The US ISM services index eased from 55.4 to 53.8 in June, below forecasts centred on a result near 55.0. But with the index above 50.0 the services sector continues to expand. All key components softened in the month with employment easing from 50.4 to 49.7.

Chinese state television has reported Premier Wen Jiabao as saying that corporate tax will be cut from 25pct to 15pct in western regions to boost development.

European shares posted solid gains on Tuesday on optimism that banks would pass stress tests on July 23. French banks in particular did well after authorities in the country were adamant their banks had no problems. Societe Generale was up 6.3pct. Miners were also strong with BHP Billiton up 5.5pct in London trade with Rio Tinto up 5.9pct. The FTSEurofirst index rose by 2.6pct with the UK FTSE up 2.9pct and the German Dax gained 2.2pct.

US sharemarkets finished with a wet sail to end in positive territory. Banks were stronger but retailers weighed on indexes with Home Depot down 1.5pct. The Dow Jones rose by 57 points or 0.6pct with the S&P 500 up 0.5pct, and the Nasdaq edged 2 points higher or 0.1pct.

US treasuries rose on Tuesday (yields lower) after a soft report on the services sector. US 2yr yields eased 2pts to 0.62pct with US 10yr yields down 5pts to 2.94pct.

The Euro and commodity currencies rose against the US dollar in European and US trade on Monday after disappointment with US services sector data. The Euro rose from lows near US$1.2535 to US$1.2660, ending the US session near US$1.2625. The Aussie dollar rose from lows near US84.15c to US85.60c, ending the US session near US85.15c. And the Japanese yen lifted from 88.00 yen per US dollar to JPY87.35, ending US trade near JPY87.50.

US crude oil prices fell for a sixth straight day on Tuesday. Traders ignored the positive lead from the weaker US dollar, preferring to wait for weekly inventory data. The Nymex crude oil contract fell by US16c or 0.2pct to US$71.98. But in after-hours trade Nymex was firmer at US$72.20. London Brent crude fell by US2c to US$71.45 a barrel.

Base metal prices posted firm gains on the London Metal Exchange on Tuesday. Investors again embraced riskier assets such as equities and commodities as the US dollar lost ground. And China announced a cut in corporate tax to boost spending in the western regions of the country. Metals rose between 1.0-3.1pct with aluminium doing best. But the gold price fell as risk appetite improved. The Comex gold price fell by US$12.60 an ounce to US$1,195.10.

Ahead: In Australia, the Performance of Construction index is issued. In the US, weekly retail sales data and the Challenger job cut report are released.

Provided by Comsec.com.au