Hovering around 70, the benchmark contract for crude oil changes little ahead of US opening. IMF's upgrades on economic forecasts and OPEC's production cut in September are bullish factors but investors probably feel nervous to push oil higher after the +5.8% rally yesterday.

IMF forecasts world economy will expand +3.1% in 2010, compared with +3.1% projected in July, as driven by growths of +9% and +6.4% in China and India respectively. As stated in the report, 'the recovery has started and financial markets are healing...'in most countries, growth will be positive for the rest of the year, as well as in 2010'. However, 'to sustain the recovery, private consumption and investment will have to strengthen as high public spending and large fiscal deficits are unwound'.

For OECDs, GDP in the US, Japan and the Eurozone are anticipated to rise by +1.5%, +1.7% and +0.3%. All of these estimates have been revised upward from Julys' projections.

According to Bloomberg's estimates, OPEC's crude production declined 50K bpd from August to 28.395M bpd in September as led by reductions in Iraq, Saudi Arabia and Angola. For the 11 members (excluding Iraq) that are subject to quota, total output dropped -10K bpd to 26.045M bpd in September, though the production was still higher than the target.

Stock market plunges in both Europe and Asia. In the UK FTSE 100 Index slides -0.6% to 5106 as investors worry that equity rally in recent months has overextended. The benchmark index for British stocks soared +21% in 3Q09, the strongest quarterly rally since 1984. However, macroeconomic data do not seem to justify the surge. Released earlier, manufacturing PMI slipped to 49.5 in September from 49.7 in the prior month. The market had anticipated an improvement to 50.2. Germany's DAX and France's CAC 40 also lost ground after the 16-nation Eurozone recorded an unemployment rate of 9.6% in August.

In Asian session, the MSCI Asia Pacific Index slid -1.2% after rising for 3 days. In Japan, the Nikkei 225 Stock Average dropped -1.5% to 9978.6, the first close below 1000 in 2 months as the Tankan survey factored in bigger capex reduction in the year ended March 2010.

While staying above 1000, the benchmark contract for gold retreats to 1004.5 as the euro erases previous gains and sinks to 1.453. ECB President Trichet said, before the G-7 meeting, that 'there is very strong sentiment that we have a shared interest in a strong international financial system and 'excess volatility may have adverse implications'. The comment hinders further buying of the single currency as the central bank president seems to prefer a stronger dollar.

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