The US ISM non-manufacturing survey rose from 52.7 to 53.3 in July - ahead of expectations. The pickup in service sector activity was supported by a rise in new orders and exports. Encouraginly the prices index also rose.

European shares fell on Tuesday as sovereign debt concerns weighed heavily on investors. Banks exposed to the Euro zone´s peripheral countries were among the worst performers. The STOXX Europe 600 Banking index fell 2.1pct to a 29-month low. The falls occurred on heavy volume. Germany´s Finance Minister, commented that Greece will not be able to receive another tranche of aid if the ´´troika´´ report from the EU & IMF is not positive. The FTSEurofirst index fell by 0.7pct while the German Dax lost 1pct however the UK FTSE bucked the trend with bargain hunters pushing up commodity stocks. The FTSE index closed up 1.1pct.

US sharemarkets fell for a third day on Tuesday. The sovereign debt issues in Europe continued to dominate attention. Major US banks were among the biggest decliners, with KBW Bank index off nearly 2pct. The CBOE Volatility Index - a measure of market turbulence - posted its biggest gain in nearly two weeks rising 9.1pct. The Dow Jones fell by 101pts or 0.9pct with the S&P 500 down by 0.7pct and the Nasdaq lost almost 7pts or 0.3pct.

US long-term treasury yields fell on Tuesday (prices higher) in response to growing expectations that the Federal Reserve would soon buy longer term maturities. US 2yr yields were flat at 0.202pct but US 10yr yields fell by 1pt to 1.99pct.

The Swiss franc plunged nearly 10pct against the Euro, after the Swiss National Bank set a target rate of 1.20 francs to the Euro. And the US dollar strengthened against the Euro and commodity currencies on growing risk aversion. The Euro fell from highs near US$1.4245 to US$1.3970, ending trade near US$1.4005. The Aussie dollar fell from highs around US106.15c to US104.80c, ending US trade near US105.15c. And the Japanese yen fell from highs near 76.70 yen per US dollar to JPY77.70 before ending US trade near its lows.

US crude oil price ended lower on Tuesday, but well off its low. Focus was centred on two-low pressure systems in the Gulf of Mexico and the Atlantic that could turn into tropical cyclones. Nymex crude oil fell by US43c or 0.5pct to US$86.02 a barrel and London Brent crude rose by US$2.81 to US$112.89 a barrel.

Base metal prices fell on the London Metal Exchange on Tuesday in response to the US dollar strength and fears of a global economic downturn. Lead lost 2.1pct however Zinc managed to gain 0.8pct. And the gold price eased on Tuesday in line with the weakness in other commodities. The Comex December gold price was down by US$3.60 an ounce or 0.2pct to US$1,873.30.

Ahead: In Australia, June quarter GDP is released. In the US, the Federal Reserve Beige book is released.