Scoreboard: Gold retreat

Gold fell to fresh four-year lows, while the Australian dollar dipped below US87c and oil prices slid.

In the US, the ISM manufacturing index rose from 56.6 to 59.0 in October, above forecasts for a result near 56.2. Construction spending fell by 0.4 per cent in September, whereas economists had tipped a 0.7 per cent gain. And the six largest automakers in the US have reported October sales that were up 6 per cent on a year ago.

European shares fell on Monday with investors disappointed by purchasing manager index readings. The Eurozone PMI rose only modestly from 50.3 to 50.6 in October. But airline stocks rose, boosted by a stronger profit forecast from Ryan Air. The FTSEurofirst 300 index fell by 0.8 per cent, the UK FTSE lost 0.9 per cent and the German Dax fell by 0.8 per cent. In London trade shares in BHP Billiton were flat with Rio Tinto down 0.1 per cent.

US sharemarkets recovered from early losses but were mixed in afternoon trade. Positive economic data encouraged investors. With an hour of trade to go, the Dow Jones was down by 25 points or 0.1 per cent with the S&P 500 index down by 0.1 per cent while the Nasdaq was up by 4 points or 0.1 per cent.

US treasury prices eased modestly on Monday (yields higher) in response to generally stronger economic data and firmer equities markets. US two-year yields were up by 2 points to 0.517 per cent while US 10-year yields were up 1 point to 2.348 per cent.

Major currencies generally eased against the US dollar in European and US trade on Monday. The euro eased from highs near $US1.2510 to lows near $US1.2470, and was near $US1.2485 in late US trade. The Aussie dollar fell from highs near US87.50c to lows near US86.80c, and was near US86.85c in late US trade. The Japanese yen weakened from ¥112.54 per US dollar to ¥114.18 and was near ¥113.78 in late US trade.

World oil prices were weaker on Monday. A stronger greenback made it more expensive for oil buyers in Europe and Asia. But state-backed Saudi Arabian firm, Saudi Aramco, announced price increases for Asian and European buyers in December. Brent crude fell by $US1.08 or 1.3 per cent to $US84.78 a barrel while the US Nymex crude price fell by $US1.76 or 2.2 per cent to $US78.78 a barrel.

Base metal prices rose by up to 1.0 per cent on the London Metal Exchange on Monday with lead the strongest. But zinc lost 0.3 per cent while nickel fell 0.2 per cent. Gold eased to fresh four-year lows on Monday with Comex gold futures down by $US1.80 an ounce or 0.2 per cent to $US1,169.80 per ounce. Iron ore fell by US70c on Monday or 0.9 per cent to $US77.80 a tonne.

Ahead: In Australia, retail trade, international trade and tourist arrivals data are released and the Reserve Bank Board meets. In the US, weekly data on chain store sales is issued with durable goods orders and international trade. Mid-term elections are held in the US.

Craig James is chief economist at CommSec. 

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