Market sentiment improved a tad in European morning as economic data showed that Germany's economic grew much more than anticipated. Moreover, there are signs that European governments would allow more time for Greece to fix its fiscal problems. European bourses waxed in waned as investors await the US economic data later today. In the commodity sector, oil prices rebounded but the front-month WTI contract continued to hover below 95 while the equivalent Brent crude contract struggled to break above 112.

As the market concerned today's data would show that Eurozone has entered into recession in 1Q12, Germany's data delivered pleasant surprise with the country's economy growing +0.5% q/q, following a -0.2% contraction in the prior quarter. The market had anticipated a gain of +0.1%. French GDP growth came in inline with consensus of +0.0%. For the Eurozone as a whole, the economy was flat from the prior quarter, compared with market forecast of a -0.2% dip. This has saved the 17-nation region from being classified as entering into recession technically.

Economic sentiment data was nevertheless disappointing. The ZEW confidence for the Eurozone fell to -2.4 in May, down sharply from 13.1 in April. The market had anticipated a milder drop to 11.7. Germany's sentiment also slipped to 10.8 in May, compared with 23.4 in April and consensus of 19.4. Germany's current situation index surprisingly rose to 44.1 in May from 40.7 a month ago. This also exceeded consensus of 38.

The Eurogroup stated that talks of Greece exit is nonsense. Moreover, Luxembourg Prime Minister Jean-Claude Juncker said that if there are dramatic changes in circumstances, we wouldn't close ourselves off to a debate over extending the deadlines. Yet, European governments have maintained a firm stance and urged Greece to respect the commitments agreed in order to get the bailout funds.

On the US session, the focus is on the inflation which probably gained +0.1%, moderating from +0.3% a month ago. On annual basis, the reading probably eased to +2.3% from +2.7%. The Empire State Manufacturing index might have climbed to 8 in May from 6.6 in the prior month. Retail sales might have grew +0.2% in April, down from +0.8% in March.