The Australian equity market is set for a higher start to the trading day after the US markets finished higher after a volatile session on speculation that China may come to the aid of the euro zone.
The Dow (see above chart) gained 68.99 points to close the session at 11061.12, in extremely volatile session that saw the index trade as low as 10824.50 while the S&P500 index gained 8.04 points to finish on its highs of 1162.27.
The European session ended lower after a German official said an orderly default for Greece could no longer be ruled out. French bank stocks plunged amid worries that Moody's Investors Service could downgrade them this week due to their holdings of Greek government debt.
In the last trading hour The Financial Times reported that China may invest in Italy for significant purchases of government bonds, which would help one of the most important of Europe's heavily indebted governments. Earlier in the day, investors had been preoccupied with worries that Greece's sovereign-debt crisis was coming to a head.
The EURUSD finished flat after trading up from lows of 1.3500 to highs of 1.3696 after reports surfaced that Chinese investors could help prop up the roiled European government bond markets.
Gold traded down for the first time in three days from session highs of 1852.50 to as low as 1802.50 as some investors sold the metal to cover losses in equities market.
WTI oil traded up from lows of 85.00 to highs of 89.19 after the euro rebounded from a six month low, increasing the appeal of the commodity as an alternative investment to the US dollar.
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