FROM MORRISON SECURITIES PTY. LTD:
U.S. STOCK MARKETS
Stocks staged a rebound rally as investors cheered the potential for more stimulus from the Federal Reserve and as Europe's central bankers repeated their call for unified efforts to combat the region's financial issues.
Leaders of the world's 12-member crude oil cartel gather this week in Vienna to discuss and perhaps set a production ceiling for the group in what is expected to "rubber stamp" the current state of affairs. It is also expected to feature a fierce tug-of-war between Saudi Arabia, the cartel's dominant producer, and Iran.
The Dow Jones Industrial Average surged 162.57 points, or 1.3%, to 12573.80 on Tuesday, erasing Monday's 143-point slide. The Standard & Poor's 500-stock index jumped 15.25 points, or 1.2%, to 1324.18.
Materials led the way as all 10 of the S&P 500's sectors rushed higher. Boeing shot up 3.2% to lead among the Dow stocks after analysts at Bernstein raised its stock recommendation to outperform, citing a better outlook for the firm's 787 Dreamliner.
Financial stocks saw a late surge as an executive from Bank of America said that capital-market conditions in the second half of this year are shaping up to be better than last year.
Both Bank of America and JPMorgan rose 2.9%. The Nasdaq Composite added 33.34 points, or 1.2%, to 2843.07. After languishing early in the session, benchmarks climbed higher after the European Central Bank again said the euro zone needs to create a banking union.
Markets continue to take their cues from Europe, and investors said they expect volatile trading ahead of a key election in Greece this weekend. The vote could determine the country's future in 17-nation, euro-currency bloc.
Comments from Chicago Federal Reserve Bank President Charles Evans helped prop up Tuesday's rally. Mr. Evans repeated his support for additional monetary stimulus from the central bank in an interview with Bloomberg Television.
In U.S. economic news, the National Federation of Independent Business's index of optimism among small businesses slipped slightly in May from the previous month.
Elsewhere, the Labor Department reported import prices for May posted their biggest monthly drop in nearly two years.
In corporate news, Apple rose 0.9% after unveiling a series of software features for its mobile phones and computers Monday.
Facebook rose 1.5% as the company defended itself against claims the advertising on the social network doesn't work. Zynga shares slumped 10% to a fresh all-time low amid an analyst report by Cowen that its number of daily users declined for two months in a row.
EUROPEAN STOCK MARKETS
European stock markets flitted between small losses and gains in a session marked by low volumes, while Spain's 10-year government bond yield surged to a euro-era high, reflecting concerns the proposed EUR100 billion ($125 billion) bailout for Spain's banks will do little to end the sovereign-debt crisis.
The benchmark Stoxx 600 index ticked up 0.6% to close at 243.44. Meanwhile, the Italian FTSE MIB index closed down 0.7% at 12979.69, and Greece's ASE index fell 1.4% at 489.35.
Stock markets plunged briefly into negative territory in afternoon action as the yield on the 10-year Spanish government bond leapt toward the critical 7% level widely considered unsustainable.
Spain's 10-year bond yield hit 6.80% while Italy's 10-year bond yield surged as high as 6.26%, its highest level this year, according to Tradeweb.
Italy came under scrutiny as investors have grown concerned it, too, may need help from its European partners. A key test for Italy lies ahead, with an auction of up to EUR4.5 billion of three- and seven-year bonds scheduled for Thursday.
Italian banks were the biggest underperformers in the euro zone: Intesa Sanpaolo slumped 3.7% while UniCredit fell 3.9%. In Spain, Banco Santander fell 0.4% and Banco Bilbao Vizcaya Argentaria was down 0.2%.
Fitch Ratings downgraded Banco Bilbao Vizcaya Argentaria and Banco Santander by two notches to triple-B plus late Monday.
Fitch said the move was linked to its earlier downgrade of Spain's credit rating. Fitch cut another 18 Spanish banks' long-term credit ratings Tuesday.
However, the selloff in Spanish banks eased after the International Swaps and Derivatives Association announced the Spanish bank bailout proposal isn't likely to trigger a credit event due to subordination.
Adding to the gloom was news Cyprus could become the fifth euro-zone country to seek help from the region's bailout funds. Among individual stocks, shares in Dutch navigation maker TomTom increased 16.2% after it said it will provide maps for Apple's newly announced mapping service.
Defensives, such as food and beverage stocks, provided support. Nestle rose 1.3%. Drug manufacturers also lent support, with Roche up 1.6% and Novartis rising 1.1%. Meanwhile, E.ON was the biggest gainer out of the euro zone's blue-chip stocks, closing up 2% after being upgraded to buy from neutral by UBS.
ASIA-PACIFIC STOCK MARKETS
Most Asian stocks retreated Tuesday, giving back some of the steep gains made the previous day, as initial enthusiasm over Spain's bank bailout gave way to doubts over the details and as investors looked ahead to Greek's weekend elections.
Worries about Europe sent the euro below the 99-yen mark for much of the morning after spending most of the previous Japanese stock session above Y100.
While the European currency rebounded a little by the afternoon, the move still hurt exporters with large European Union exposure. Sony Corp. lost 2.1%, Mazda Motor Co. dropped 2.9%, and Pioneer Corp. fell 2.7%.
Electronics firm LG Electronics Inc. declined 2.8% in Seoul, while Samsung Electronics Co. lost 1%.
Energy firms were among the worst performers in the region, reflecting falls in crude futures.
Inpex Corp. lost 0.7% in Tokyo, Cnooc Ltd. dropped 0.8% in Hong Kong, while PetroChina Co. fell 0.8% in Hong Kong and 0.4% in Shanghai.
Shares of China Southern Airlines Co. surged 6.7% in Hong Kong after announcing plans to raise up to 2 billion yuan ($315 million) through a private share placement to its corporate parent.
Base metals closed mostly lower on the London Metal Exchange Tuesday, as dovish comments by the Chicago Federal Reserve Bank president failed to distract from persistent concerns over the situation in the euro zone.
At the close, LME three-month copper was 0.3% lower at $7,395 a metric ton. Aluminum closed at $1,967.50/ton, down 0.2% on the day. U.S. crude-oil futures settled higher Tuesday despite signs of high supplies in the global oil market, boosted instead by rising stock markets, gains in the euro against the dollar and a reversal in the bond market.
Light, sweet crude-oil for July delivery settled 62 cents higher at $83.32 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange for July delivery traded 86 cents lower at $97.14 a barrel.
Optimism was tempered by reports ahead of Thursday's meeting of the Organization of Petroleum Exporting Countries that Saudi Arabia would push to keep current output unchanged despite a market with plenty of supplies.
The Saudi stance helped keep Europe's Brent crude in the red Tuesday. Gold held above $1,600 an ounce as a weaker dollar and talk of further monetary easing drew investors seeking safety into the gold market.
The most actively traded contract, for August delivery, gained 1.1%, or $17, to settle at $1,613.80 per troy ounce on the Comex division of the New York Mercantile Exchange.
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