The US Senate has passed the bill to cut spending and raise the debt ceiling. President Obama has signed the debt bill into law.

US personal income rose by 0.1pct in June, while consumption fell by 0.2pct - the first drop in 21 months. Economists had tipped gains of 0.2pct for income and spending. And US auto sales totalled 12.23 million units in July, up from 11.41m in June and above forecasts of 11.80m.

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European shares fell to 11-month lows on Tuesday with investors fretting about weak economic growth in the US and Europe. The FTSEurofirst index fell by 1.8pct, the German Dax slumped by 2.3pct, the French CAC lost 1.8pct and the UK FTSE fell by 1.0pct.

US sharemarkets slumped on Tuesday as investors switched their attention to an economy fast losing momentum. At the close of trade the Dow Jones was down almost 266pts or 2.2pct with the S&P 500 down by 2.5pct while the Nasdaq lost 75pts or 2.8pct.

US long-term treasuries soared on Tuesday (yields lower) as sharemarkets fell and investors rushed to the safety of safe-haven assets. US 2yr yields fell by 6pts to 0.32pct and US 10yr yields fell by 13pts to 2.617pct.

Major currencies were mixed against the greenback over the European and US sessions. The Euro rose from lows near US$1.4150 to US$1.4280, before easing over the US session to end at US$1.4195. The Aussie dollar fell from highs near US109.30c to US107.80c, ending US trade near US107.90c. And the Japanese yen held between 76.95 yen per US dollar and US77.45c, ending US trade near JPY77.05.

Benchmark crude oil prices fell on Tuesday as US economic data again disappointed and the US dollar rebounded against the Euro in afternoon trade. But traders were watching the progress of Tropical Storm Emily in the Caribbean. Nymex crude oil fell by US$1.10 or 1.2pct to US$93.79 a barrel and London Brent crude fell by US35c to US$116.46 a barrel.

Base metal prices were mixed on the London Metal Exchange on Tuesday. Weaker US consumer spending weighed on investor sentiment but the Euro rose against the greenback in early US trade, supporting metal prices. Tin lost 3.0pct and zinc fell 0.9pct but nickel rose 1.0pct and copper gained 0.3pct. And the gold price rose to record highs as investors embraced safe-haven assets. Comex December gold rose by US$22.80 an ounce or 1.5pct to US$1,644.50.

Ahead: In Australia, retail trade, international trade and the Performance of Services index are released. In the US, the ADP employment index, factory orders and the ISM services index are released.

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