After strong gains in the previous session, the international bulls took a breather overnight.

In Europe the FTSE 100 gave up four points to settle at 5662, whilst the French CAC and German DAX were also little changed.

Other European markets were mostly lower, with the Stoxx Europe 600 down 0.3% and Spain’s IBEX-35 index down 2.5% as investors continued to worry about the euro zone’s ability to rescue troubled sovereigns if the need arises.

In the US, the blue-chip Dow Jones slipped 50 points (-0.4%) to settle at 12727, whilst the S&P (-0.2%) and NASDASQ (-0.4%) were also weaker.

It was the seventh losing session in eight for the Dow, after retail sales unexpectedly fell in June.

Retail sales fell for the third straight month, the Commerce Department reported, bucking economists’ projections for a slight increase and marking the first three-month streak of declines since 2008.

An index on manufacturing activity in New York rose more than expected this month, though new orders in the region fell into territory indicating contraction for the first time since November 2011, according to the New York Federal Reserve Bank’s Empire State Manufacturing Survey.

US business inventories rose more than expected in May, the Commerce Department reported, as companies were left holding more goods in warehouses while shoppers trimmed spending.

The greenback dropped to the lowest in almost a month against the yen and erased gains versus the euro as retail sales unexpectedly fell, adding to bets the Fed is closer to a third round of asset purchases.

The Canadian dollar weakened against most of its major counterpart, as the nation's 10-year bond yields declined to a record low.

Oil capped the longest winning streak since April as manufacturing in the New York region expanded in July at a faster pace than anticipated.

Oil for August delivery rose $1.33 to settle at $88.43 a barrel on the NYMEX.

The four-day advance is the longest since a six-day streak ended April 27. Prices have fallen 11% this year.

Elsewhere, copper shed 0.3% whilst bullion was also weaker, giving up 0.2% to settle at US$1592 an ounce.

Today's session will bring us the latest monetary policy meeting minutes and new motor vehicle sales (11:30am, AEST).

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Morning Market Analysis: Firmly Neutral is a post from: Australian Stock Report Market Pulse Blog