The US ISM manufacturing index rose unexpectedly from 53.5 to 55.3 in June - marking the first rise in four months. Across key sub-indices new orders, production and employment recorded modest increases, while prices paid fell to its lowest level since August 2010 - easing concerns about inflation. In contrast the global manufacturing index fell from 53.0 to 52.3 in June - its lowest reading in nearly two years.

European shares rallied to fresh one-month highs on Friday. Upbeat US manufacturing numbers supported the rally. Banking stocks were amongst the best performers following the two successful Greece austerity votes earlier in the week. The FTSEurofirst index rose by 0.7pct with the German Dax up 0.6pct and the UK FTSE up by 0.7pct. The FTSEurofirst index rose by 3.6pct its best weekly gain in 10 months.

US sharemarkets posted strong gains on Friday although volumes were light. The upbeat US manufacturing data proved to be the catalyst. The S&P consumer discretionary sector led the closing up 2pct. The Dow Jones rose by 168pts or 1.4pct with the S&P 500 up 1.4pct while the Nasdaq rose by 43pts or 1.5pct. Over the week the Dow gained 5.4pct, the S&P 500 rose 5.6pct and the Nasdaq rose 6.2pct.

US longer-term treasuries fell again on Friday (yields higher). Investors trimmed safe-haven positions after the US manufacturing data topped forecasts offering some evidence that economic activity might be once again be picking up pace. US 2yr yields were flat at 0.474pct but US 10yr yields rose by 1pts to 3.182pct. Over the week US 2yr yields rose by 15pts and US 10yr yields rose by 31pts.

The Euro rallied against the US dollar continuing the recent trend as Greece staved of a near term default. The Euro hit early highs near US$1.4545 before falling to US$1.4445, ending US trade near US$1.4520. The Aussie dollar rallied from US106.80c to highs near US107.85c, ending US trade near US107.70c. And the Japanese yen eased from 80.50 yen per US dollar to JPY81.15, before ending US trade around JPY80.85.

Benchmark crude oil prices recorded modest falls on Friday. Signs of slower growth in China (PMI at a 28-month low) was offset by the stronger US data. US Nymex crude oil fell by US48c or 0.5pct to US$94.94 a barrel and London Brent crude fell by US71c or 0.6pct to US$111.77 a barrel. Over the week Nymex gained 4.2pct and Brent rose by rose by 6.3pct.

Base metal prices were mixed on the London Metal Exchange on Friday. Copper rose for a fourth straight session pushing through its 200-day moving average. However the gold price fell with Comex gold fell by US$20.20 an ounce or 1.3pct to US$1,482.60.

Ahead: In Australia, retail trade, building approvals, TD inflation gauge, and job ads are released. In the US, no major economic data is scheduled for release.