From Craig James, Commsec Chief Economist

MORNING REPORT (8.00am AEDT) The US ISM services index fell from 52.9 to 52.0 in November - the lowest level in almost two years (January 2010). While new orders rose, the employment reading fell. Any reading above 50 indicates expansion of the services sector. Meanwhile US factory orders fell 0.4pct in October, in line with forecasts.

The International Monetary Fund has approved a 2.2 billion euro loan to Greece, a tranche in the three-year IMF-EU bailout package.

The Financial Times has reported that six AAA-rated euro zone nations face being placed on credit watch negative by Standard and Poor´s.

European shares rose on Monday after the German Chancellor and French President agreed on measures to enforce budget discipline for the euro zone. The FTSEurofirst index rose by 0.8pct to a five-week high while the UK FTSE was up by 0.3pct and the German Dax gained 0.4pct.

US shares finished firmer but off their highs after speculation of rating agency action against six euro nations surfaced. At the close of trade, the Dow Jones was up by 78 points or 0.7pct. Earlier in the session the Dow had been up 167pts. The S&P 500 rose by 1.0pct, while the Nasdaq was higher by 29pts or 1.1pct.

US treasuries were little changed on Monday as investors weighed up US economic data, optimism on a euro zone budget agreement and speculation of credit rating action against euro nations. US 2yr yields were flat near 0.258pct and US 10yr yields were flat at 2.04pct.

The Euro and commodity currencies gave up gains against the greenback after speculation of credit rating action against euro nations emerged at 6.00am AEST. The Euro had risen from near US$1.3400 to US$1.3485 but fell from US$1.3455 to US$1.3380 on the rating speculation. The Aussie dollar rose from lows around US102.00c to US103.00c, but fell from highs to US102.50c on the rating speculation. The euro is near US$1.3400 and Aussie near US102.75c. And the Japanese yen lifted from 78.00 yen per US dollar to JPY77.75, and is currently near these levels.

World crude oil prices gave up earlier gains following the speculation of credit rating action against euro zone nations. Oil prices had been up 1.5-2.0pct on fears tensions with western nations could disrupt Iranian oil shipments. Nymex crude oil rose by US3c to US$100.99 a barrel but London Brent crude fell by US13c to US$109.81 a barrel.

Base metal prices were generally higher on the London Metal Exchange on Monday. Nickel soared 4.4pct but other metals rose up to 0.7pct while zinc bucked the trend, down 1.0pct. But the gold price fell with the Comex February gold price down by US$16.80 an ounce or 1.0pct to US$1,734.50. Some analysts attribute the drop to the potential for a euro zone budget agreement, reducing demand for safe-haven assets.

Ahead: In Australia, the Reserve Bank Board meets to decide interest rate settings. Government finance figures and the balance of payments are released. In the US, weekly retail sales are released.