US housing starts fell by 1.5pct to a 604,000 annual rate in July, in line with expectations. US industrial production soared by 0.9pct in July, well above forecasts centred on a gain of 0.5pct. Capacity use jumped from 76.9pct to 77.5pct.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said all 17 euro zone countries should constitutionally commit to balanced finances by the summer of 2012. The two leaders also proposed a new tax on financial institutions but ruled out euro bonds.

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European shares ended mixed on Tuesday. European economic data disappointed with the German economy growing just 0.1pct in the June quarter. But markets retraced losses after better-than-expected US economic data. The FTSEurofirst index was flat while the German Dax was down by 0.5pct and the UK FTSE rose 0.1pct.

US sharemarkets eased on Tuesday, giving back just under a quarter of the two previous days gains. Shares in Wal-Mart rose by 3.9pct and shares in Home Depot rose 5.2pct after both retailers posted better-than-expected earnings results. The Dow Jones fell by 77pts or 0.7pct with the S&P 500 lower by 1.0pct and the Nasdaq fell by 32pts or 1.2pct.

US long-term treasuries rose on Tuesday (yields lower) as investors embraced US government bonds after German and French leaders failed to come up with fresh plans to deal with the Euro debt crisis. US 2yr yields fell 2pts to 0.187pct and US 10yr yields fell by 10pts to 2.227pct.

Major currencies trended sideways against the greenback over the European and US sessions. The Euro held between US$1.4355 and US$1.4460, ending the US session at US$1.4405. The Aussie dollar held between US104.05c and US105.05c, ending US trade near US104.75c. And the Japanese yen held between 76.65 yen per US dollar and JPY76.90, ending US trade near JPY76.75.

Global crude oil prices fell on Tuesday. Investors digested mixed economic news and there was some disappointment that German and French leaders didn´t come up with more concrete plans to address the Euro debt crisis. Nymex crude oil fell by US$1.23 or 1.4pct to US$86.65 a barrel and London Brent crude fell by US44c to US$109.47 a barrel.

Base metal prices were mixed on the London Metal Exchange on Tuesday, tracking mixed economic data. Lead fell 1.7pct, tin lost 1.2pct and copper fell 0.9pct. But nickel rose 1.9pct and other metals were flat. But the gold price rose as Euro economic growth slowed with Comex December gold up by US$27 an ounce to a record US$1,785.00.

Ahead: In Australia, the wage cost index is released. Earnings are expected from Boral, Brambles, CSL, Westfield, The Reject Shop, Woodside Petroleum and APN News & Media. In the US, data on producer prices is released.