FROM MORRISON SECURITIES PTY. LTD:

U.S. STOCK MARKETS

A surprise decline in U.S. factory orders weighed on shares of manufacturers and sent the Dow lower for the fourth session in a row, while a late rally pushed other stock benchmarks higher.

Stocks tilted lower shortly after the open following a report that orders for manufactured goods fell in April, versus forecasts for orders to hold steady. Stocks then spent most of Monday's session in the red before reversing course late in the session.

The Dow Jones Industrial Average fell 17.11 points, or 0.1%, to 12101.46. Meanwhile, the Standard & Poor's 500-stock index inched up 0.14 point, or less than 0.1%, to 1278.18, and the Nasdaq Composite rose 12.53 points, or 0.5%, to 2760.01.

The broader market suffered its steepest losses of the year Friday, following a monthly jobs reports that badly missed expectations. The S&P narrowly averted closing in "correction" territory, meaning the benchmark has almost fallen 10% from its April closing high.

The Nasdaq reached this milestone last week, while the Dow has fallen 8.9% from its May 1 close. Industrial and financial stocks fell the most among the S&P 500's 10 sectors.

J.P. Morgan Chase slumped 2.9%, while Caterpillar, a stock closely tied to growth prospects, fell 2.6%. Telecommunications stocks were a source of strength, leading among S&P 500 sectors.

Chesapeake Energy rose 6% and was the biggest gainer on the S&P 500 after the company agreed to replace four members of its nine-member board with candidates proposed by the embattled oil-and-gas company's two largest shareholders, Southeastern Management Co. and activist investor Carl Icahn.

Shares of Facebook fell 3% after analysts at Bernstein assigned the stock an underperform rating and handed out Wall Street's lowest price target for the company: $25.

Weak U.S. manufacturing data came as investors studied a number of headlines from Europe, where a possible euro-zone exit for Greece and Spanish bank instability have roiled global markets in recent weeks.

Brightening the mood were reports that Germany is more willing to discuss deepening the fiscal integration among euro-zone members to resolve Europe's debt crisis.

In addition, Portugal said it would inject EUR6.65 billion ($8.27 billion) into three of its largest lenders. In other corporate news, airline stocks were hit with a wave of selling following a report from Delta Air Lines that said a closely watched revenue metric missed expectations in May.

Delta, United Continental Holdings and US Airways Group all declined more than 7%. Auxilium Pharmaceuticals jumped 16% after the company announced positive test results from a trial of its treatment for Peyronie's disease.

EUROPEAN STOCK MARKETS

European stocks ended mostly lower, dragged down by German shares on worries over slowing growth in China and the U.S., while bank stocks rebounded.

The Stoxx Europe 600 index fell for the fourth straight session, ending 0.5% lower at 233.87, after having tumbled 3.1% last week. The French CAC 40 index eked out a gain of 0.1% to 2954.49. London markets were closed for the Queen's Diamond Jubilee holiday and will return to action on Wednesday.

A survey released Sunday showed that China's services sector expanded at its slowest pace in more than a year, weighing on sentiment for German stocks.

The China survey compounded the effect of indicators showing much weaker-than-expected U.S. payrolls on Friday. The German DAX 30 index fell 1.2% to 5978.23, with heavyweight chemical major BASF SE dropping 1.1%.

Away from the major index, chemical group Lanxess AG shed 2.3%. China is a major market for companies like BASF, which develop a lot of products in the country for Chinese customers, according to Heino Ruland, strategist at Ruland Research in Eppstein, Germany.

Auto shares also fell, with Volkswagen AG down 3.2% and Daimler AG down 1.9%. Bank stocks rebounded on hopes that European officials will find a way to backstop the euro zone's troubled financial sector. Shares of Spain's Banco Santander SA rose 4.9%, while BBVA SA jumped 3.1%.

Olli Rehn, the European Commission chief for economic and monetary affairs, reportedly said Monday that officials have considered the idea of directly recapitalizing euro-zone banks through the region's bailout fund, but this would require a treaty change. He added discussions are moving forward on creating a banking union.

