MORNING REPORT
(7am AEST)

The Philadelphia Fed survey fell from 12.5 to 8.5 in April - a three month low. Across the sub-indices, new orders and shipments both fell modestly. US weekly jobless claims fell by 2,000 last week from a upwardly revised 386,000 in the prior week.

US existing home sales fell 2.6pct in March. The US leading economic index rose for the sixth straight month, up by 0.3pct to 95.7 in March - the highest level since June 2008.

The Spanish Treasury sold €2.54b. of 2yr and 10yr bonds, a little over the maximum target of €2.5b. Yields were elevated compared to earlier in the year, but not excessively so. The 10yr auction was sold at a yield of 5.74pct comfortably below the 6.13pct recorded earlier in the week. Spain has now sold €43b. of medium and long term debt in 2012 - half of the planned total for the year.

European shares fell on Thursday, as sovereign debt concerns were once again at the fore. Investors fretted about the higher yields demanded at Spanish sovereign debt auctions, and about rumours - later denied - of a rating downgrade for France. The benchmark FTSEurofirst 300 index fell 0.5pct with the German Dax down 0.9pct and the UK FTSE down just 1pt.

US sharemarkets fell for the second straight session on Thursday. Investors were discouraged by the disappointing economic data. Bank of America fell 2.2pct, while Morgan Stanley rose nearly 1pct - both reported better-than expected results. At the close of trade, the Dow Jones was lower by 69pts or 0.5pct with the S&P 500 down by 0.6pct while the Nasdaq lost 24pts or 0.8pct.

US treasuries rose on Thursday (yields lower) as US economic data failed to meet expectations. The Euro-zone uncertainty also added to the safe-haven bid. US 2yr yields were flat at 0.27pct, US 10yr yields fell by 1pt to 1.97pct.

The Euro fell against the greenback on Thursday before recovering ground in late trade. The Euro fell from highs near US$1.3160 to lows near US$1.3075 and ended US trade at US$1.3130. The Aussie dollar fell from highs around US103.85c to US103.15c and ended US trade near US103.30c. And the Japanese yen traded between 81.40 yen per US dollar and JPY81.75 nearing JPY81.60 in late US trade.

Benchmark crude oil prices were mixed on Thursday. The disappointing US economic data added to modest weakness for US crude and resulted in Brent crude paring earlier gains. US Nymex crude fell by US40c or 0.4pct to US$102.27 a barrel. London Brent crude rose US3c to US$118.00 a barrel.

Base metal prices were mixed on the London metals exchange on Thursday with copper prices remaining in a tight range. Copper fell 0.5pct but held above the key US$8,000 a tonne. The gold price edged higher. June Comex gold futures rose by US$1.80 or 0.1pct to US$1,641.96 an ounce.

Ahead: In Australia, export and import prices are released. In the US, no economic data was released.