US retail sales rose by 0.5pct in July - the biggest gain in four months - and in line with the consensus forecast. Excluding autos, sales rose by 0.5pct - above the consensus forecast of a 0.2pct rise. But consumer sentiment fell sharply to a 31-year low in August, dropping from 63.7 to 54.9.

[Kick off your trading day with our newsletter]

European shares posted solid gains on Friday after a ban on short-selling of financial stocks by a number of countries gave investors confidence to pick up bargains. Shares in Societe General rose by 5.7pct. The FTSEurofirst index rose by 3.4pct while the German Dax was up by 3.5pct and the UK FTSE rose 3.0pct. The FTSEurofirst index fell by 0.8pct last week.

US sharemarkets ended higher on Friday despite weakness in the banking sector. Morgan Stanley fell by 7.3pct with JP Morgan down 2.1pct. But shares in Hewlett Packard rose 4.1pct. The Dow Jones rose by almost 126pts or 1.1pct with the S&P 500 up by 0.5pct and the Nasdaq gained by 15.3pts or 0.6pct. Over the week the Dow fell by 1.5pct and the S&P 500 lost 1.7pct while the Nasdaq fell by 1.0pct.

US long-term treasuries rose again on Friday (yields lower) as investors focussed on the weak consumer sentiment reading and the implications for future spending, employment and investment. US 2yr yields were flat at 0.195pct and US 10yr yields fell by 9pts to 2.26pct. Over the week US 2yr yields fell by 9pts while US 10yr yields fell by 30pts.

The US dollar eased against the Euro and commodity currencies on Friday but the Japanese yen held in a tight range. The Euro rose from lows near US$1.4150 to US$1.4290, ending the US session at US$1.4245. The Aussie dollar rose from lows around US102.45c to US103.60c, ending US trade near US103.50c. The Aussie is at US103.65c this morning. And the Japanese yen held between 76.50 yen per US dollar and JPY76.90, ending US trade near JPY76.80.

US crude oil prices fell on Friday in thin trade with weaker US consumer sentiment slightly offsetting a firmer reading on retail sales. Nymex crude oil fell by US34c or 0.4pct to US$85.38 a barrel and London Brent crude rose by US1 cent to US$108.03 a barrel. Nymex was down by 1.7pct over the week with Brent down 1.2pct.

Base metal prices were slightly lower on the London Metal Exchange on Friday, except tin which soared 4.7pct. Other metals fell 0.2-0.9pct. Over the week metal prices were mixed. Tin rose 1.4pct and lead rose 0.9pct but other metals fell with nickel down 5.0pct. Other metals fell 0.4-1.9pct. And the gold price fell on Friday as investor confidence improved, reducing demand for safe-haven assets. Comex December gold fell by US$8.90 an ounce to US$1,742.60. Gold rose by US$90.80 or 5.5pct over the week.

Ahead: In Australia, data on new car sales is issued. Leighton Holdings, United Group, iiNet, Newcrest and Ansell release earnings results. In the US, the Empire State manufacturing index, NAHB Housing Market index and capital flows data are released.