The US Richmond Fed manufacturing index fell from 11 to -2 in August. The sub indices including shipments, service revenues, and retail sales revenues were also in negative territory. US consumer confidence fell from 53.2 to 48.5 in August - the lowest reading in seven months. The Case-Shiller 20-City index fell by a seasonally adjusted 0.1pct in July.

European shares were lower for a second straight session on Tuesday, as the weaker US economic data weighed on sentiment. Banking stocks led the declines with STOXX Europe 600 banking index falling 1pct. The FTSEurofirst index fell 0.3pct with the UK FTSE higher by 0.1pct and the German Dax remained unchanged

US sharemarkets recovered from early losses to close higher on Tuesday. The weak economic data soured initial sentiment, however the added likelihood of further stimulus by the Fed and end quarter window dressing supported equities. Energy and commodity shares received a strong boost. Towards the close Meredith Witney spoke on CNBC and said she would be selling the regional banks, as there was little chance they could make money. The Dow Jones rose 46pts or 0.4pct with the S&P 500 up 0.5pct and the Nasdaq higher by 9pts or 0.4pct.

US treasuries rallied (yields lower) on Tuesday as the fall in consumer confidence raised expectations that the Federal Reserve will add further stimulus to the US economy. Strong demand for the $35 billion auction of five-year notes added to the speculation that the Japanese central bank was reinvesting the proceeds from the intervention in currency markets earlier this month. US 2yr yields fell 1pt to 0.42pct and US 10yr yields lost pts to 2.46pct.

The Euro and commodity currencies rallied against the US dollar, as speculation about further stimulus by the US fed gained traction. The Euro rallied from lows near US$1.3385 to US$1.3595, ending US trade near US$1.3585. The Aussie dollar rose from lows near US95.65c to US96.80c, closing US trade near US96.75c. The Japanese yen held between 84.25 yen per US dollar and JPY83.70, ending US trade near JPY83.95.

US crude oil prices fell on Tuesday as the in volatile trade. An anticipated lift in US fuel inventories and weak economic data weighed on prices. The Nymex crude oil contract fell by US34 cents to US$76.18. London Brent crude rose US14 cents to US$78.71 a barrel.

Base metal prices were higher on the London Metal Exchange on Tuesday. The weakness in the US dollar added to the demand for commodities with metals rising between 0.3-0.7pct. And the Comex gold price hit a fresh all-time high touching US$1,311.80 an ounce before closing up US$9.70 an ounce to $1308.30.

Ahead: In Australia, demographic data is released. In the US no economic data is released. The Japanese Tankan survey is slated for release.