US new home sales rose by 6.6pct to a 307,000 annual rate in September, above forecasts centred on sales near 300,000. The stock of homes for sale fell to 204,000 - the lowest since July 1968. And new orders for durable goods rose by 3.3pct in September, above expectations for a 2pct gain. But excluding transport, new orders slipped 0.8pct.

European shares fell to two-week lows on Wednesday. Investors are cautious ahead of the Federal Reserve meeting next week. And mining company shares fell in response to lower metal prices. In London trade, shares of BHP Billiton fell by 1.5pct with Rio Tinto down 2.6pct. The FTSEurofirst index fell by 0.8pct, with the UK FTSE down by 1.1pct while the German Dax lost 0.7pct.

US sharemarkets ended mixed on Wednesday, with early losses pared over the afternoon session. Fund managers booked profits ahead of the October 31 year end. And investors reacted to a Wall Street Journal report that speculated the Federal Reserve would engage in only modest bond purchases next week. After being down 149 points at one stage, the Dow Jones closed lower by 43pts or 0.4pct with the S&P 500 down 0.3pct while the Nasdaq rose by 6pts or 0.2pct.

US treasuries fell on Wednesday (yields higher) on reports that the Federal Reserve would announce only modest bond purchases next week. There was also only modest interest for a US$35 billion auction of five-year notes. US 2yr yields rose 1pt to 0.41pct, and US 10yr yields rose 8pts to 2.72pct.

The US dollar rose against the Euro and commodity currencies in European and US trade on reports that the Federal Reserve is mulling smaller bond purchases than currently assumed. The Euro eased from US$1.3845 to US$1.3735, ending US trade near US$1.3765. The Aussie dollar eased from highs near US97.50c to US96.50c, before ending US trade near US97.20c. And the Japanese yen held between 81.45 yen per US dollar to JPY82.00, ending US trade near JPY81.70.

US crude oil prices fell on Wednesday as the US dollar rose and investors trimmed positions in equity and commodity markets. But helping to limit losses was new data that showed that US gasoline stocks fell by 4.4 million barrels in the past week with crude stocks down by 5 million barrels. The Nymex crude oil contract fell by US61c to US$81.94 a barrel.

Base metal prices fell on the London Metal Exchange on Wednesday as the US dollar rose. A firmer greenback reduces the purchasing power for buyers in Europe and Asia. Metal prices fell between 1.9-4.0pct. And the gold price eased in line with other commodities with the Comex gold futures price down by US$16.00 an ounce to US$1,322.60.

Ahead: In Australia, ANZ releases its profit result. A raft of companies hold annual general meetings including Flight Centre, Newcrest and GWA International. In the US, weekly jobless claims data is released. Exxon Mobil releases earnings data.

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