US consumer spending rose by 0.4pct in July - marking the strongest reading in four months. US personal income rose by 0.2 pct in July after edging up 0.1pct in June. Wages and salaries rose at a $22 billion annual rate, supporting the rise in incomes. The savings rate slipped from 6.2pct to 5.9pct.

European sharemarkets were mostly flat on Monday as concerns about the global economic recovery were offset by M&A activity. Volumes were light with the London market closed on Monday due to its summer banking holiday. The FTSEurofirst index was largely unchanged while the UK FTSE was closed and the German Dax fell 0.7pct.

US shares fell on Monday with investors remaining concerned about the pace of the economic recovery. Markets virtually gave back all of the previous session's gains, however volumes were the lightest this year. The Dow Jones fell by almost 140pts or 1.4pct with the S&P 500 down 1.5pct and the Nasdaq lower by 33pts or 1.6pct.

US treasuries rallied on Monday (yields lower) as the market recouped some of Friday´s sharp losses. Traders will get a better gauge of how the central bank will manage its balance sheet with Tuesday´s release of the minutes of the last FOMC policy meeting. US 2yr yields fell by 6pts to 0.50pct and US 10yr yields fell by 12pts to near 2.53pct.

The Euro and commodity currencies fell against the greenback in US trade as investors headed back to safe-haven assets. The Euro fell from highs near US$1.2735 to US$1.2660, ending US trade near its lows. The Aussie dollar fell from US89.95c to lows near US89.20c, ending US trade near the day´s lows. And the Japanese yen strengthened from 85.20 yen per US dollar to JPY84.50, ending US trade near its strongest levels.

US crude oil prices tracked lower on Monday, following a three day winning streak. Investors remained concerned that the US economy was stalling despite the better than expected reading on consumer spending. The Nymex crude oil contract fell by US47c or 0.6pct to US$74.70. London Brent crude did not trade due to the summer bank public holiday.

The London Metal Exchange was closed on Monday for summer bank holiday so there was no trade in base metals. The Comex gold price rose by US$1.30 an ounce to US$1,239.20 as the slide in US equities boosted the demand for safe-haven assets.

Ahead: In Australia, home prices, retail trade, building approvals, government finance figures, private sector credit and the balance of payments are released. In the US the Case-Shiller home price series, consumer confidence, the Chicago purchasing managers index and minutes of the last Federal Reserve meeting are due for release.