Crude oil price retreated to below 43 after the release poor manufacturing PMI data in Europe. The Eurozone February manufacturing PMI was revised down to 33.5 from preliminary reading of 33.6 while in Germany, the final reading also came in lower at 32.1 from 32.2. In the UK, manufacturing PMI slipped to 34.7 in February from 35.8 a month ago with the employment component plunged to record low.

Declines in crude oil and other basic material prices were also brought by Warren Buffet's comment that the US economy will be s 'shambles' this year.

Stock markets slid in both Asia and Europe. The MSCI Asia Pacific Index lost 3.4%and Japan Nikkei 225 Stock Average dropped 3.8%. In the UK, the FTSE 100 Index plunged 3.2% as led by HSBC's 10% decline as the bank announced 70% drop in 2008 net profit which was worse than market expectation. Other banking shares also slumped with both RBS and Standard Chartered slipping more than 9%.

Gold rebounded to 959 in European morning despite the dollar's strength and crude oil's retreat. We believe EU leaders' refusal to aid Eastern European countries did increased default risk in debts in the Eurozone, hence driving investors from the euro to gold.

Leaders from the EU met over the weekend and rejected an 180B euro bailout plan of the Eastern Europe. Investors worry that this would put countries such as Hungary, Ukraine and Serbia into bankruptcy as they may not be able to refinance the debts. According to Markit, the iTraxx Crossover Index of 50 companies with the highest yield credit ratings rose 20 bps to 1100 while the iTraxx Europe index of 125 companies with investment grade ratings also rose 7 bps to 187. Increase in index indicates the market has priced in higher probability of default.

The dollar continues to strengthen in European morning with the dollar index trading above 88. Against the euro and the pound, the USD rose to 1.26 and 1.42, respectively.

4 central banks, namely, RBA, BOC, ECB and BOE, will meet for rate decision tomorrow and on Thursday. All of BOC, ECB and BOE are expected to announce rate cuts of 50 bps while RBA, after several months' of aggressively expansionary monetary policy, will probably slash rate by only 25 bps this time. In the coming few months, the dollar should continue to hold up well due to interest rate differential and risk aversion of investors.

Silver, poor man's gold, edges higher to 13.3. Investors who think gold has been bided to high may turn to silver and therefore silver has a big chance to outperform gold this year. According to Philip Klapwijk, chairman of GFMS Ltd, expects silver to rally to $18/oz this year as investors continue to seek safe haven.