US housing starts soared by 14.6pct in June to a 629,000 annual rate, well above forecasts for a result near 575,000. Building permits rose by 2.5pct after a 8.2pct gain in May. And the Johnson Redbook index of chain store sales rose by 3.8pct in the second week of July compared with a year ago.

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US President Barack Obama has given support to a so-called ´´Gang of Six´´ bipartisan deficit-reduction plan.

European shares posted solid gains on Tuesday with investors embracing bank stocks on hopes that European leaders will be successful in agreeing a bail-out deal for Greece. The STOXX Europe 600 Banks index rose by 1.4pct. The FTSEurofirst index rose by 0.8pct with the German Dax higher by 1.2pct and the UK FTSE was higher by 0.7pct.

US sharemarkets posted strong gains on Tuesday. Shares in IBM soared to a record high on a strong earnings result, boosting technology shares. Strong economic data helped investor sentiment. News Corp shares rose 5.5pct after Rupert Murdoch testified before an inquiry in the UK. And President Obama expressed greater optimism on a deal to lift the debt ceiling. The Dow Jones rose by 202pts or 1.6pct with the broader S&P 500 also up by 1.6pct while the Nasdaq gained 61.4pts or 2.2pct. After the bell Apple reported revenues of US$28.57 billion, above the consensus forecast of US$25.00bn. Apple sold 20.34m iPhones in the quarter.

US long-term treasuries rose sharply on Tuesday (yields lower) on hopes for a resolution to the government debt and budget deficit negotiations between Republicans and Democrats. US 2yr yields fell by 1pt to 0.371pct and US 10yr yields eased by 5pts to 2.877pct.

The Euro and commodity currencies rose in European and US trade as equity markets rose. The Euro rose from lows near US$1.4070 to US$1.4215, ending the US session near US$1.4140. The Aussie dollar rose from US106.05c to US107.40c, before ending US trade near US107.25c. And the Japanese yen weakened from 78.85 yen per US dollar to JPY79.25, ending US trade at JPY79.20.

Benchmark crude oil prices rose on Monday with investors again confident to buy commodities and encouraged by strong US housing data. Nymex crude oil rose by US$1.57 or 1.6pct to US$97.50 a barrel and London Brent crude rose by US$1.01 to US$117.06 a barrel.

Base metal prices posted solid gains on the London Metal Exchange on Tuesday as investors were again confident to embrace riskier assets such as equities and commodities. Metals rose between 1.3-2.4pct with zinc doing best. But the gold price slipped from record highs as investors took profits and retreated from safe-haven assets. Comex gold fell by US$1.30 an ounce to US$1,601.10. Spot gold stands at US$1,587 an ounce.

Ahead: In Australia, data on engineering and construction activity are released. In the US, data on existing home sales is released.

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