The People´s Bank of China has lifted interest rates for the fourth time in six months, raising lending and deposit rates by 25 basis points or a quarter of a percent. The one-year lending rate increases to 6.31pct with the one-year deposit rate up to 3.25pct.

Minutes of the last Federal Reserve meeting indicate that the second round of quantitative easing (QE2) will most likely be completed in full by the end of June. Although a few members suggested a reduction in the size of bond purchases, ´´several´´ members opted for it to be completed in full.

The US ISM services index eased from 59.7 to 57.3 in March and below market forecasts centred on a result near 59.5.

European shares rose to their highest levels in almost four weeks on Tuesday. The FTSEurofirst index rose by 0.2pct, but while the UK FTSE fell by 0.2pct, the German Dax was largely flat. In London trade shares in BHP Billiton fell by 0.2pct while Rio Tinto lost 1.5pct.

US sharemarkets ended trade on Tuesday largely flat. Investors mulled a softer reading on the services sector, minutes of the last Federal Reserve meeting and a possible shutdown of government offices due to a Budget dispute in Congress. Texas Instruments has offered to buy National Semi-Conductor for US$6.5 billion. The Dow Jones index fell by 6pts or 0.1pct with the S&P 500 down 0.2 points or less than 0.1pct while the Nasdaq was up just 2pts or 0.1pct.

US treasuries fell on Tuesday (yields higher) on concerns that the Fed could tighten policy earlier than expected. US 2yr yields rose by 5pts to 0.822pct and US 10yr yields rose 6pts to 3.485pct.

Major currencies ended little changed against the US dollar on Tuesday in European and US trade. The Euro held between US$1.4150 and US$1.4245, ending US trade around US$1.4220. The Aussie dollar traded from US102.85c to almost US103.65c, ending US trade near US103.30c. And the Japanese yen eased from 84.15 yen per US dollar to JPY84.90, ending US trade near JPY84.85.

Benchmark crude oil prices were mixed in thin trade on Tuesday. The Nymex crude oil contract fell by US13c or 0.1pct to US$108.34 a barrel. But London Brent crude hit fresh 30-month highs, up US$1.16 to US$122.22 a barrel. Investors are worried that continued unrest in North Africa and the Middle East could disrupt oil supplies to Europe.

Base metal prices were up modestly between 0.1-0.8pct on the London Metal Exchange on Tuesday, the exception being nickel, down 0.4pct. But the gold price lifted to fresh record highs as higher rural prices stoked inflation fears. The Comex gold futures price was up US$19.50 an ounce or 1.4pct to US$1,452.50 after hitting US$1,456.90 at one point.

Ahead: In Australia, housing finance data is released. In the US, no major economic data is scheduled.

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