MORNING REPORT
(7am AEST)

New claims for unemployment insurance in the US (jobless claims) fell by 37,000 in the latest week to 391,000. Economists had tipped a result near 420,000 The US economy grew at a 1.3pct annual pace in the June quarter, up from the previous estimate of 1.0pct. US pending home sales fell by 1.2pct in August. And the Kansas City Fed index rose from +3 to +6 in September.

European shares generally rose on Thursday. Investors were encouraged by the decision of the German Parliament to approve the changes to the European Financial Stability Fund. Stronger US economic data also boosted confidence. The FTSEurofirst index rose by 0.6pct but while the German Dax gained 1.1pct the UK FTSE lost 0.4pct.

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US sharemarkets were extremely volatile on Thursday. The Dow Jones rose strongly in early trade to be up 260 points. But the Dow eased over the session to be down 45 points with a hour of trade to go. But in the last 60 minutes the Dow rose 188 points to finish up 143 points or 1.3pct. The S&P 500 rose by 0.8pct while the Nasdaq lost just under 11pts or 0.4pct.

US treasuries ended the session on Thursday only modestly weaker (yields higher) despite solid economic data and a stronger close on Wall Street. US 2yr yields edged 1 point higher to 0.262pct and US 10yr yields rose by 1pt to 1.994pct.

The Euro and commodity currencies eased in line with the US sharemarket but lifted late in the session when shares recovered. The Euro eased from highs near US$1.3675 to US$1.3550 before ending the US session near US$1.3580. The Aussie dollar also eased from highs around US98.75c to near US97.00c, before ending US trade near US97.75c. And the Japanese yen eased from 76.40 yen per US dollar to almost JPY77.00 and ended US trade near JPY76.80.

Global crude oil prices rose modestly on Thursday in response to positive US economic data Investors also shrugged off views that the Chinese economy may be slowing. Nymex crude oil rose by US93c or 1.1pct to US$82.14 a barrel and London Brent crude rose by US14c to US$103.95 a barrel.

Base metal prices were mixed on the London Metal Exchange on Thursday with most investors already squaring positions ahead of the end of the month and quarter. Zinc fell by 0.8pct while copper lost 0.3pct but other metals were higher up to 0.9pct. And the gold price eased slightly in the official session with the Comex December gold price lower by US80c an ounce to US$1,618.10. In after hours trade gold is trading near US$1,621 an ounce.

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Ahead: In Australia, the final Budget outcome for 2010/11 is released together with the RP Data home value index and private sector credit. In the US, personal income and consumer sentiment figures are released together with the Chicago PMI and New York ISM index.