The US ISM services index rose from 51.5 to 53.2 in September. Economists had tipped a reading near 52.0. Orders, imports and employment all rose in the month.

According to Fitch Ratings, the number of US credit-card holders that were more than 60 days behind their payments hit a 23-month low in August.

European shares rose for the first time in seven days on Tuesday with investors encouraged by US economic data and an easing of monetary policy in Japan. In London trade shares in BHP Billiton rose by 2.4pct with Rio Tinto up 2.6pct. The FTSEurofirst index rose by 1.4pct, with the UK FTSE up by 1.4pct and the German Dax was higher by 1.3pct.

US sharemarkets posted solid gains on Tuesday, also reacting to the better-than-expected data on the services sector and stimulus by the Bank of Japan. The Bank of Japan cut the target rate from 0.10 per cent to between 0-0.10 per cent. With 15 minutes of trade to go, the Dow Jones was higher by 206pts or 1.9pct with the S&P 500 up 2.1pct and the Nasdaq lifted by 55pts or 2.3pct.

US short-term treasuries were modestly firmer on Tuesday (yields lower) as investors focused on speculation that the Federal Reserve will further stimulate the economy via asset purchases - the so-called QE2 - or second batch of quantitative easing. US 2yr yields eased by 1pt to 0.407pct but US 10yr yields rose by 1pt to near 2.485pct.

The Euro and commodity currencies posted solid gains against the greenback in European and US trade on Tuesday. The Euro rose from lows near US$1.3665 to near US$1.3860, ending US trade near US$1.3830. The Aussie dollar lifted from lows near US95.40c to US97.20c, closing US trade near the day´s highs. And the Japanese yen lifted from 83.85 yen per US dollar to near JPY83.00, ending US trade around JPY83.20.

US crude oil prices hit five-month highs on Tuesday, rising by 1.7pct in response to a sharply weaker greenback. The Nymex crude oil contract rose by US$1.35 or 1.7pct to US$82.82 and traded as high as US$82.99 a barrel. London Brent crude rose by US$1.51 to US$84.79 a barrel.

Base metal prices posted firm gains between 0.7-3.8pct on the London Metal Exchange on Tuesday. Zinc did best with a lift of 3.8pct and nickel rose 2.4pct. And the gold price hit fresh record highs, gaining strength with other commodities in response to a weaker greenback. The Comex gold futures price rose by US$23.50 an ounce to US$1,340.30, hitting highs of US$1,342.60. The price of silver followed gold higher, lifting 3.2pct to 30-year highs.

Ahead: In Australia, the Performance of Construction index is released. In the US the ADP employment report is released.