MORNING REPORT (8am AEDT)

The second estimate of US GDP was revised down from 2.5pct to 2.0pct. The downward revision reflected a cut in inventories and lower investment spending. US ICSC chain store sales rose 2.8pct last week compared with a year ago. ICSC research expects same store sales to rise 3.5pct-4pct in November. The Richmond Fed manufacturing index improved from -6 to 0 in November.

The FOMC minutes highlighted that policymakers remained concerned about the downside risks to the US economy. A few members believed that additional policy accommodation maybe required given the outlook for modest growth.

European shares fell for a fourth consecutive session on Tuesday as a Spanish bond auction showed investors remain unconvinced that a solution to the debt crisis was on hand. The auction of 3-month short-term paper resulted in the highest borrowing cost in 14-years. The STOXX Euro zone banking index fell 3.4pct. The FTSEurofirst index fell by 0.6pct with the UK FTSE down by 0.3pct while the German Dax lost 1.2pct.

US shares fell for a fifth straight session in volatile trade on Tuesday. Losses were trimmed midway through the trading session after the IMF confirmed that it had strengthened liquidity tools to the euro zone. Hewlett Packard lost 1.3pct after a weak 2012 profit outlook. At the close of trade the Dow Jones was lower by 53pts or 0.5pct. The S&P 500 fell 0.4pct and the Nasdaq was down by 2pts or 0.1pct.

US treasuries recorded modest gains (yields lower) on Tuesday as expectations of a pickup in fourth quarter economic growth offset the bid for safe-haven government debt. US 2yr yields fell 1pt to 0.266pct and US 10yr yields fell 2pts to 1.929pct.

The Euro rallied against the greenback on Tuesday after the IMF increased its lending instruments and introduced a new six-month liquidity line to support Euro zone countries. The Euro rose from lows near US$1.3470 in early European trade to highs near US$1.3565 and was around US$1.3510 in late US trade. The Aussie dollar fell from highs around US98.95c to US98.10c, and was near US98.40c in late US trade. And the Japanese yen traded between JPY76.80 yen per US dollar and JPY77.05, ending US trade near JPY76.95.

US crude oil prices rose in choppy trade on Tuesday as efforts to strengthen sanctions against Iran offset global growth worries. Nymex crude oil rose by US$1.09 or 1.1pct to US$98.01 a barrel and London Brent crude rose by US$2.15 to US$109.03 a barrel.

Base metal prices rose on the London Metal Exchange on Tuesday in line with other commodities. The exception was nickel which fell 1.4pct. And the gold price rallied after the sharp sell-off in the prior session. The Comex December gold price rose by US$23.80 an ounce or 1.4pct to US$1,702.40.

Ahead: In Australia, construction work done is released. In the US, durable goods orders and personal income/spending data are released.