US President Obama has unveiled his fiscal 2012 budget proposal. The aim is to reduce the budget deficit by US$1.1 trillion over the next decade and cut the deficit from 10.9pct of GDP to 3.2pct of GDP by 2015.

European shares rose to 29-month highs with miners leading the way in response to strong Chinese trade data. In London trade, shares in BHP Billiton rose by 1.3pct with Rio Tinto up 1.2pct. The FTSEurofirst index rose by 0.3pct, but while the UK FTSE fell by 0.1pct, the German Dax was higher by 0.3pct.

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US sharemarkets were mixed in thin trade on Monday as investors digested the budget proposal from the President and mulled the risk that recent Egyptian unrest could spread through the Middle East. In merger and acquisition news, EchoStar has agreed to buy Hughes Communications for US$1.33 billion. At the close of trade, the Dow Jones index was down 5pts or less than 0.1pct but the S&P 500 was up 0.2pct and the Nasdaq was higher by 7.7pts or 0.3pct.

US treasuries were largely flat on Monday. Investors were largely biding their time ahead of key economic data to be released later in the week. In addition a becalmed sharemarket provided no direction while investors also mulled the President´s budget proposal. US 2yr yields were largely steady at 0.847pct but US 10yr yields eased 1pt to 3.62pct.

The US dollar rose against major currencies in European trade before giving back the majority of gains in the US session. The Euro eased from US$1.3555 to US$1.3430 before lifting to US$1.3485 in late US trade. The Aussie dollar eased from US100.75c to US100.00c, before reversing to US100.30c in late US trade. And the Japanese yen eased from 83.10 yen per US dollar to around JPY83.50, before strengthening to JPY83.30 in late US trade.

US crude oil prices fell on Monday as investors continued to respond to high inventory levels. Last week the Energy Information Administration reported that gasoline stocks had hit 21-year highs. The Nymex crude oil contract fell by US77c (0.9pct) to US$84.81 a barrel. But the London Brent crude rose on fears that unrest could spread in the Middle East, affecting oil supplies to Europe. Brent rose by US$2.14 to US$103.08 a barrel.

>Base metal prices posted solid gains on the London Metal Exchange on Monday with investors encouraged by the end to the unrest in Egypt and strong trade figures in China. Metals generally rose 2.0-2.7pct but aluminium rose just 0.7pct. And the gold price rose modestly on Monday with the Comex gold futures price up by US$4.70 an ounce to US$1,365.10.

Ahead: In Australia, the Reserve Bank releases minutes of the last Board meeting. Lending finance figures are released. Westpac releases its first quarter trading update. Brambles, Primary Healthcare, Foster´s and Axa Asia Pacific release results. Chinese economic data is released. In the US, retail sales data is scheduled.
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