MORNING REPORT
(7am AEDT)

In the US, the Case Shiller home price series for 20 cities was flat in seasonally adjusted terms in August but up 0.2pct in unadjusted terms. Home prices are down 3.8pct on a year ago. The consumer confidence index fell from 46.4 to a 30-month low of 39.8 in October. The Richmond Fed manufacturing index was unchanged at -6 in October.

European shares eased from 11-week highs on Tuesday as investors awaited a summit of European leaders to address the debt crisis. Encouraging earnings results underpinned a 4.4pct lift in BP shares while Deutsche Bank rose by 0.3pct. The FTSEurofirst index fell by 0.7pct with the German Dax lower by 0.1pct while the UK FTSE lost 0.4pct.

US sharemarkets fell on Tuesday. Investors booked some profits on recent gains ahead of the European leaders summit. And a number of companies gave cautious commentaries when delivering earnings results. The Dow Jones lost 110pts in the last hour of trade to close lower by 207pts or 1.7pct with the S&P 500 down by 2.0pct and the Nasdaq lost 61pts or 2.3pct.

US treasuries rose on Tuesday (yields lower) as investors embraced safe-haven assets on doubts that European leaders would come up with a comprehensive plan to deal with the region´s debt crisis. US 2yr yields fell by 4pts to 0.25pct and US 10yr yields eased 13pts to 2.11pct.

The euro and commodity currencies drifted lower against the US dollar in volatile US and European trade. Currencies gyrated on news that the EU finance ministers meeting was cancelled but the Euro zone Heads of State meeting would proceed. The Euro fell from highs near US$1.3955 to US$1.3855, but partially recovered to end US trade near US$1.3900. The Aussie dollar also eased from around US104.95c to US104.05c, but partially recovered to end US trade at US104.25c. And the Japanese yen lifted from 76.25 yen to JPY75.75, ending US trade near JPY75.95.

Global crude oil prices were mixed in technical trade on Tuesday. Traders were focussing on the spread between the Nymex and Brent crude quotes while the trend into backwardation deepened - a situation where near-term futures prices are dearer that longer-term quotes. Nymex crude oil rose by US$1.90 or 2.1pct to US$93.17 a barrel but London Brent crude fell by US53c to US$110.92 a barrel.

Base metal prices were generally softer on Tuesday as investors booked some profits after two days of solid gains. Metals fell between 1.3-2.8pct but aluminium rose by 0.3pct. The gold price soared in line with the oil price but investors also embraced the safe-haven metal ahead of the Euro summit. The Comex December gold price was up by US$48.10 an ounce to US$1,700.40.

Ahead: In Australia, the Consumer Price Index is released together with quarterly estimates on wealth. Around 30 companies hold annual general meetings. In the US, data on durable goods orders and new home sales are released.