The news helped push down bond yields for Spain. The 10-year Spanish government bond yield fell 0.12 percentage point to 6.41%, according to Tradeweb.

Data also showed a slight easing in the number of jobless claims in the country, which has the euro zone's highest unemployment rate at 25%, between May and June. The FTSE MIB Italy index rose 1.2% to 12891.96.

Shares of Intesa Sanpaolo SpA surged 6% and Banco Popolare SC rose 5.2%. The yield on the 10-year Italian government bond dropped 0.19 percentage point to 5.67%. Portugal's PSI 20 index rose 0.4% to 4471.98.

The government said Monday it will inject up to EUR6.65 billion into three banks: Caixa Geral de Depositos, Banco Comercial Portugues SA and Banco BPI SA. BPI surged nearly 6%, while Banco Comercial fell 1%.

Also, the country's troika of international lenders, the European Commission, European Central Bank and International Monetary Fund, on Monday said the country's bailout program remains on track and that Portugal's 2012 deficit target was still in reach. In France, BNP Paribas SA rose 3.4%, Societe Generale SA rose 3.5% and Credit Agricole SA added 1.8%.

U.K. markets were closed Monday for a public holiday and remain closed Tuesday.

ASIA-PACIFIC STOCK MARKETS

Hong Kong joined indexes from Australia to Japan in wiping out their gains for the year Monday, as fallout from Europe's debt crisis and fresh signs of a slowdown in the U.S. and China drove markets lower.

Leading the declines was Taiwan's Taiex, down 3%, while the China Shanghai Composite Index fell 2.7%. Japan's Topix index, a broader measure of Japanese equities than the Nikkei 225, slumped 1.9% to its lowest level since 1983. Japan's Nikkei ended the day 1.7% lower and the Hang Seng Index fell 2%.

The Nikkei has now dropped 19% from its March peak, while the Hang Seng Index is down 16% from its February high. The combination of weaker exports and lower risk tolerance by investors in Asia is expected to further slow economies over the coming months.

On the positive side, inflationary pressures have mostly abated, opening the door for more significant stimulus. Among the day's biggest losers in China were resources stocks because of slumping commodity prices and weakening demand.

Yanzhou Coal fell 3.9%, China Oilfield Services shed 5.4%, Sinopec Shandong declined 4.0% and Jiangxi Copper lost 3.6%.

The selloff in Hong Kong was broad-based, with 47 of 49 blue chips ending in negative territory. Hong Kong Exchange slumped 4.8%, weighed by news it and IntercontinentalExchange, the other remaining bidder for the London Metal Exchange, have been asked to resubmit their proposals, raising concerns that HKEx may raise its bid further.

Macau casino operator Sands China tumbled 4.8% on its first day of trading as a blue chip. China Insurer Ping An lost 5.5%, mobile telecom operator China Unicom shed 5.6%, and Hong Kong property developer Sino Land closed 4.6% lower.

In Japan, heavily weighted exporters dragged the market lower, with Canon falling 5.1%, Nikon down 4.9%, Honda Motor off 3.7%, and Toyota Motor down 3.5%.

COMMODITIES

Crude futures broke a four-session losing streak Monday, posting gains on signs that European leaders may be readying further steps to support the currency union.

Light, sweet crude for July delivery settled 75 cents higher at $83.98 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange for July delivery settled 42 cents higher at $98.85 a barrel.

Oil rose as investors took profits from bets on slumping crude prices. Brokers said that after steep declines stemming from Europe's debt crisis, investors are awaiting more signals on whether the euro zone will take further action before adding to positions.

Over the weekend, the Wall Street Journal reported that Germany is signaling it may be willing to support further euro-zone integration.

Gold futures pulled back after Friday's surge, as investors were reluctant to bet on further gains in holiday-thinned trading and ahead of potentially market-moving announcements this week from central banks. The most actively traded gold contract, for August delivery, fell $8.20, or 0.5%, to settle at $1,613.90 a troy ounce.