daytrading sep 13 pre-market

Morning traders.

Market wrap: A late recovery on Wall Street has Australian shares pointed higher despite overnight falls in European equities, gold and copper.

The September SPI futures contract ended the night session 41 points or 1% stronger at 4081 as US stocks were boosted by reports that China may assist debt-stricken Italy.

The report on the Financial Times website helped the Dow turn another triple-digit decline into a gain of 69 points or 0.63%. The S&P 500 bounced off a technical support level to close 0.7% ahead and the Nasdaq added 1.1%.

Earlier, European markets continued to slide as credit-default swaps pointed to a 98% probability that Greece will default on its debt. Britain's FTSE fell 1.63%, Germany's DAX 2.27% and France's CAC 4.03%.

"This is an environment in which normal rules don't hold any more," a strategist at Commerzbank told MarketWatch. "This is fear, uncertainty and all the other nasty things associated with market panics. You can forget fundamentals, valuations."

Greek Prime Minister George Papandreou failed to convince international investors that his country can escape default after new data revealed the budget gap has blown out 22% since the start of the year. The government expects the economy to shrink 5% this year.

French banks plunged following weekend claims that Moody's plans downgrades because of their exposure to Greek debt. BNP Paribas, Credit Agricole and Societe Generale all fell more than 10%.

US stocks staged a late recovery after the Financial Times reported that Italy is courting China Investment Corporation, one of the world's largest sovereign wealth funds, in the hope it will buy Italian bonds and invest in Italian companies. The news helped soothe fears that Italy is also lurching towards a credit crisis.

Oil turned north as the US dollar came off its highs for the session. Crude for October delivery was recently ahead $1.66 or 1.9% at US$88.90 a barrel.

Industrial metals were mixed but copper hit a one-month low as the European debt crisis continued to weigh on demand. In London, aluminium rallied 0.4%, nickel 2.2%, tin 0.5% and zinc 1.2%. Copper fell 0.65% and lead 1.15%. US copper was recently off 0.2%.

Precious metals lost ground in selling attributed by market commentators to investors liquidating assets to cover falls elsewhere. Gold for December delivery was recently down $42.50 or 2.2% at US$1,818 an ounce. Silver for December delivery fell $1.26 or 3% to US$40.33 an ounce.

"Gold sell stops are being placed as asset managers need to raise cash to stem portfolio losses," the vice-president of global futures at RBC Capital Markets wrote in a note quoted on MarketWatch.

TRADING THEMES TODAY

RESPITE. BUT FOR HOW LONG? Another horror night for European equity markets but a late rally on Wall Street offers local investors some hope this morning. The question is, for how long? It looks like the end game is near for Greece and the finale isn't going to be pretty, with repercussions for many of the world's largest banks and a danger that inter-bank lending will seize up, much as it did three years ago. While it was great to see green on Wall Street, the pretext was pretty flimsy - it will take more than talks about possible Chinese investments in Italy to fix the euro-zone. It's very hard to pick anything more than the very near-term direction in these conditions because breaking news will send this jittery market skittering one way, then the other. Stay nimble.

ECONOMIC NEWS: Monthly business confidence figures are due at 11.30 am AEST. A relatively light session for scheduled news tonight in the US includes economic optimism, the Federal Budget balance and import prices.

Good luck to all.