US construction spending rose 0.1pct in June, better than forecasts centred on a decline of 0.5pct. The US ISM manufacturing index eased from 56.2 to 55.5 in July, better than forecasts centred on a reading of 54.1. Employment rose from 57.8 to 58.6.

The global purchasing managers index eased from 55.0 to 54.3 in July despite solid results in Germany and Switzerland.

European shares soared to three-month highs on Monday in response to encouraging economic data and firmer earnings from major banks, HSBC and BNP Paribas. The FTSEurofirst index rose by 2.6pct with the UK FTSE up 2.7pct and the German Dax was higher by 2.3pct.

US sharemarkets posted solid gains on Monday, lifting to 10-week highs. Energy and raw material stocks did well as the US dollar fell. Shares in Exxon Mobil gained 3.8pct. Banking stocks were buoyed by good earnings results in Europe with JP Morgan up 3.4pct. The Dow Jones rose by 208pts or 2.0pct with the S&P 500 up 2.2pct and the Nasdaq lifted 40pts or 1.8pct.

US longer-term treasuries fell on Monday (yields higher) as investors shifted away from safe-haven assets like government bonds to equities and commodities. US 2yr yields were steady near 0.56pct and US 10yr yields rose by 6pts to 2.97pct.

Major currencies rose against the US dollar on Monday. The Euro rose from lows near US$1.3055 to US$1.3195 in European and US trade to end near US$1.3175. The Aussie dollar rose from US90.85c to near US91.45c, ending US trade near US91.35c. And the Japanese yen strengthened from 86.85 yen per US dollar to JPY86.30, before ending US trade near JPY86.40.

US crude oil rose to near three-month highs on Monday as investors became more optimistic about economic prospects. Traders are also tracking a tropical depression in the Atlantic Ocean although forecasts suggest that it will miss oil facilities in the Gulf of Mexico. The Nymex crude oil contract rose by US$2.39 or 3.0pct to US$81.34. London Brent crude rose by US$2.64 to US$80.82 a barrel.

Base metal prices posted solid gains for the fourth straight day on the London Metal Exchange on Monday as the US dollar fell and investors shifted to growth assets like commodities and equities. Lead soared 6.6pct with zinc up 4.8pct and other metals rose 2.0-3.8pct. And the Comex gold price rose in line with other commodities, although more modestly, edging up by US$1.50 an ounce to US$1,185.40. Gold traded from US$1,176.70 to US$1,193.90 an ounce.

Ahead: In Australia, the Reserve Bank Board meets. Data on job ads, retail trade and building approvals are released. In the US personal income, car sales and factory orders data are released.