MORNING REPORT (7am AEDT) Italian retail sales fell by 0.4pct in September - the fifth straight decline. French consumer confidence fell from 82 to 79 in November.

In ratings action, Standard and Poor´s cut the long-term sovereign credit rating of Belgium from AA+ to AA in response to funding pressure. Following the downgrade Belgian political parties reached a deal on the 2012 Budget that will see the deficit fall to 2.8pct of GDP. And Moody´s cut Hungary´s bond credit rating to ´´junk´´ status, cutting it one notch to Ba1.

European shares rose for the first time in seven days on Friday as investors covered short positions in thin trade. The FTSEurofirst index rose by 0.9pct with the UK FTSE up by 0.7pct while the German Dax gained 1.2pct.

US shares fell for the seventh day in thin trade during a shortened session on Friday. Caution about the European Debt Crisis reigned. The Dow Jones fell by 25pts or 0.2pct with the S&P 500 down 0.3pct and the Nasdaq eased 18.5pts or 0.8pct. Over the week the Dow Jones fell by 4.8pct while the S&P 500 lost 4.7pct and the Nasdaq slumped by 5.1pct.

US treasuries eased on Friday (yields higher) as traders booked profits at the end of the week. US 2yr yields rose by 1pt to 0.277pct and US 10yr yields rose by 5pts to 1.965pct. Over the week US 2yr yields fell by 1pt and US 10yr yields fell by 5pts.

Major currencies ended mixed in directionless European and US trade on Friday. The Euro eased from highs near US$1.3320 to near US$1.3215, recovered to US$1.3300 but ended US trade near US$1.3235. The Aussie dollar rose from lows around US96.65c to US97.70c, and ended US trade at US97.05c. And the Japanese yen eased from JPY77.30 yen per US dollar to JPY77.78, ending US trade near JPY77.72.

World crude oil prices were mixed on Friday. US prices rose in line with higher equities markets (US shares fell modestly after the oil price closed). But the Brent price eased on fears of slower European oil demand in response to the region´s debt crisis. Nymex crude oil rose by US60c or 0.6pct to US$96.77 a barrel and London Brent crude fell by US$1.38 to US$105.98 a barrel. Over the week Nymex crude fell by 0.7pct while Brent fell by 1.0pct.

Base metal prices were mixed on the London Metal Exchange on Friday. Lead, zinc and tin rose and other metals fell 0.7-1.1pct with aluminium faring worst. Over the week base metals fell between 2.5-5.2pct with aluminium and nickel faring the worst. And the gold price fell with technical selling, weaker equities markets and a firmer US dollar all blamed. But providing support was news that central banks bought 26 tonnes of gold in October. The Comex December gold price fell by US$10.20 an ounce or 0.6pct to US$1,685.70. Over the week gold fell by US$39.40 or 2.3pct.

Ahead: In Australia, no major economic data is released. In the US, new homes sales data is released together with the Midwest manufacturing index and Dallas Fed business index.