According to the US Federal Reserve´s Beige book, economic activity continued to grow at a moderate pace in January and early February. The report also noted that retail sales increased in all 12 regional bank districts in early 2011, while some retailers had already raised prices or intend to do so in the next few months. Manufacturing retailers were also reporting greater ability to pass through higher costs to customers.

US ADP private sector employers added 217,000 job in February, well above expectations for a raise of 175,000. The January result was also revised modestly higher. US non-farm payrolls are expected to rise by 193,000 on Friday.

European shares ended lower on Wednesday as the political unrest in Libya and rising tensions in the Middle East pushed crude oil prices towards recent highs. Automakers were among the worst hit sectors, down 1.8pct. The FTSEurofirst index fell by 0.7pct, the German Dax was lower by 0.6pct and the UK FTSE fell by 0.4pct.

US sharemarkets edged higher in a volatile trading session on Wednesday. The better than expected employment data and upbeat Fed beige book supported investor sentiment. However the rising oil price capped gains. With an hour of trade, the Dow Jones index was up 35pts or 0.3pct with the S&P 500 gained 0.4pct and the Nasdaq was higher by 17pts or 0.6pct.

US treasuries fell on Wednesday (yields higher) as the better than expected economic data supported a modest switch to equities. US 2yr yields rose 3pts to 0.68pct and US 10yr yields gained 7pts to 3.46pct.

The US dollar fell against the Euro ahead of the ECB policy meeting on Thursday. The Euro rallied from lows near US$1.3745 to US$1.3885, and headed into the US close near US$1.3860. The Aussie dollar rose from US100.85c to US101.80c, and was near US101.66c in late US trade. And the Japanese yen strengthened from 82.10 yen per US dollar to around JPY81.60, and was near JPY81.90 in late US trade.

US crude oil prices rallied as the violence in Libya gained traction following an airstrike near a Libyan oil terminal. Libya´s oil output of 1.6 million barrels per day has been more than halved since the crisis began. The Nymex crude oil contract rose by US$2.60 or 2.6pct to US$102.23 a barrel - its highest close since September 2008. And the London Brent crude rose by US$1.03 to US$116.45 a barrel.

  • Base metal prices were mixed on the London Metal Exchange, with the upbeat ADP employment report offsetting the escalating tensions in Middle East. And the gold price rose to fresh record highs, supported by safe-haven flows. The Comex gold futures price rose US$6.50 to US$1,437.20 an ounce.

Ahead: In Australia, building approvals and international trade data are released. In the US, the ISM non-manufacturing survey is released.