US advance retail sales rose by a less than expected 0.2pct in November, after an upwardly revised 0.6pct gain in October. In the 12 months to November sales were up a healthy 6.7pct. Core retail sales, which exclude autos, gasoline, and building materials, (and is closely correlated with the consumer spending component of the GDP report) rose 0.3pct in November.

The US Federal Reserve left interest rates unchanged but said the ´´strain in global financial market posed downside risks to economic growth´´ - effectively leaving the door open to further easing next year. The Fed did note that there was ´´some improvement in overall labour market conditions´´.

European shares were mostly higher on Tuesday, though volumes were light. Energy stocks received a boost from the higher oil price. The ongoing euro zone debt concerns capped overall gains. Spain sold €4.94 billion of 1yr and 18-month bills at auction. Respective yields were significantly below levels a month ago, at 4.05pct and 4.23pct compared to 5.02pct and 5.16pct. The FTSEurofirst index closed up 0.6pct while the UK FTSE rose 1.2pct and the German Dax lost 0.2pct.

US shares gave back early gains on Tuesday after the Federal Reserve confirmed that the US economy had been expanding but there were downside risks to global growth. At the close of trade, the Dow Jones was lower by 67points or 0.6pct. The S&P 500 fell by 0.9pct, and the Nasdaq was lower by 33 points or 1.3pct.

US long-dated treasuries rallied on Tuesday (yields lower) following strong demand in 10yr bond auction. US 2yr yields were flat at 0.23pct and US 10yr yields fell by 5pts to 1.967pct.

The Euro and commodity currencies extended its recent weakness against the greenback on Tuesday. The Euro fell from highs near US$1.3235 to around US$1.3005 and was near US$1.3030 in late US trade. The Aussie dollar fell from highs around US101.55c to US99.80c, and was near US99.95c in late US trade. And the Japanese yen held between 77.60 yen per US dollar and JPY78.00, and was near JPY77.95 in late US trade.

World crude oil prices recorded their biggest one-day gain in almost a month on Tuesday. Worries about supply disruptions in Iran drove. A member of the Iranian National Security Committee commented that the military was set to practice its ability to close the Strait of Hormuz to shipping. Around a third of all sea-borne oil is shipped through the Strait. Nymex crude oil rose by US$2.37 to US$100.14 a barrel and London Brent crude rose US$2.24 to US$109.50 a barrel.

Base metal prices were lower on the London Metals Exchange on Tuesday. Metals fell between 0.1-1.5pct as the stronger US dollar and euro zone fears dominated trading activity. Similarly the gold price fell to a fresh seven week low with the Comex February gold price down by US$5.10 an ounce or 0.3pct to US$1,663.10.

Ahead: In Australia, consumer sentiment data is released. In the US, import price data is released.