US retail sales rose by 0.4pct in August, above expectations for a 0.3pct gain. Excluding autos, sales were up 0.6pct with food stores and gasoline stations doing best. And US business inventories rose by 1.0pct in July, the largest increase in two years. Stocks are at 14-month highs.

European shares were flat on Tuesday. Mining shares rose modestly in response to higher prices but utilities eased. The FTSEurofirst index was broadly unchanged. The UK FTSE rose by almost 2pts or less than 0.1pct while the German Dax rose 0.2pct despite a slump in the key ZEW survey of investor sentiment in September.

US sharemarkets ended mixed on Tuesday. Retail stocks did well after positive spending data. Shares in Best Buy rose 6pct. And technology gained after Cisco Systems said it would pay a dividend for the first time. The Dow Jones fell by almost 18pts or 0.2pct with the S&P 500 down 0.1pct but the Nasdaq rose by 4pts or 0.2pct.

US treasuries rose on Tuesday (yields lower) on speculation that the Federal Reserve will increase its purchases of Treasuries. US 2yr yields fell by 4pts to 0.50pct and US 10yr yields fell by 7pts to near 2.68pct.

The US dollar fell against all major currencies in European and US trade on Tuesday with the US dollar index at a 1-month low. The Euro lifted from lows near US$1.2830 to US$1.3030, ending US trade near US$1.2995. The Aussie dollar lifted from lows near US93.10c to US94.55c, but eased sharply to end US trade near US93.95c. And the Japanese yen lifted from 83.65 yen per US dollar to its strongest level in 15 years at JPY82.90, ending US trade near JPY83.05.

US crude oil bucked the trend in commodities markets on Tuesday, with prices retreating despite a weaker US dollar. In contrast, prices of many agricultural commodities hit multi-year highs. The fall in oil prices came after Enbridge said that repairs to its key Line 6A Canadian-US pipeline were nearly complete. The Nymex crude oil contract fell by US39c or 0.5pct to US$76.80. London Brent crude rose by US13c to US$79.16 a barrel.

Base metal prices were higher on the London Metal Exchange on Tuesday in response to a weaker greenback. A lower US dollar improves the purchasing power of buyers in Europe and Asia. Metals rose between 0.3-2.2pct although lead was the exception, down 0.4pct. And gold hit a record high as the US dollar sank. Comex gold rose by US$24.60 an ounce to US$1,271.70 after trading as high as US$1,276.50 an ounce.

Ahead: In Australia, the consumer confidence index, car sales and dwelling starts are released In the US data on industrial production, export and import prices are released.