Shares set for early surge

SHARE market likely to open half a per cent higher despite mixed leads from the US and China.

THE Australian market is likely to open half a per cent higher this morning despite mixed leads from the US and China over the weekend.

On Friday night, Wall Street closed up after a day of choppy trade and mixed economic data.

US indicators showed September manufacturing remained sluggish, while construction spending rose, offering a mixed outlook on the economic recovery.

Consumer spending, a key indicator of US economic growth, rose 0.4 per cent from July, the second straight month of increase after stagnating in June, according to seasonally adjusted data from the US Commerce Department.

The increase was better than the 0.3 per cent rise forecast by analysts.

The 30-chip Dow Jones index rose 41.6 points to 10,829.7, while the broader S&P 500 index was up 5.04 points to 1146.24 and the Nasdaq index 2.13 points to 2370.75.

The Australian dollar neared two-year highs on Friday as strong Chinese manufacturing data suggested that the Asian superpower would keep importing commodities in large volumes from resource-based economies.

Commodity prices remain strong, as gold set a record high on Friday and oil settled above $US80 a barrel.

Gold futures for December delivery gained $US8.20 to settle at $US1317.80 an ounce after it had soared to $US1322 an ounce earlierin the day.

The December share price index futures contract is pointing to a rise of half a per cent on the Australian market when it opens on Monday. ICAP analyst Adam Carr said the economic data coming from the US was "generally pretty good" news for Australian investors.

"All up, the data shows the US economy remains firmly on the recovery track and there are few signs of deterioration in growth prospects," he said.

"In particular, the July/August spending data suggest US consumers should again make a reasonable contribution to Q3 GDP."

However, IG Markets analyst Ben Potter said the market appeared wary going into the new month.

"Whilst September was one of the strongest on record, it seems there's a bit of apprehension heading into October," he said.

"Coming off the back of such strength, a lot of participants believe we could be in for a much quieter month, especially given the propensity for end-of-year tax loss selling from US mutual funds."

Investors will be watching for the release of the non-manufacturing ISM report from the US this week, while data on factory orders, pending home sales and employment are also likely to affect markets.

Locally, the Australian Bureau of Statistics is due to release international trade and retail trade data for August, just prior to the Reserve Bank of Australia's monthly board meeting and interest rate decision tomorrow, with the ABS labour force data for September due out on Thursday.