POLITICS & POLICY

MORNING REPORT (8.00am AEDT)US existing home sales rose 4pct in November. At November´s sales pace, the 2.58 million unsold homes on the market represented 7 months supply - the lowest since February 2007 - a sign the backlog of inventory was clearing.

From Morrison Securities Pty Ltd.:U.S. stocks fell as questions about loans to euro-zone banks and some earnings disappointments cut into Tuesday's optimism. The Dow Jones Industrial Average fell 30 points, or 0.3%, to 12073, the Standard & Poor's 500-stock index eased 2 points, or 0.1%, to 1239 and the Nasdaq Composite lost 39 points, or 1.5%, to 2564.

US Military's F-22 Raptor planes have generated serious safety concerns following seven major crashes resulting to two fatalities and other 14 oxygen system malfunction-related incidences were earlier reported.

Fiscal crisis stricken Germany, by far the eurozone's largest single investor in renewable energy, is all the more getting serious to wipe out its coal usage by 2020.

With most of its natural resources already nearing depletion, Malaysia has been urged to seriously consider opening itself to accommodate the production of rare earth metals.

Safe haven precious metal gold renewed its sparkle on Tuesday, closing above $US1600 a troy ounce first time this week.But the number of volume traded remained light as short-term traders remained cautious to take big risks before year end, while long-term traders have locked their books for the year, Reuters reported. This scenario should hold gold prices in a sideways range until 2012.

The U.S. has asked the World Trade Organization (WTO) to settle its dispute with China over duties imposed by Beijing on chicken feet imports from the U.S. that is adversely affecting American chicken producers.

Copper futures, along with other commodities, climbed in New York after a report released by the U.S. Commerce Department showed that construction works of U.S. homes grew more than expected in November.

Consumer confidence in New Zealand has dropped to its lowest since the peak of recession in early 2009, according to the latest Westpac McDermott Miller quarterly survey.

Barely a day after the last of U.S. troops left Baghdad, Iraqi authorities ordered on Monday the arrest of one the country's vice president on charges that he ordered terror activities to destabilise the government.

A Libyan rebel commander who fought to oust Col. Moammar Gaddafi is suing the British government for its complicity in his torture by American and Libyan military interrogators in 2004.

Threats of recession in Europe and a general slow down on major Asian economies would likely lead the Reserve Bank of Australia (RBA) to implement more cuts on the country's cash rate come the first month of 2012.

Papua New Guinea Governor-General Michael Ogio on Monday recognised Peter O'Neill as the prime minister saying he erred in reinstating Sir Michael Somare in that post earlier.

Analysts forecast two more overnight cash rate cuts by the Reserve Bank of Australia (RBA). By how much will the cut be and when will it be made depends on the impact of the European recession and its effect on global growth, particularly in China.

Bell FX Currency Outlook: The Australian Dollar has rallied solidly overnight due to improved confidence in financial markets, brought about largely from solid economic data in Europe and the US, as well as a successful Spanish debt auction.

From Morrison Securities Pty. Ltd. U.S. stocks rallied as domestic home building jumped to the highest level in nearly two years and another successful Spanish debt auction buoyed investor sentiment.

Local stocks closed modestly lower today, which was a fairly encouraging outcome given falls in offshore markets and a warning from the European Central Bank that 2012 would be another tough one for the global financial sector. Once again, volumes were low as investors decide to stay out of the market in the lead up to the end of the calendar year. The All Ordinaries Index (XAO) fell 7pts by close to 4107.

North Korean dictator Kim Jong-Il died on Monday, leaving the future of his totalitarian state in doubt.

The continuing human smuggling cases require efforts coming from Australia and its regional neighbors to finally put an end to such unfortunate occurrences that already killed many would-be immigrants.

Some 15 new oil and gas fields in Indonesia are expected to go online in 2012, with total expected production at 1.15 million standard cubic feet per day (mmscfd) and 32,200 barrels of oil per day (bpd), the country's energy regulator said on Sunday.

Effective Jan. 1, China will start implementing a modified Vehicle and Vessel Tax Law that imposes a corresponding higher tax levy for vehicles with an engine size of 2 liters and above.

At least two people died after an overloaded boat believed to be making its way to Australia with hundreds of asylum seekers from the Middle East has sunk in heavy seas off the main island of Java over the weekend, ABC reported.

U.S. stocks fell Monday after European Central Bank President Mario Draghi made cautious comments on the state of Europe's economy and as bank stocks sagged in expectation of tighter capital standards.

Bell FX Currency Outlook: The death of North Korea's leader, Kim Jong-II has brought further uncertainty to an already fragile market. As a result, the AUD and equity markets were lower across the board.

Local stocks were hammered today, as investor sentiment was dampened by more concerns about the Eurozone and as the death of North Korean dictator Kim Jong Il added to global uncertainty. The All Ordinaries Index (XAO) fell 105pts or 2.5pct to 4113.9.

In a bid to lessen the impacts of coal ash into its surrounding environment, China's biggest coal producer had started building a facility that will make coal ash converted into alumina.

Britain's banking system is set to undergo major overhauls that London aims to implement by 2019, reports said.

As steel mills in China, the world's top buyer of iron ore, continue to suspend buying sprees due to a weak domestic demand, this has impacted spot prices of the raw material to plummet on Monday.On the Shanghai Futures Exchange, the most traded May steel rebar contract dropped to $650 per tonne on Monday, down 0.76 per cent from the previous close. On Friday, iron ore index with 62 per cent Fe grade .IO62-CNI=SI slid 1.27 per cent to $132.1 per tonne, its lowest since Nov. 30.

Are we there yet?Prices of gold, long considered by most as a safe haven investment possession against economic uncertainty and rising inflation, will decline further below $1,500 per ounce over the next three months, according to a poll made by Reuters of 20 hedge fund managers, economists and traders.