US existing home sales fell by 9.6pct in February to an annual rate of 4.88 million - a near nine year low and more than double the fall analysts had expected. The supply of homes available for sale rose to 8.6 months.

European shares rallied to a one-week closing high on Monday as fears over the Japanese nuclear crisis abated. Insurance stocks were higher after the recent sell-off, with the STOXX Europe insurance index gaining 2.5pct. Telco shares received a boost after Deutsche Telekom sold its T-Mobile USA unit for US$39billion. The FTSEurofirst index rose by 0.8pct, the German Dax rallied 2.3pct and the UK FTSE gained 1.2pct.

US sharemarkets rose on Monday, spurred on by M&A activity in the Telco sector. Warren Buffet´s comments about Japanese stocks being a buying opportunity supported investor sentiment. The iShares MSCI Japan Index Fund gained 1.8pct. The VIX fell 15.1pct. The Dow Jones index rose by 178pts or 1.5pct with the S&P 500 higher by 1.5pct and the Nasdaq gained 48pts or 1.8pct.

US treasuries fell (yields higher) on Monday as investor risk appetite improved. Bonds extended losses after the US Treasury Department said it will begin selling its $142 billion portfolio of agency-guaranteed mortgage-backed securities acquired in 2008/09 at a rate of $10 billion a month. US 2yr yields rose 4pts to 0.64pct and US 10yr yields lifted 5pts to 3.33pct.

The Euro rose to its highest level against the US dollar in over four months on Monday. European Central Bank officials continued to talk up the prospects of a rate hike next month. The Euro lifted from lows near US$1.4135 to US$1.4235 and closed US trade near US$1.4220. And the Aussie dollar rose from lows near US100.10c to US100.70c, ending US trade near US$100.55c. The Japanese yen weakened as traders remained wary of further intervention by G7 nations. The Yen fell from highs near 80.85 yen per US dollar to JPY81.30, ending near JPY81.05.

US crude oil prices rallied as the unrest in the Middle East intensified following the recent airstrikes on Libya. However lingering concerns about weak oil demand from Japan tempered gains. The Nymex crude oil contract rose by US$1.22 or 1.2pct to US$102.30 a barrel. And the London Brent crude rose by US$1.03 to US$114.96 a barrel.

Base metal prices were mixed on the London Metal Exchange on Monday. Copper lost 1.3pct after recent data showed that China´s imports of an array of commodities including copper fell in February. The gold price rose for the fourth straight session on Monday driven largely by the uncertainty in the Middle East and North Africa. The Comex gold futures price rose by US$10.30 an ounce to US$1,426.40.

Ahead: In Australia, no economic data is released. In the US, the Richmond Fed manufacturing index is released.