MORNING REPORT
(8.00am AEDT)

As widely expected, the International Monetary Fund has cut its forecast for global economic growth in 2012 from 4.0pct to 3.3pct. The global economy grew 3.8pct in 2011. The IMF tips global growth of 3.9pct in 2013.

In the US the Richmond Fed manufacturing Index lifted from +3 to +12 in January - a 10-month high. The ´flash´ composite Euro-zone Purchasing Managers index for January jumped by over 2 points to 50.4. Both manufacturing and services indices improved notably to 48.7 (+1.8) and 50.5 (+1.7) respectively. Strongest performance was in Germany. The services PMI jumped to 54.5, manufacturing to 50.9. In France equivalents were 51.7 and 48.5.

European shares eased from the highest levels in almost six months on Tuesday after euro zone finance ministers rejected a bond swap offer from Greece´s private creditors. The FTSEurofirst index fell by 0.4pct, with the UK FTSE down 0.5pct and German Dax down by 0.3pct.

US sharemarkets eased on Tuesday on lingering uncertainty about the Greek debt situation. Shares of companies reporting earnings were generally lower with shares in McDonalds down 2.2pct. At the close of trade, the Dow Jones was down by 33 points or 0.3pct with the S&P 500 down 0.1pct but the Nasdaq was up 2.5pts or less than 0.1pct.

US longer-term treasuries were flat on Tuesday after a successful $35 billion auction of two-year notes. On Wednesday the government will sell $35 billion of five year notes and will sell $29 billion of two year notes on Thursday. US 2yr yields were flat near 0.238pct and US 10yr yields were flat at 2.058pct

The Euro and commodity currencies eased against the US dollar in the European session before partially recovering in the US session. The Euro eased from US$1.3055 to US$1.2950 before lifting to US$1.3025 in late US trade. The Aussie dollar eased from highs near US105.10c in European trade to US104.25c, but was back near US104.75c in late US trade. And the Japanese yen weakened from 76.96 yen per US dollar to JPY77.83 on expectations data will show the first trade deficit since 1980. The yen was near JPY77.72 in late US trade.

World crude oil prices eased on Tuesday with uncertainty on a deal between Greece and its private sector creditors weighing on sentiment. Supply concerns supported prices after Iran again threatened to close the Strait of Hormuz after the EU decision to ban oil imports from the country. Nymex oil fell by US63c or 0.6pct to US$98.95 a barrel and London Brent crude fell by US55c to US$110.03 a barrel.

Base metals rose again on Tuesday but results varied widely. Zinc rose 3.2pct and nickel rose 1.6pct while other metals were largely flat and copper bucked the trend, down just 0.1pct. And the gold price fell on Tuesday in line with oil with the Comex February gold price down by US$13.80 or 0.8pct to US$1,664.50 an ounce.

Ahead: In Australia, the Consumer Price Index is released. In the US, the Federal Reserve hands down its monetary policy decision.