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Market stages tentative bounce

The Australian sharemarket staged a tentative bounce but volume was below average as geopolitical risks remained elevated and caution high.

The S&P/ASX 200 index gained 0.7 per cent mid-session but slipped to close 21.7 points, or 0.4 per cent, up at 5457 as the lacklustre earnings season and weakening domestic growth outlook did little to feed bullish sentiment.

The Australian dollar edged up US0.3� to US92.75� and government 10-year yields jumped 12.2 points to 3.401 per cent as global jitters eased following the ending of Russian military exercises on Ukraine's border on Friday.

"While we doubt geopolitical crises in the Ukraine and Iraq will have lasting impact on markets, especially with low and stable energy prices, we see some risks to global growth confidence when Chinese economic, credit and property data are released this week," Royal Bank of Scotland currency strategist Greg Gibbs said. "The key risks lie in credit growth and the property market. The former has been too strong and the latter too weak for comfort this year."

The Shanghai composite index climbed 1.3 per cent at the close of the ASX after July consumer price inflation of 2.3 per cent was unchanged and met forecasts, boosting hopes the central bank will cut rates to support growth.

In Tokyo the Nikkei index bounced 2.4 per cent ahead of Wednesday's June-quarter GDP data which is forecast to plunge 7 per cent.

"With much of the "bring-forward" in growth ahead of the April consumption tax concentrated in Q1, it appears that the retrenchment in Q2 may be so large to suggest that economic growth will struggle to remain above trend," Mr Gibbs said.

Dalian iron ore futures were up 0.4 per cent following a 0.5 per cent drop in the spot price to $US95.50 a tonne on Friday.

Copper bounced 0.5 per cent to $US7030 a tonne and gold slipped $US4 to $US1306 an ounce.

More to come…