European bourses fluctuate between gains and losses today after decline in Asian stocks and selloff in Wall Street last Friday. With a light economic calendar and ease in concerns over debt crisis in the Eurozone, financial markets will likely be directed by corporate news. Commodities, change little today, are expected to move in high correlation with equities.

As a reminder of sovereign crisis in the Eurozone, Moody's downgraded on Friday the sovereign bond rating of Ireland to Aa2 from Aa1 with a stable outlook. Meanwhile, the IMF and the EU suspended a review of Hungary's funding program over the weekend, meaning the country will not have access to remaining funds in a $25.1B loan package. Impacts of the news were mild for the euro and bond yields due to smooth of expiry of ECB's 12-month LTRO earlier in the month and subsequent success in peripheral bond auctions.

Market concerns have shifted from Europe to deteriorating outlook in the US. Slowdown in China has also made investors more cautious.

According to the China Securities Journal, the State Information Center forecast the country's exports may slow to +16% y/y in 2H10, compared with a +35% growth in the first quarter. The significant slowdown is expected to be driven by the crisis in the Eurozone together with the culmination of a tax rebate. A sharp moderation in exports would accelerate the pace of economic slowdown in the country, the world's third biggest economy and the number 1 growth driver in recent years. Imports are estimated to increase +19.3% in 2H10 following a strong expansion of +52.7% in the first quarter.

Despite the broad outlook on exports slowdown in China, we expect oil products exports to increase in the second half. As we mentioned in our weekly report, China's processed oil has far exceeded what is domestically needed. In fact, the country has been net exporters of gasoline and diesel since late 2008 as demand fails to catch up production.

Industrial production growth slowed to +13.7% y/y in June from 16.5% in May. IP has been positively correlated with diesel demand and a slowdown in IP growth should indicate higher exports for diesel in coming months.

PGMs recover modestly after Friday decline. South Africa's safety rules will limit mining and this should be positive for platinum prices and to a lesser extend for palladium prices. 5 workers died in Aquarius's Marikana mine when about 500 metric tons of rock collapsed on them earlier in the month and this triggered the government's concern on workers' safety. The government requested to reduce the width of each rock panel 6 meters from 10 meters now and the impact of the directive is a reduction of the amount of the ore body that the company can mine.