Wall Street managed to struggle into positive territory early this morning - hardly anything convincing. We also saw commodities take a significant backward step. Oil and gold both retreated, while base metals saw declines not seen in over 12 months.

The sting is still coming from Europe. Overnight we saw a real flight to quality in the US dollar. Investors are concerned about the long term viability of the Euro and the impact a European economic crisis would have on global demand.

Metals are being hit from two sides: they become relatively more expensive as the US dollar appreciates, and demand fades as investors forecast a reduced level of demand from China given the ramifications of a sovereign debt contagion in Europe.

What will help sentiment among mining investors today is that the Euro recovered late in the session to make some ground against the US dollar.

The market's looking for a floor at this point and a lift on Wall Street, combined with some buying interest in the Euro, could help this cause. I see gains in defensive plays today and possibly some interest in the banks.

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