The US mortgage market index rose by 4.5pct last week with the purchase index spiking 8.1pct higher.

The Beige Book report on the US economy showed that economic activity improved in late 2011 with the economy increasing ´´at a modest to moderate pace´´ and holiday retail sales up ´´noticeably´´.

The auto sector strengthened with suppliers reportedly nearing capacity constraints.

The Germany economy grew by 3.0pct in 2011 according to the Federal Statistics office after 3.7pct growth in 2010, while the economy contracted by around 0.25pct in the December quarter.

French, German and Italian leaders will meet on January 20. German Chancellor Angela Merkel said the euro zone´s top priority for the beginning of 2012 was to secure a second aid package for Greece, while she expressed admiration for how quickly Italy´s new
government has launched reforms.

European shares eased from five-month highs on Wednesday in thin and choppy trade. Weighing on sentiment were comments by ratings agency Fitch, which called for the European Central Bank to
step up purchases on euro zone member country debt to support the euro. The FTSEurofirst index fell by 0.5pct with the UK FTSE down 0.5pct and German Dax eased by 0.2pct.

US sharemarkets were mixed on Wednesday as investors weighed economic news on both sides of the Atlantic. At the close of trade, the Dow Jones was down by 13 points or 0.1pct with the S&P 500 flat while the Nasdaq was up 8pts or 0.3pct.

US treasuries rose on Wednesday (yields lower) as investors lightened positions in equities markets to lift holdings of US government bonds. US 2yr yields fell 2pts to 0.233pct and US 10yr yields fell by 7pts to 1.904pct.

The Euro and commodity currencies fell against the greenback in European trade in line with equities but clawed back losses in the US session. The Euro fell from near $1.2790 to US$1.2665 and was near US$1.2705 in late US trade. The Aussie dollar fell from US103.25c to US102.65c, and was around US103.10c in late US trade. And the Japanese yen held between 76.83 yen per US dollar and JPY77.03, and was near JPY76.85 in late US trade.

World crude oil prices fell on Wednesday on data showing a sharp rise in US crude inventories. Nymex crude oil fell by US$1.37 or 1.3pct to US$100.87 a barrel and London Brent crude fell by US$1.04 to US$112.24 a barrel.

Base metals were little changed on Wednesday. Tin rose 1pct but other metals rose or fell less than 0.5pct. And the gold price rose for the second day on news that China´s gold imports from Hong Kong hit record highs in November. The Comex February gold price rose by US$8.10 or 0.5pct to US$1,639.60 an ounce.

Ahead: In Australia, credit & debit card data and figures on overseas arrivals & departures are released. In the US, retail sales and the monthly federal budget data are released.