YAHOO [BRIEFING.COM]: The major equity averages fell hard in early trade. Although they were able to trim losses in a slow and steady fashion, broad losses were still booked.

Market participants were spooked this morning by news that China's latest manufacturing reading improved from the prior month, but pointed to yet another month of tighter activity. Manufacturing readings from Germany and France were also disappointing. France added to concerns about the eurozone with speculation that the country may experience a political shakeup that could carry implications for the country's plans for fiscal and financial reform. In a similar vein, Netherlands officials failed to reach an agreement on their country's budget.

Those themes, along with the losses suffered by the major averages of Asia and the bourses of Europe, dropped domestic markets for losses in excess of 1% this morning. The S&P 500 stabilized at its monthly closing low of 1358, which is also just a single point above its monthly intraday low of 1357, but the Nasdaq Composite notched a new monthly low before it found support.

Upon finding a floor, the broad market was able to trend upward at a modest pace in afternoon trade. The Energy sector made a more rapid recovery that took it all the way to the flat line after it had been down more than 1% in morning trade. Still, the sector's rebound lost momentum at the flat line. As such, the sector settled with a 0.1% loss. Baker Hughes (BHI 41.07, +0.61) was a leader among Energy issues ahead of its quarterly report tomorrow morning, but ConocoPhillips (COP 72.33, -0.55) shares remained in the red after the integrated outfit reported this morning an earnings miss.

Crude oil was also able to cut its loss, but not completely so. It set a session low of $101.82 per barrel, but settled the day with a 0.7% loss at $103.09 per barrel.

Other resource related plays were less impressive in their ability to rebound. Materials stocks were down about 2% at their session low, but ended the day with a 1.4% loss. Diversified metals and miners were particularly poor performers, as was US Steel (X 28.22, -0.77), which reports its latest quarterly results tomorrow morning.

Energy stocks ended the day as the best performing sector of the session, but Materials were the worst.

As investor skittishness decreased during afternoon trade demand for the safety of the dollar declined. Still, the greenback ended the day with a gain of about 0.2% against a basket of major foreign currencies.

Treasuries made modest gains, too. The benchmark 10-year Note saw its yield move to a monthly low closer to 1.90% this morning, but some of that gain was given back. The yield on Germany's 10-year Bund actually fell to a record low of 1.57%.

Crude oil extended losses in electronic and early morning floor activity after underwhelming PMI data from China and Europe pointed to soft demand. After touching a session low of $101.82 per barrel crude slowly trended upward. The energy component still settled in the red with a 0.7% loss at $103.09 per barrel.

Natural gas, on the other hand, steadily climbed higher and broke through the $2.00 per MMBtu level. In the end, the energy component booked an impressive 4.7% gain by closing floor trade at $2.01 per MMBtu.

A stronger dollar put added pressure on precious metals. Gold touched its session low of $1623.60 per ounce just two minutes into floor trading. The yellow metal attempted to recover some losses, but ended up in a consolidative pattern. Gold settled its floor session 0.6% lower at $1632.40 per ounce.  Silver also trended lower in its electronic and early floor session. It chopped around the $30.60 per ounce level before hitting a session low of $30.45 per ounce, but settled pit trade at $30.56 per ounce with a 3.5% loss.

Advancing Sectors: None
Declining Sectors: Energy -0.1%, Utilities -0.6%, Telecom -0.7%, Tech -0.7%, Health Care -0.8%, Financials -0.8%, Industrials -1.0%, Consumer Discretionary -1.1%, Materials -1.4%, Consumer Staples -1.5%DJ30 -102.09 NASDAQ -30.00 NQ100 -1.0% R2K -1.5% SP400 -1.1% SP500 -11.59 NASDAQ Adv/Vol/Dec 613/1.76 bln/1931 NYSE Adv/Vol/Dec 789/784 mln/2231