US financial markets were closed on Monday for the Labor Day holiday. On Friday the Dow Jones fell by 253pts or 2.2pct with the S&P 500 down by 2.5pct and the Nasdaq lost 65.7pts or 2.6pct. Over the week the Dow fell by 0.4pct and the S&P 500 lost 0.2pct while the Nasdaq was largely flat.

On US bond markets on Friday US 2yr yields rose by 1.6pts to 0.204pct but US 10yr yields fell by 14pts to 1.99pct. Over the week US 2yr yields were up 1pt while US 10yr yields fell by 20pts.

European sharemarkets were open on Monday but all the key bourses ended sharply lower in thin trade, driven by weakness in banking stocks. On Friday a US regulator sued 17 large banks over losses on about $200 billion of subprime bonds. And on Monday a media report said that the UK Serious Fraud Office was examining deals made by Deutsche Bank in asset-backed securities. Shares in Deutsche Bank slid by 8.9pct. Shares in Royal Bank of Scotland fell by 12.3pct.

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At the close of trade in Europe, the FTSEurofirst index was down by 4.1pct while the German Dax lost 5.3pct and the UK FTSE slid by 3.6pct. Italian shares fell 4.8pct while Spanish shares lost 4.6pct.

A key gauge on the European services index hit a 2-year low in August. The Markit Eurozone services index eased from 51.6 to 51.5 - the fifth consecutive decline.

The US dollar strengthened against major currencies in thin European and North American trade on Monday. The Euro fell from highs near US$1.4160 to around US$1.4065, before ending North American trade near US$1.4090. The Aussie dollar fell from highs around US105.90c to US105.10c, ending North American trade near US105.45c. And the Japanese yen eased from 76.70 yen per US dollar to JPY76.95 before ending North American trade at JPY76.90.

Global crude oil prices fell again on Monday on fears about the health of North Atlantic economies and the implications for global oil demand. In after-hours trade Nymex crude oil was lower by US$2.84 a barrel or 3.3pct to US$83.61 a barrel. London Brent crude fell by US$2.25 to US$109.92 a barrel.

Base metal prices fell on the London Metal Exchange on Monday in response to a stronger greenback. Metals fell between 1.0-2.8pct with zinc faring best and nickel faring the worst. But the gold price rose to near record highs on Monday as investors dumped equities and embraced safe-haven assets. In after-hours trade the Comex December gold price was up by US$26.20 an ounce or 1.4pct to US$1,903.10. Spot gold was trading near US$1,900 an ounce.

Ahead: In Australia, the Reserve Bank Board meets to decide interest rate settings. Data on housing finance, government finance and the current account are released. The NSW Budget is handed down. In the US, the ISM services index is released.