Crude oil was firm in Europe despite disappointing sentiment data in the Eurozone, Chinese Premier Wen Jiabao's double dip warning as well as French Budget Minister's comment on the country's AAA credit rating. Brent crude edged higher and settled at 74.65, up 0.85%. WTI crude rose to as high as 75.17 in US electronic trade which will be booked to today in settlement. Floor trading was closed today for the Memorial Day holiday. Today in Asia, crude oil prices retreat as China's PMIs disappoint.

Holidays in the UK and the US made the market quiet yesterday. However, Chicago Fed President Evan's comment that the central bank will likely keep its loose monetary policy on hold for longer and current liquidity measures are not enough boosted stocks with Europe's Stoxx 600 gaining 0.3%. Indeed, other news released yesterday was not too encouraging.

Eurozone economic confidence unexpectedly fell to 98.4 in May from 100.6 in April. Services confidence was also down to 3 from 5 in April. The market had anticipated a tilt-up to 6. Industrial confidence however improved slightly to -6 from -7 while consumer confidence stayed unchanged at -18. Moreover, initial estimates of inflation grew 1.6% m/m, compared with consensus of 1.7%, in May from 1.5% in the prior month. These indicated the region's sovereign crisis began to show impact in the economy.

In China, Premier Wen also warned of a double-dip recession as Eurozone's crisis spreads. Wen said that 'We must closely monitor and take measures to prevent a double-dip recession... Nations should unite to bolster measures that support their economies'.

After Spain's downgrade by Fitch Ratings, French Budget Minister Francois Baroin said that maintaining France's AAA credit rating is a 'tough objective'. EU's forecasts suggest that fiscal deficits in France is 8% of GDP, lower than Ireland (11.7%), Spain (9.8%), Greece (9.4%) and Portugal (8.5%) but higher than Italy (5%).

Gold showed resilience despite narrow-trading. The benchmark contract soared above 1220 for the first time in almost 2 weeks. Apart from sovereign crisis, escalated tensions in Gaza also spurred demand for gold as a safe-haven.

After news reported that Israeli forces have killed 10 people as they attacked ships carrying hundreds of pro-Palestinian activists and tons of humanitarian aid supplies to the Gaza Strip, the UK and the EU called on Israel to lift its blockade of Gaza. Israel's action was condemned by foreign leaders and intensified geopolitical tensions boosted flights for gold.

On the dataflow today, China's manufacturing PMI fell to 53.9 in May (consensus: 54.5) from 55.7 in April, suggesting the government's cooling measures have shown impacts and Eurozone's sovereign crisis is affecting growth even in emerging markets. Stocks in Asia decline with the MSCI Asia Pacific Index losing -1%. Japan's Nikkei 225 Stock Average, dipping -0.7%, is also affected political turmoil as the Social Democratic Party announced to quit the coalition government.

The RBA has just announced to keep its policy rate unchanged after hiking for 6 times since October 2009 to 4.5%. While the decision was widely expected, AUD extended its 3-day decline against USD as the accompanying statement suggested the pause will continue for sometime.