy week ends with a whimper. Nothing significant on the domestic calendar today. It's options expiry tonight in the US, which tends to be volatile. Also tonight: the leading index and speeches by two members of the Federal Reserve.

Good luck to all.