Commodities recover in European session as yesterday's selloff attracts bargain hunting. Strength in stock markets also helps but risks in the near-term are skewed to the downside and further decline is likely.

Asian equities rallied as led by Japanese and Chinese shares. In Japan, shares of Canon jumped +5.7% as the company's net income more than quadrupled to 67.6B yen in the fiscal first quarter (3 months ended June 30). Daihatsu Motor reported that its net profit soared 6 times in the fiscal first quarter. Shares of the carmaker jumped+8.3% after the report. Stronger-than-expected corporate earnings results, together with depreciation in Japanese yen, boosted the stock market and the Nikkei 225 Stock Average gained +2.7% to close at 9753.3.

In China, cement and airlines shares surged on government policy and brokerage upgrades. Economic Information Daily said that China will announce a development for the cement industry. Morgan Stanley upgraded China Eastern Airlines to 'equalweight' from 'underweight' as Shanghai Expo should have boosted near-term earnings momentum. The broad market sentiment has been boosted as the People's Bank of China released a statement describing Chinese economy as 'good' and the country's declining reliance on exports helps reducing the negative impacts from debt crisis in the Eurozone. The central bank reiterated its cautiously optimistic outlook about the country's economy. The good news boosted the Shanghai Composite Index higher, by +2.26%.

European bourses dip ahead of US economic data. Indeed, a retreat is justified as stocks have risen for 6 consecutive days.

Zijin Mining Group, China's largest gold producer, announced in a statement that its gold output will be reduced by about 1 metric ton this year due to closure of a plant after the acid- laced waste spill. While earnings impact will be insignificant, around 2-3%, overhangs including damages, future operation and acquisition plans, remain. The impact of the production cut to world gold supply is minimal.