Uncertainty in the markets as European summit draws near

Asian stocks are set for a flat start with mildly positive gains expected from offshore leads. The market will be closely watching the outcome of the much anticipated Euro summit over the next few days.

The S&P500 was 0.2% higher after losing as much as 1.1% during the session. Commodities remain fragile with copper still hovering below US$3.60/lb, last down around 1%.

News that BHP Billiton is contemplating exiting Nickel and Aluminum divisions put pressure on both metals, which last traded around 1.9% and 1.5% lower respectively. While the official line from BHP is that they are committed to these businesses, there is speculation the board is warming to other possibilities also.

In Europe, the upcoming meeting is expected to see German Chancellor Angela Merkel and French President Nicolas Sarkozy argue for a restructure of existing European Union treaties to help tighten control of national budgets and introduce sanctions if states don’t comply with strict guidelines. The outcome is important for Asian exporters who are starting to feel the pressure of the European slowdown. The Euro remains near that 1.34 level against the U.S. dollar ahead of the summit.

In regional economic news, markets will be closely watching the November employment report to be released by the Australian Bureau of Statistics today. Consensus estimates are for 10,000 new jobs to have been added and the unemployment rate steady at 5.2% but there could be a downward surprise given this week’s decision from the Reserve Bank of Australia to cut rates. The Australian dollar remains strong though, last trading just shy of 103 U.S. cents.