US import prices rose 0.7pct in November after sliding by 0.5pct in October. The gains marked the largest increase in seven months and was driven by a surge in the cost of petroleum. Imports prices are up 9.9pct in the 12 months to November.

Euro-zone industrial production dipped by 0.1pct in October, taking the annual rate of growth down to 1.3pct. Comments from European policymakers squashed any hopes that the ECB intends to become a “lender of last resort” to European governments. Bundesbank President Weidmann added that “the idea that the required money will be created through the printing press should finally be brushed aside.”

European shares fell to a two-week low on Wednesday, though volumes were light. The ongoing euro zone debt concerns including a potential downgrade of France´s sovereign rating added to the sell-off. Italian Treasury sold €3 billion of 5yr bonds and managed to get the maximum target for the auction but again the funding was expensive at 6.47pct. The Bid to cover ratio was down from 1.47 to 1.42. The FTSEurofirst index closed down 2.1while the UK FTSE fell 2.3pct and the German Dax lost 1.7pct.

US shares slumped on Wednesday heading back towards session lows as weak commodity prices sparked a selloff in energy and material sectors. The S&P 500 fell below its 50-day moving average driven by the 3pct slide in the energy sector. At the close of trade, the Dow Jones was lower by 131points or 1.1pct. The S&P 500 fell by 1.1pct, and the Nasdaq was lower by 40 points or 1.6pct.

US long-dated treasuries rallied on Wednesday (yields lower) with benchmark yields dipping to their lowest levels in 3- weeks as European debt concerns dominated price action. US 2yr yields were flat at 0.24pct and US 10yr yields fell 8pts to 1.89pct.

The Euro and commodity currencies extended its recent weakness against the greenback on Wednesday. The Euro fell from highs near US$1.3060 to around US$1.2950 and was near US$1.2980in late US trade. The Aussie dollar fell from highs around US100.40c to US98.85c, and was near US99.05c in late US trade. And the Japanese yen held between 77.85 yen per US dollar and JPY78.15, and was near JPY78.05 in late US trade.

World crude oil prices fell sharply on Wednesday. Renewed fears about Europe´s debt crisis triggered selling despite OPEC maintaining production at a total of 30 million barrels per day. Nymex crude oil fell by US$5.19 to US$94.95 a barrel and London Brent crude fell US$4.48 to US$105.02 a barrel.

Base metal prices were lower on the London Metals Exchange on Wednesday. Metals fell between 2.0-5.2pct as the stronger US dollar and euro zone fears dominated trading activity. Similarly the gold price fell sharply with the Comex February gold price down by US$76.20 an ounce or 4.6pct to US$1,586.90.
Ahead: In Australia, consumer sentiment data is released. In the US, import price data is released.