US housing starts fell by 4.3pct to a 529,000 annual rate in December, the lowest in over a year and below forecasts centred on a result near 550,000. But harsh winter weather was a factor behind the weakness. And building permits soared by 16.7pct, pointing to higher activity ahead. Meanwhile US chain store sales were up 2.5pct last week compared with a year ago.

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European shares fell from 28-month highs on Wednesday as weak US housing data and disappointing profit figures from Goldman Sachs drove profit-taking. And mining stocks fell in response to lower metal prices. In London trade shares in Rio Tinto fell 1.7pct while BHP Billiton dropped by 1.3pct. The FTSEurofirst index fell by 1.3pct, with the UK FTSE lower by 1.3pct while the German Dax lost 0.9pct.

US sharemarkets were weaker on Wednesday. Shares in Goldman Sachs fell by 4.7pct after weak trading returns weighed on earnings. But shares in IBM rose 3.3pct after posting a better-than-expected profit result. At the close of trade the Dow Jones index was down almost 13pts or 0.1pct with the S&P 500 down 1.0pct and the Nasdaq was lower by 40pts or 1.5pct.

US treasuries rose on Wednesday (yields lower) as investors drifted back from equities to bonds in response to disappointing economic and corporate profit news. US 2yr yields fell 2pts to 0.57pct and US 10yr yields fell 3pts to 3.34pct.

The Euro and Aussie dollar steadied against the greenback in European and US trade after solid gains in the Asian session. But the Japanese yen strengthened. The Euro traded between US$1.3435 and US$1.3535, and was holding near US$1.3470 in late US trade. The Aussie dollar held between US99.85c and US100.75c, and was near US100c in late US trade. And the Japanese yen lifted from 82.30 yen per US dollar to JPY81.85, and was near JPY82.00 in late US trade.

US crude oil prices fell for a second day on Wednesday. Investors weighed up softer economic data while supply fears continued to ease as the operator of Alaska´s main oil pipeline prepared to lift shipments to normal levels after the recent shutdown. The Nymex crude oil contract fell by US52c to US$90.86 a barrel. But the Brent crude contract rose by US39c to US$98.19 a barrel.

Base metal prices fell on the London Metal Exchange on Wednesday in response to weak US housing data. Metals fell between 0.9-3.6pct with aluminium faring best and lead down the most after LME stock levels hit 15-year highs. Copper lost 1.4pct after earlier hitting record highs. But the gold price rose modestly on safe-haven flows. The Comex gold futures price was higher by US$2.00 an ounce to US$1,370.20.

Ahead: In Australia, detailed labour data is released. BHP Billiton releases quarterly production figures. In China monthly economic data and economic growth figures are released. In the US, the leading index, Philadelphia Fed index and weekly jobless claims data are due.