What you need2know:

• SPI futures down 19 pts at 5419

• AUD at 88.07 US cents, 94.85 Japanese yen, 69.30 Euro cents and 54.59 British pence

• In late trade, S&P 500 -0.2%, Dow flat, Nasdaq flat

• In Europe, Euro Stoxx 50 +-1%, FTSE -0.4%, CAC -0.8%, DAX -1%

• Spot gold falls 0.2% to $US1228.93 an ounce

• Brent oil down 0.5% to $US85.68 per barrel

• Iron ore drops 1.2% to $US79.52 per metric tonne

What’s on today

China industrial profits; US consumer confidence, durable goods orders, Case Shiller home prices.

Stocks to watch

Telstra, ResMed.

Morgan Stanley has dropped its price target on Medusa Mining from $1.30 a share to 85¢ and has a “equal-weight” rating on the stock.

RBC Capital Markets has an “outperform” on MACA Ltd from a “sector perform” previously and a price target raised to $2.30 a share compared with $2.10 a share before.

Currencies

The euro recovered lost ground in rangebound trade, boosted by weaker-than-expected US housing data that softened the blow to the euro zone common currency from news that German business morale fell.

The German data had taken the shine off better-than-expected stress-test results for European banks issued on Sunday but widely leaked at the end of last week.

Commodities

US oil prices rebounded after tumbling to a 28-month low below $US80 per barrel.

The tumble came after Goldman Sachs cut its forecast for Brent to $US85 a barrel from $US100 for the first quarter of 2015, and reduced its projection for US crude to $US75 from $US90, making it the most bearish bank on Wall Street.

John Saucer, vice president of research and analysis at Mobius Risk Group in Houston said there were signs US crude might be starting to stabilise after falling more than 25 per cent since June. "Certainly the market can push lower but it's going to need fresh impetus because we have already discounted into this market weak global growth, lower demand, a strong dollar and OPEC and Saudi Arabia's views (on supply)," he said.

United States

US stocks edged lower in afternoon trading on Monday, pausing after the S&P 500's biggest weekly gain since January 2013, as energy shares fell with another decline in oil prices. The S&P 500 energy index was down 2.2 per cent.

Markit said its preliminary or ‘flash’ US services sector purchasing managers index slipped to 57.3 last month, the lowest reading since April, from 58.9 in September.

Separately, the Federal Reserve Bank of Dallas said its production index, which measures the state of manufacturing conditions in Texas, fell to 13.7 this month from 17.6 in September. The new orders sub-index, however, doubled and hit a six-month high.

Europe

European stocks fell on Monday, as investors booked the gains they made after the European Central Bank’s review of the region’s banks and an index of German business sentiment dropped to its lowest in almost two years.

Following an early rally, most euro zone banking stocks turned negative as traders took profits after the sector had risen 14 per cent since mid-October in the run-up to the results of the ECB review.

The French government plans to cut its budget deficit by an additional €3.6-3.7 billion next year, Finance Minister Michel Sapin said, adding that this should allow Paris to respect EU-deficit rules.

What happened yesterday

The Australian equity market began the week on a positive note as it con­tinues to retrace recent losses, with the big four banks leading the recovery ahead of the start of their reporting ­season later in the week.

The benchmark S&P/ASX 200 Index lifted 0.9 per cent on Monday to 5459 points, while the broader All ­Ordinaries Index added 0.8 per cent to 5441.9 points.