The International Monetary Fund has cut its forecast for global economic growth. The IMF expects growth of 4.0 percent this year, down from its previous forecast of 4.3pct. The Australian economy is tipped to grow 1.8pct this year and 3.3pct in 2012.

Australian Treasurer Wayne Swan has been named finance minister of the year by Euromoney magazine.

US housing starts fell by 5.0pct to an annual rate of 571,000 in August. Economists had tipped a result around 590,000. But permits rose 3.2pct, pointing to stronger activity ahead. And US chain store sales were up 4.1pct in the latest week compared with a year earlier.

European shares rebounded on Tuesday despite Standard and Poor´s cutting the credit rating of Italy. Defensive shares led the way while banks lagged. Still, the STOXX Europe 600 Banks index was up 1.2pct. The FTSEurofirst index rose by 2.0pct while the German Dax gained 2.9pct and the UK FTSE rose 2.0pct.

US sharemarkets ended mixed on Tuesday with the Dow Jones finishing well off the highs of the day. There is optimism that Greece will secure a deal for access to more bail-out funds and that the Federal Reserve will unveil more stimulus measures on Wednesday. The Dow Jones ended trade higher by almost 8pts or 0.1pct after being up close to 150 points at one stage. The S&P 500 was lower by 0.2pct and the Nasdaq fell by 22.6pts or 0.9pct.

US long-term treasuries rose slightly on Tuesday (yields lower) as traders squared positions and awaited the Federal Reserve decision. US 2yr yields were steady at 0.161pct and US 10yr yields fell by 2pts to 1.932pct.

The US dollar lost ground against the Euro and commodity currencies on Tuesday. The Euro rose from near US$1.3600 to US$1.3730 before ending the US session near US$1.3685. The Aussie dollar rose from lows around US101.80c to US103.10c before ending US trade near US102.60c. And the Japanese yen held between 76.30 yen per US dollar and JPY76.80 and ended US trade near JPY76.40.

Global crude oil prices rebounded on Tuesday in response to a weaker greenback and firmer equities markets. Nymex crude oil rose by US$1.19 or 1.4pct to US$86.89 a barrel and London Brent crude rose by US$1.40 to US$110.54 a barrel.

Base metal prices were mixed on the London Metal Exchange on Tuesday. Nickel rose 1.2pct and lead gained 0.5pct but other metals fell up to 1.0pct. But the gold price rebounded as the US dollar eased and bargain hunters moved in. The Comex December gold price was higher by US$30.20 an ounce or 1.7pct to US$1,809.10.

Ahead: In Australia, Reserve Bank Deputy Governor Ric Battellino delivers a speech (11.20pm). David Jones releases full year results. In the US, the Federal Reserve hands down its monetary policy decision. Data on existing home sales is released.