US existing home sales fell by a record 27.2pct in July to a 15-year low of 3.83 million following the end of a home-buyer tax credit. Forecasts had centred on a result near 4.70m. The inventory of homes for sale lifted to 12.5 months - the most since at least 1999. The median price was up 0.7pct on a year ago. And the Richmond Fed manufacturing eased from +16 to +11 in August.

European shares fell on Tuesday as a sharp fall in US home sales raised doubts about the recovery in the world´s biggest economy. The FTSEurofirst index fell by 1.6pct while the UK FTSE lost 1.5pct and the German Dax fell by 1.3pct.

US shares slumped on Tuesday as investors fretted about the health of the US economy. But shares of computer storage company 3PAR rose by 3.6pct on reports that Dell is prepared to lift its offer for the company and trump a bid by Hewlett-Packard. The Dow Jones fell by 134pts or 1.3pct with the S&P 500 down 1.5pct and the Nasdaq fell by almost 36pts or 1.7pct.

US treasuries rallied again on Tuesday (yields lower) in response to weaker-than-expected economic data and lower share prices. Solid demand for Treasury´s auction of two-year notes also supported prices. US 2yr yields fell by 2pts to 0.47pct and US 10yr yields were lower by 11pts to 2.49pct.

Major currencies were generally stable to higher against the greenback in European and US trade but the Aussie dollar bucked the trend. The Euro lifted from lows near US$1.2590 to US$1.2710, ending US trade near US$1.2665. The Aussie dollar fell from US89.95c to US88.00c, ending US trade near US88.30c. But the Japanese yen strengthened from 85.00 yen per US dollar to a 15-year high of JPY83.65, ending US trade near JPY84.05.

US crude oil prices fell for a fifth straight session on Tuesday hitting a near seven-week low. Concern about the health of the US economy was the prime reason for the fall in oil prices but traders also awaited data likely to show a fresh lift in oil stocks. The Nymex crude oil contract fell by US$1.47 or 2.0pct to US$72.05. London Brent crude fell by US$1.24 to US$72.38 a barrel.

Base metal prices were weaker on the London Metal Exchange on Tuesday, as investors reacted to the weak US home sales data. Nickel lost 2.8pct and zinc fell 2.7pct with other metals down 0.4-1.8pct. But the Comex gold price bucked the trend, lifting in response to safe-haven buying. Comex gold rose by US$4.90 an ounce to US$1,233.40.

Ahead: In Australia, construction work data is released. Earnings results are expected from BHP Billiton, Suncorp-Metway, Seven Group, MAp and Asciano. In the US new homes sales and durable goods orders data is released.