US producer prices rose by a less than expected 0.4pct in October. The rise was largely due to higher energy prices. Core producer prices fell 0.6pct in October - the biggest drop since July 2006. Foreign purchases of US government debt remained robust in September. US net capital inflows rose from US$11.2 billion in August to US$81.7 billion in September.

US industrial production was unchanged in October. Utilities output was the biggest drag on the index, largely due to the reduced demand for heating. Manufacturing output rose by 0.5pct - the biggest gain in three months. The NAHB housing market index rose from 15 to 16 in November. A reading below 50 indicates that more builder view sales conditions as poor.

European shares posted the biggest one day drop in almost five months on Tuesday. Ireland debt issues were in focus as investors awaited the release of a government statement on the Irish economy. The FTSEurofirst index fell 2.2pct, the UK FTSE lost 2.2pct and the German Dax fell 1.7pct.

US sharemarkets slumped on Tuesday as concerns over Europe´s debt problems prompted investors to sell equities. Speculation of tighter lending requirements in China also added to the weakness with energy and resources stocks sharply weaker. At the close of trade, the Dow Jones was lower by 178pts or 1.6pct, the S&P 500 down 1.6pct and the Nasdaq lower by 44pts or 1.8pct.

US treasuries rallied (yields lower) on Tuesday as the uncertainty in the Euro zone prompted investor to seek safe haven assets. US 2yr yields fell 5pts to 0.50pct and US 10yr yields lost 13pts to 2.84pct.

The Euro fell to a seven week low against the US dollar, as heightened worries about a worsening Euro zone debt crisis resulted in traders heading for the safety of the greenback. The Euro fell from highs near US$1.3650 to US$1.34555, heading into the US close near US$1.3485. The Aussie dollar fell from highs near US98.90c to US97.30c, heading into the US close near US97.65c. And the Japanese yen is currently around 83.30 yen per US dollar after trading from JPY82.85 to JPY83.55.

US crude oil prices slumped on Tuesday, down for a third straight session. Concerns over the prospects of further rate hikes in China and US dollar strength added to the weakness. The Nymex crude oil contract fell US$2.52 to US$82.34 a barrel.

Base metal prices fell sharply on the London Metal Exchange on Tuesday. Investor flows to the safety of the US dollar exacerbate the losses. Copper managed lost 5.8pct, while other metals fell by 6.8-8.2pct. And the gold price lost ground with Comex gold futures down US$30.10 an ounce to US$1,338.40.

Ahead: In Australia, September quarter wage price data is released. In the US consumer prices, housing starts and building permits are released.

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