The European Commission has almost doubled its forecasts for growth of the euro zone economy. The European Commission now expects the euro zone to grow by 1.7 per cent in 2010, up from its previous forecast in May of 0.9 per cent.

The US government has posted a budget deficit of US$90.53 billion in August, below forecasts for a shortfall near US$95bn. It was the 23rd consecutive monthly deficit.

European shares rose to 5-month highs on Monday, with investors encouraged by Chinese economic data and the long phase-in timetable for banks to meet tougher capital rules. Mining stocks did well with Rio Tinto and BHP Billiton both up by 2.5pct in London trade. The FTSEurofirst index rose by 0.6pct with the UK FTSE up by 1.2pct while the German Dax gained 0.8pct.

US sharemarkets hit 5-week highs on Monday. Investors reacted positively to stronger Chinese production and retail spending data. And there was relief that banks would have time to meet new capital requirements. The KBW bank index rose by 3.1pct. The Dow Jones rose by 81pts or 0.8pct with the S&P 500 up 1.1pct and the Nasdaq rose by 43pts or 1.9pct.

US treasuries rose for the first day in four on Monday (yields lower). Traders attribute the gains to bargain hunting and the lift in prices came despite higher equity and commodity prices. The Federal Reserve also announced that it would buy US$27 billion of Treasuries between September 15 and October 6. US 2yr yields fell by 5pts to 0.535pct and US 10yr yields fell by 5pts to near 2.75pct.

Major currencies rose against the greenback in European and US trade on Monday. The Euro lifted from lows near US$1.2790 to US$1.2890, ending US trade near US$1.2875. The Aussie dollar lifted from lows near US92.95c to US93.60c, ending US trade near its highs. And the Japanese yen lifted from 84.15 yen per US dollar to JPY83.50, ending US trade near JPY83.65 and not far from the strongest point in 15 years at JPY83.32.

US crude oil prices rose to one-month highs on Monday as investors worried that a key Canada-US oil pipeline could face an extended shutdown. On Friday Enbridge closed its 670,000 barrel per day Line 6A that supplies oil from Canada to the US after a leak was discovered. The Nymex crude oil contract rose by US74c or 1.0pct to US$77.19. London Brent crude rose by US87c to US$79.03 a barrel.

Base metal prices posted solid gains on the London Metal Exchange on Monday as investors reacted to positive Chinese economic data. Metals rose between 1.3-3.1pct with lead doing best. And the gold price rose slightly as a weaker greenback offset reduced demand for safe-haven assets. Comex gold rose by US60c an ounce to US$1,247.10 after trading between US$1,242.30 to US$1,251 an ounce.

Ahead: In Australia, the NAB business survey is released. In the US retail sales and business inventories data are released.