US new home sales soared by 23.6pct to a 330,000 annual rate in June, well ahead of forecasts centred on a result near 320,000. The stock of unsold homes fell from 9.6 months to 7.6 months. The median home price eased 0.6pct from a year ago. The Dallas Fed manufacturing index rose from -1.9 to +4.9 in July. But the Chicago national activity index eased from +0.31 to -0.63 in June.

The Bank of Israel unexpectedly raised its benchmark interest rate by a quarter of a percent to 1.75pct.

European shares rose for a fourth day to five-week highs on Monday as investors reacted positively to the bank stress test results. The FTSEurofirst index rose by 0.5pct, the UK FTSE rose by 0.7pct and the German Dax rose by 0.5pct.

US sharemarkets posted solid gains on Tuesday in response to encouraging earnings results and economic data. Shares in FedEx rose 5.6pct after the package delivery company lifted its business outlook. The Dow Jones rose by 100 points or 1.0pct with the S&P 500 up 1.1pct, and the Nasdaq rose almost 27 points or 1.2pct.

US treasuries were little changed on Monday. While shares rose and economic data was encouraging - reducing the allure of bonds - traders said that long-term yields near 3pct provided an attraction to buyers. US 2yr yields were broadly steady at 0.59pct and US 10yr yields were little changed near 3.00pct.

The US dollar fell against major currencies over the US session. The Euro lifted from lows around US$1.2890 in European trade to US$1.3000, before ending US trade at US$1.2990. The Aussie dollar rose from lows around US89.50c to highs near US90.35c, ending US trade near US90.25c. And the Japanese yen advanced from near 87.40 yen per US dollar to JPY86.80, ending US trade near its strongest levels.

US crude oil prices finished unchanged on Monday. While economic data was generally positive, Tropical Storm Bonnie passed through the Gulf region without causing major disruption to production or damage. The Nymex crude oil contract was unchanged at US$78.98 while London Brent crude rose by US5c to US$77.50 a barrel.

Base metal prices rose on the London Metal Exchange on Monday in response to encouraging economic data and an improvement in investor risk appetites. Metals rose between 1.3-2.5pct with zinc doing best. International Aluminium Institute stocks data also point to strong global aluminium demand in June. But the Comex gold price fell for a second day as investors trimmed defensive positions, easing by US$4.70 an ounce to US$1,183.10. The range was US$1,178.60-1,194.80.

Ahead: In Australia, the Housing Industry Association releases its Trades Report. Australand releases earnings results. In the US the Case Shiller home price survey and consumer confidence figures are released.

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