No Announcement Made On Progress Of US Budget Negotiations

 | Dec 11, 2012 07:25AM ET

President Barack Obama and Speaker of the House John Boehner had one-on-one meetings over the weekend as the budget negotiations continue. Although neither side elaborated on the progress or content of the discussions, both the President and Boehner issued identical statements after the talks and said that “the lines of communication remain open.”

Law makers have been frantically looking for a compromise budget deal to avert the fiscal cliff. Meanwhile in Europe, the fallout from the political turmoil in Italy is only the start of more bad news as Italian bonds tumbled in response to Mario Monti's plan to resign and grand announcements from Silvio Berlusconi that he will return to pow-er. Italy's biggest bank, UniCredit, plunged more than 5%. The euro opens the morning slightly higher at 1.2940.

In other news, Standard Chartered has agreed to pay fines of almost $330 million after regulators accused the bank of violating sanctions with Iran. Britain's second largest bank had already paid $340 million to settle with the Department of Financial Services of New York in August and the latest fine will now finalise and resolve all outstanding allegations against the institution. The fines were issued in relation to alleged insufficient oversight of bank secrecy and anti-money laundering requirements. The Australian dollar continues to hold its ground at 1.0480.

Stock markets were buoyed by promising Chinese data which saw the Shanghai Composite rise to a four week high. Better than expected factory output and retail sales data out of the world's second largest economy was enough to prompt a rally in American markets even though European shares were mixed in response to news that Italian Prime Minister Mario Monti will resign before the end of his term. The S&P 500 has closed barely changed at 1,418.55. Stocks such as Cisco Systems, Microsoft and McDonald's all made strong gains. In Europe, bourses were lacklustre with the DAX and FTSE rising less than 0.2%.

Commodity prices were barely moved and as a result the major commodity indexes were largely unchanged. WTI crude was off another 0.5% to $85.40 as investor's became jittery once again over the European debt crisis as Silvio Berlusconi announced that he is seeking a return to power in the wake of a planned resignation of Italian Prime Minis-ter Mario Monti. Precious metals rose in the prelude to the last FOMC meeting for this year. Gold rose 0.5% to $1,713 while silver rose the same margin to $33.30. Agricultural commodities were mostly in the red with coffee expe-riencing losses of more than 4.4%. Copper has gained 1.1%.