After a mostly weak session in European markets, US markets responded positively to solid growth in US retail sales.
The Dow had been down earlier in the day. Europe witnessed some weak industrial production numbers (see below) and was unsettled by events in Italy (see below).
The FTSE100 fell 0.4%, the CAC40 was down 0.1% but the DAX posted a 0.1% gain. In the US, the Dow closed flat.
Markets were subdued overnight. German long bonds were unchanged while US ten year bond yields edged a basis point higher to 2.02%.
Demand was modest at the latest Italian bond auction with two year yields rising to 2.48% from 2.30% at the previous auction.
Investors fear that political deadlock in Italy will undermine attempts to place the nation's finances on a firmer footing.
The AUD lost some ground against the USD overnight as US optimism continues to grow. It was also marginally weaker against the UK pound and the yen but gained against the NZ dollar in early NZ trade as the RBNZ cash rate remained low and on hold. The AUD also edged higher against the euro following their weak industrial production results.
Commodity prices weakened on the weak European data but seemed unmoved by the better news out of the United States.
Copper and gold fell but the price of West Texas crude oil remained steady.
Yesterday's housing finance figures were disappointing.
The number of owner occupier home loans fell 1.5% in January and was the fourth consecutive monthly decline in housing finance.
For the year to January, housing finance is down 4.0%.
Better news came from the Westpac-MI index of consumer sentiment which rose 2.0% in March, following on from a 7.7% gain in February.
This took the index to 110.5, well above the 100 level, signalling more consumers are optimistic than pessimistic.
Europe: Industrial production in fell 0.4% in the Eurozone in January. The result, two-thirds of which is generated by Germany, France and Italy, was down 1.3% on an annual basis in January.
The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5%. Reserve Bank Governor Graeme Wheeler said: "The downside risks around global growth have receded in recent months, and financial market sentiment has improved.
"We project the economy to grow at an annual rate of between 2% and 3% over the forecast period. Inflation is expected to rise gradually towards the 2% midpoint of the target range.
"At this point we expect to keep the OCR unchanged through the end of the year."
Retail sales rose 1.1% in February, more than doubling market expectations.
The lift in sales comes at a time when job creation is firming in the US and the rising equity and housing markets are adding to consumer wealth.
While a comprehensive plan to address US budget woes has yet to be reached, the monthly Federal Budget deficit in February 2013 was $203.5 billion, $28 billion lower than the same figure in February 2012.
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