US factory orders rose by 0.7pct in November, beating forecasts centred on a decline of 0.1pct. Orders for durable goods were revised up to show a decline of 0.3pct rather than a fall of 1.3pct. US chain store sales in the latest week were up 3.5pct on a year ago according to the Johnson Redbook Retail Sales index. Sales rose by 0.4pct in December compared with November.

Minutes from the December 14 Federal Reserve meeting showed that members still expect only a gradual lift in economic growth and modest job gains despite recent positive economic data.

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European shares rose again on Tuesday with oil stocks leading the way. Shares in BP rose by 5.9pct after the Daily Mail reported that Royal Dutch Shell considered a takeover bid as well as news that economic damages to BP from the oil spill will be lower than previously forecast. The FTSEurofirst index rose by 0.9pct, with the UK FTSE up 1.9pct. But the German Dax lost 0.2pct. In London trade shares in Rio Tinto rose by 0.4pct with shares in BHP Billiton up by 0.1pct.

US sharemarkets were mixed on Tuesday. Materials and energy stocks fell in response to lower commodity prices but defensive sectors rose. At the close of trade the Dow Jones was up by 20pts or 0.2pct but the S&P 500 was down 0.1pct and the Nasdaq was lower by 10pts or 0.4pct.

US treasuries were little changed on Tuesday. Investors weighed up a bevy of corporate bond deals, positive economic data and mixed results for US share indexes. US 2yr yields rose by 2pts to 0.617pct and US 10yr yields eased 1pt to 3.327pct.

The US dollar rose against major currencies except the Japanese yen as prospects for the US economy continued to improve. The Euro eased from highs of US$1.3430 set in early US trade to US$1.3295, and was trading near US$1.3300 in late US trade. The Aussie dollar began its retreat against the greenback in Asian trade yesterday and it continued to fall in European and US trade. The Aussie fell to as low as US100.25c, but was trading near US100.50c in late US trade. The Japanese yen lifted from 82.25 yen per US dollar to around JPY81.70 but eased to JPY82.00 in late US trade.

US crude oil prices fell on Tuesday as investors lightened positions across commodity markets. The Nymex crude oil contract fell by US$2.17 or 2.4pct to US$89.38 a barrel.

Base metal prices were generally higher on Tuesday as the London Metal Exchange re-opened for 2011, the exception being copper, down 0.3pct. Other metals rose between 0.5-2.5pct with lead doing best. But the gold price slumped in line with other commodities with Comex gold futures down by US$44.10 an ounce to US$1,378.80. Silver slumped 5.2pct with palladium down 3.9pct and platinum down 2.2pct. The CRB futures index fell by 1.6pct.

Ahead: In Australia data on new home sales is released. In the US the ADP employment survey and ISM services report are scheduled.

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