MORNING REPORT
(8.00am AEDT)

US existing home sales rose 4pct in November. At November´s sales pace, the 2.58 million unsold homes on the market represented 7 months supply - the lowest since February 2007 - a sign the backlog of inventory was clearing.

European shares gave back some of the prior sessions gains on Wednesday. The ECB lent Euro-zone banks €489 billion in its first ever 3-year lending facility, comfortably above the consensus estimate of €293 billion. The allotment was the highest ever in a single ECB operation and was taken up by 523 banks. The second 3-year lending facility is scheduled for February. The FTSEurofirst index fell by 0.5pct with the UK FTSE up by 0.6pct while the German Dax was lower by 1pct.

US shares were mixed on Wednesday with investors remaining nervous about the ongoing debt scenario in Europe. The Nasdaq recorded sharp losses after Oracle reported earnings and sales that missed expectations for the first time in a decade. Oracle plunged 12pct while IBM gave back 3.5pct. At the close of trade, the Dow Jones was higher by 4pts with the S&P 500 rose 0.2pct and the Nasdaq was weaker by 26pts or 1pct.

US treasuries fell on Wednesday (yields higher) following the relatively upbeat data on the US housing sector. US 2yr yields rose 1pt to 0.275pct and US 10yr yields rose by 4pts to 1.972pct.

Major currencies eased against the greenback on Wednesday as investors fretted that the new ECB three-year lending facility would do little to solve the ongoing debt crisis. The Euro fell from highs near US$1.3195 to lows around US$1.3025 and headed into the US close near US$1.3045. The Aussie dollar fell from highs around US102.10c to US100.50c, and was near US100.90c in late US trade. And the Japanese yen traded between JPY77.65 yen per US dollar and JPY78.10, ending US trade near JPY78.05.

US crude oil prices rallied on Wednesday for the third consecutive session after the release of the US inventory data. US crude stockpiles fell by 10.6 million barrels in the last week to 323.6 million barrels - a three-year low. Worries about potential supply disruptions in Iran also supported demand. Nymex crude oil rose by US$1.43 or 1.5pct to US$98.67 a barrel and London Brent crude rose by US98c to US$107.71 a barrel.

Base metal prices were mixed on the London Metal Exchange on Wednesday as the ongoing European concerns was offset by the signs of a revival in the US housing sector. And the gold price fell for the sixth time in eight sessions. The Comex gold price fell by US$4 an ounce to US$1,613.60.

Ahead: In Australia no economic data is released. In the US, leading indicators index and the final estimate of US GDP for the September quarter are released.