From Craig James, Commsec Chief Economist

MORNING REPORT (8am AEDT) US jobless claims rose by 2,000 to 393,000 in the last week. The 4-week moving average of claims which is a better gauge of labour market trends fell to the lowest levels since April. US consumer sentiment rose from 60.9 to 64.1 in November. The most improved aspect was that consumers anticipated healthier jobs growth.

US consumer spending edged up by 0.1pct in October slowing sharply from a revised 0.7pct in September. Income rose 0.4pct in October - marking the largest gain since March.

European shares fell on Wednesday to their lowest close in seven weeks. Weak demand in a German bond auction sparked fears that Europe´s debt crisis was beginning to threaten the larger economies. The Bundesbank was forced to retain almost half of a sale of $6 billion euros due to a shortage of bids by investors. A report by Fitch suggested that France has limited room left to absorb shocks to its finances without endangering its AAA credit rating. The FTSEurofirst index fell by 1.1pct with the UK FTSE down by 1.3pct while the German Dax lost 1.4pct.

US shares fell for a sixth straight session on Wednesday. A plethora of negative news prompted investors to sell-off equities ahead of the Thanksgiving holiday. All 10 S&P sectors were weaker, with financials among the big decliners over concerns about exposure to Europe. At the close of trade, the Dow Jones was lower by 235pts or 2.1pct. The S&P 500 fell 2.2pct and the Nasdaq was down by 61pts or 2.4pct.

US long-dated treasuries rallied (yields lower) on Wednesday as traders switched to safe-haven US bonds. US 2yr yields were flat at 0.266pct and US 10yr yields fell 4pts to 1.878ct.

The Euro and commodity currencies fell against the greenback on Wednesday on further signs that the euro-zone debt crisis was starting to threaten Germany as well as France. The Euro fell from highs near US$1.3480 in early European trade to lows near US$1.3320 and was around US$1.3335 in late US trade. The Aussie dollar fell from highs around US97.80c to US96.60c, and was near US96.85c in late US trade. And the Japanese yen traded between JPY76.90 yen per US dollar and JPY77.55, ending US trade near JPY77.30.

US crude oil prices fell on Wednesday as weak manufacturing data from China and Europe heightened concerns about a slowing global economy. Nymex crude oil fell by US$1.84 or 1.9pct to US$96.17 a barrel and London Brent crude fell by US$1.85 to US$107.18 a barrel.

Base metal prices fell on the London Metal Exchange with copper falling to a one-month low. Chinese manufacturing activity posted the sharpest contraction in 32 months adding to concerns about the demand for industrial metals. And the gold price fell in line with other commodities. The Comex December gold price lost US$6.50 an ounce or 0.4pct to US$1,695.90.

Ahead: In Australia, no economic data is released. In the US, no economic data is released due to the Thanksgiving holiday.