Scoreboard: Manufacturing blues

European markets rose slightly as speculation of M&A activity in the media sector supported sentiment following weaker-than-expected PMI data.

In European economic data, the eurozone manufacturing index fell from 51.8 to 50.7 in August -- the lowest reading in 13 months. The rate of expansion slowed in Spain, Netherlands and Germany. France remained the laggard with its PMI at 46.9 -- the sharpest rate of decline since last May. Italy's PMI dropped back into contraction after 13 months of expanding. Ireland was the exception where the PMI reading came in at the fastest pace since 1999.

European shares rose on Monday edging closer to a recent one-month peak. Speculation of merger and acquisition activity in the media sector supported sentiment. ITV led the European media index higher after reports that Liberty Group (the owners of Virgin Media) were canvassing major ITV shareholder support after acquiring a 6.4 per cent stake. Leading drug maker Novartis rose 4.3 per cent on news a new medicine from the company could replace drugs that have been central to treating heart disease for the last 25 years. The STOXX Europe 600 Healthcare index gained 1.1 per cent. The FTSEurofirst 300 index rose by 0.2 per cent. The German Dax was up by 0.1 per cent on Monday while the UK FTSE also lifted 0.1 per cent. Australia's major miners rose in London trade with shares in BHP Billiton up by 0.6 per cent while Rio Tinto gained 0.5 per cent.

US sharemarkets were closed for the Labor Day holiday.

US treasury prices were closed for the Labor Day holiday.

Major currencies were mixed against the US dollar after European and US sessions on Monday. The euro rose from lows near $US1.3120 to around $US1.3145, before ending US trade near $US1.3130. The Australian dollar eased from highs near US93.50c to lows near US93.25c before ending the US session close to US93.30c. And the Japanese yen eased from 104.05 yen per US dollar to JPY104.30, ending US trade near JPY104.25.

World oil prices fell on Monday as the weaker eurozone manufacturing figures weighed on demand at a time of ample global supply. Brent crude fell by US59c or 0.6 per cent to $US102.16 a barrel and the US Nymex price fell by US10c a barrel or 0.1 per cent to $US95.86 a barrel in electronic trade.

Base metal prices were weaker on Monday with tin (down 1 per cent) leading the declines. Metals were under pressure as subdued factory data from China raised concerns about global demand. Copper lost 0.6 per cent while aluminium and nickel lost 0.3 per cent. Gold prices fell on Monday in electronic trade with the Comex gold futures quote down by $US1.00 or 0.1 per cent to $US1,286.40 per ounce. Iron ore fell by $US1 or 0.1 per cent on Monday to $US87.10 a tonne. 

Ahead: In Australia, the current account balance, net exports, building approvals are released. The Reserve Bank Board meeting takes place. In the US, construction spending and the ISM manufacturing survey are released.

Craig James is chief economist at Commsec.

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