US retail sales fell by a smaller than expected 0.2pct in May after rising by 0.3pct in April. The weaker May result marked the first fall in 11 months and was driven by the weakness in auto sales due to the Japanese earthquake. Auto sales fell by 2.9pct in May - the largest decline since February 2010. Core retail sales which excludes autos, gasoline and building materials rose 0.2pct in May.

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US producer prices rose by just 0.2pct in May after rising by 0.8pct in April. The modest rise in prices was largely due to a fall in gasoline prices.

European shares rallied on Tuesday as the better than expected Chinese data eased concerns about global growth. The rally was broad based as investors bought up oversold stocks across an array of sectors. The STOXX Europe 600 banking index rose 1.2pct. The
FTSEurofirst index rose by 0.8pct, the German Dax rose 1.7pct, and the UK FTSE gained 0.5pct.

US sharemarkets rallied on Tuesday as investors bought up oversold stocks. The upbeat Chinese economic data and less than expected fall in US retail sales eased global growth concerns and
provided the catalyst for the rally. The Morgan Stanley retail index gained 2.8pct while the S&P energy sector rose 2pct. The Dow Jones recorded its best gains in nearly two months rising 123pts or
1pct, while the S&P 500 index rose 1.3pct and the Nasdaq gained 39pts or 1.5pct.

US treasury prices fell sharply (yields higher) on Tuesday as investors switched out of safe-haven bonds and into equities. US 2yr yields rose by 4pts to 0.444pct and US 10yr yields rose by 11pts to
3.099pct.

The Euro and commodity currencies lifted against the greenback for a second straight session on Tuesday. The Euro lifted from US$1.4415 to near US$1.4500 to end US trade near US$1.4455. The Aussie dollar rose from lows near US106.25c to near US107.15c before ending US trade near US106.80c. And the Japanese yen weakened from 80.15 yen per US dollar to JPY80.60,
ending US trade near JPY80.45.

US crude oil prices rose on Tuesday as the better than expected economic data in China and the US eased concerns about a downturn in the global economy. The Nymex crude oil contract rose by US$2.07 a barrel on to US$99.37 a barrel. And London Brent crude rose by US$1.06 on to US$120.16 a barrel.

Base metal prices rallied on the London Metal Exchange on Tuesday in line with other commodities. Copper gained 2.9pct. And the gold price also rose on Tuesday with Comex gold futures down by US$8.80 an ounce to US$1,524.40.

Ahead: In Australia, consumer sentiment and housing finance figures are scheduled. In the US, the Federal Reserve Beige Book is released.

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