MORNING REPORT(8.00am AEDT)

US consumer confidence hit eight month highs in December, lifting from 55.2 to 64.5. Economists had tipped a reading near 58.3. But home prices continued to fall with the S&P/Case-Shiller index down 0.6pct in October to stand 3.4pct lower than a year ago.

US regional economic gauges were mixed in December. The Richmond Fed manufacturing index rose from zero to +3 in the month with shipments up from +1 to +3. The Richmond Fed services index soared from +6 to +22. But the Dallas Fed manufacturing index eased from +3.2 to -3.0 in December.

European shares were mixed in thin trade on Tuesday. Investors awaited an Italian sovereign debt auction to be held on Thursday. The FTSEurofirst index rose by 0.04pct but while the German Dax rose 0.2pct, the Italian sharemarket fell by 1.0pct. The strongest gain occurred in Portugal (up 1.1pct) on hopes that Chinese investors will plough money into the country´s banking sector.

US shares were flat in thin trade on Tuesday - largely consolidating after lifting 5pct over the previous four trading sessions. Retailer Sears said it would close 120 of its Kmart and namesake stores and its share price slumped 25pct. At the close of trade, the Dow Jones was down 2 points or less than 0.1pct but the S&P 500 was up 0.1 points or less than 0.1pct, and the Nasdaq was higher by 6.6 points or 0.3pct.

US treasuries were little changed in thin trade on Tuesday. US 2yr yields were flat at 0.29pct and US 10yr yields were down 3pts to 2.00pct.

Major currencies were little moved against the greenback in thin European and US trade on Tuesday. The Euro held between US$1.3055 and US$1.3085 and was near US$1.3065 in late US trade. The Aussie dollar held betweenUS101.40c and US101.75c, and was near US101.55c in late US trade. And the Japanese yen held between 77.75 yen per US dollar and JPY77.95, and was near JPY77.85 in late US trade.

Crude oil prices rose on Tuesday on fears that Iran will halt oil traffic through the Strait of Hormuz if foreign sanctions are imposed on the country´s oil sales. Nymex crude oil rose by US$1.66 or 1.7pct to US$101.34 a barrel and London Brent crude rose by US$1.31 or 1.2pct to US$109.27 a barrel.

The London Metals Exchange was closed on Tuesday for a market holiday so there was no trading in base metals. But the gold price fell for the fourth straight session with the Comex gold price down by US$10.50 an ounce or 0.7pct to US$1,595.50.

Ahead: In Australia, no economic data is due for release. In the US weekly chain store sales data is released.