Commodity prices drop in European morning as the dollar recovers after plunging for several days. In particular, the pound sinks against the dollar and euro after Lloyds Banking Group was barred from exiting the Government's debt insurance program. Crude oil slides below 72 and is currently trading at 71.8. Heating oil and RBOB gasoline also retreat while natural gas rebounds to 3.55, paring the -8% loss made Thursday.

According a stress test done by the Financial Services Authority, Lloyds Banking Groups would have to to take part in the Government Asset Protection Scheme (GAPS). In March, the Group has agreed to puit 260N pounds of toxic loans into the scheme. However, the latest data showed that it would not be allowed to exit from the program unless it raises new capitals. The news triggers concerns about the banking system, not only in the UK but also across the board.

USD rises against major currencies, partly because investors seek safe haven and partly due to consolidation after severe decline. Against the pound and euro, USD rises +0.7% to 1.6354 and +0.3% o 1.465 respectively.

Gold price initially plummeted to 1009.2 but buying interest was then seen above 1000. Currently trading at 1015, the benchmark contract for the yellow metal will likely rise for the 5th consecutive week. However, resistance below 1033.9, record high made in March 2008, is strong and thus gold should gyrate within a range of 1000 and 1033.9 in the near term. Silver price plummets for the second consecutive day after making a fresh 2009 high at 17.69 Thursday. Over the week, silver will probably record gain of +4%, outperforming the gold's rally of less than +1%.

Copper price extends weakness to 6280 in European morning as inventory at the LME warehouse has risen to 327.7K metric tons, the highest since May. Others in the base metal complex also fall. Lead decline more than -4% to 2175 while both zinc and nickel also slide almost -2%.