U.S. STOCKS, BONDS

Industrial and consumer shares led stocks lower Monday, as U.S. retail sales disappointed and investors braced for a busy week of earnings.

The Dow Jones Industrial Average dropped 49.88 points, or 0.4%, to 12727.21, the seventh decline in eight sessions. The retreat followed a 204-point rally by blue chips Friday. The Standard & Poor's 500-stock index eased 3.14 points, or 0.2%, to 1353.64.

The Nasdaq Composite lost 11.53 points, or 0.4%, to 2896.94. Citigroup edged up 0.6% after reporting better-than-expected earnings.

Gannett rose 2.7% as the USA Today publisher's profit dropped less than forecast. Companies such as International Business Machines and General Electric are due to report in coming days. Monday, GE shares slipped 0.9% after Morgan Stanley analysts cut their rating on the shares.

IBM eased 0.7%. U.S. retail sales fell for the third straight month in June, the Commerce Department reported, bucking economists' projections for a slight increase and marking the first three-month streak of declines since 2008.

As the U.S., retail sales were below market expectations, the Empire State manufacturing index was stronger than anticipated.

Meanwhile, the International Monetary Fund trimmed its forecast for global economic growth by 0.1 percentage point to 3.5%. An index on manufacturing activity in New York rose more than expected this month, according to the New York Federal Reserve Bank's Empire State Manufacturing Survey.

A measure of new orders, one component of the index, contracted for the first time since November 2011. U.S. business inventories rose more than expected in May, the Commerce Department reported.

In the corporate arena, coal mining company Alpha Natural Resources tumbled 10%, the biggest drop in the S&P 500, after BMO Capital Markets cut its stock-investment rating on the shares. Facebook fell 8.1% for its fifth straight daily decline.

Human Genome Sciences gained 4.5% in response to news GlaxoSmithKline is nearing an agreement to buy the company for as much as $3 billion.

EUROPEAN STOCKS, BONDS

European stock markets ended Monday's highly volatile session with moderate gains, as investors grappled with mixed economic signals from the U.S. and global growth worries.

The Stoxx Europe 600 index seesawed between small gains and losses for most of the session and closed the day with a 0.2% gain at 256.73.

U.K.-listed security firm G4S PLC was the most significant faller among stocks in the pan-European index, dropping 8.7%, following a round of broker downgrades after the firm late Friday warned it would incur a loss of between 35 million pounds ($54.5 million) and GBP50 million in its Olympic Games contract.

In the other direction, Skandinaviska Enskilda Banken AB jumped 8.2% after second-quarter earnings beat market expectations.

Elsewhere, banks dragged the market lower in Spain, where the IBEX 35 index tumbled 2% to 6,532.10. Banco Popular Espanol SA gave up 2.7%, and Banco Santander SA slipped 3.3%, while BBVA SA fell 3.1%.

The Wall Street Journal reported that the European Central Bank has advocated imposing losses on holders of senior bonds issued by struggling banks, a suggestion finance ministers have rejected in fear that it would stir up financial markets.

Further related to the euro-zone banking crisis, the German Federal Constitutional Court said it would announce a decision on Sept. 12 on lawsuits challenging the country's participation in the European Stability Mechanism and the region's fiscal compact.

In France, the CAC 40 index closed marginally lower at 3,179.90, weighed by Peugeot SA, off 6.8%. Among U.K. stocks, mining firms were on the decline, as metals prices dropped following remarks over the weekend from Chinese Premier Wen Jiabao that the economic rebound in China wasn't yet stable, according to a state-media report.

Heavyweight miner Rio Tinto PLC lost 1.1%, Anglo American PLC gave up 1.1% and BHP Billiton PLC slid 0.6%. The U.K. FTSE 100 index gave up 0.1% to 5,662.43, further weighed by banks. Barclays PLC fell 2.7% and HSBC Holdings PLC dropped 0.6%. In Germany, the DAX 30 index inched 0.1% higher to 6,565.72. Metro AG gained 2.3% after UBS lifted the stock to neutral from sell.

ASIA-PACIFIC STOCK MARKETS
Asian shares ended mixed Monday as Australia was buoyed by rising commodity prices while stocks in mainland China fell to a three-year low.

Chinese Premier Wen Jiabao warned that a recovery in the country's economic growth isn't yet stable, adding to investors' worries about the health of the world's second-largest economy.

Chinese investors were spooked by comments made by Premier Wen Jiabao over the weekend that China's economic recovery is not yet stable and that there may be more hardship for some time.

The slowing economy was evident in several serious profit warnings most notably dual-listed telecoms-equipment manufacturer ZTE Corp., which fell by the 10% daily limit in Shanghai and dropped by 16.3% in Hong Kong after announcing that its net profit in the first half would fall between 60% and 80% on the year.

Other large companies to offer profit warnings included China Eastern Airlines and Sinopec Shanghai Petrochemicals.

The Shanghai Composite finished 1.7% lower at 2147.96 its lowest level since March 2009 while Hong Kong's Hang Seng Index ended the day up 0.2% at 19121.34 as the poor performance of commodity and transport stocks was offset by shares in local conglomerates and gaming companies.

In other markets, sentiment was more positive after a strong day of trading in the U.S. Friday. South Korea's Kospi finished the day 0.3% higher at 1817.79, while Japanese markets were closed for a public holiday.

In company news, Sun Hung Kai Properties slipped 1% upon resuming trading in Hong Kong after formal charges were pressed against its joint chairmen Friday as part of a high-profile bribery investigation.

The best performer in Hong Kong was gambling company Sands China, which climbed 2.4% after Macau's government gave it a three-year extension to complete a key project in the casino hub.

COMMODITIES

Base metals closed little changed on the London Metal Exchange Monday as investors weighed weak economic indicators against the hope of further stimulus by central banks.

At the close, LME three-month copper was 0.1% lower at $7,690 a metric ton. Aluminum closed up 0.4% at $1,917.5/ton. Concerns over slowing global growth damped market sentiment after China's premier warned that the country's economic recovery is not yet stable and U.S. retail sales fell unexpectedly in June.

Overriding some bearish new data on U.S. retail sales and weak overall Chinese sentiment, oil prices Monday closed 1.5% higher in anticipation of U.S Federal Reserve Chairman Ben Bernanke on Tuesday possibly indicating a greater willingness to take action to stimulate the economy.

Light, sweet crude for August delivery settled at $88.43 a barrel on the New York Mercantile Exchange, up $1.33. Brent crude on the ICE futures exchange settled at $103.55 a barrel, up $1.15. Gold futures ended flat as investors marked time ahead of two-day testimony by Federal Reserve Chairman Ben Bernanke.

The most actively traded contract, for August delivery, settled down 40 cents at $1,591.60 a troy ounce on the Comex division of the New York Mercantile Exchange. Compiled from MORRISON SECURITIES PTY. LTD.