FROM MORRISON SECURITIES PTY. LTD:

Speculation that U.S. central bankers are set to unveil additional stimulus measures lifted the Standard & Poor's 500-stock index for the fourth session in a row, as tensions eased across Europe's financial markets.

The Standard & Poor's 500 rose 13.20 points, or 1%, to 1357.98 Tuesday, giving the benchmark its longest winning streak since May.

The Dow Jones Industrial Average tacked on 95.51 points, or 0.8%, to 12837.33, closing just short of its fourth triple-digit gain in six sessions. Materials stocks led Tuesday's rally.

Financials followed closely behind after federal housing regulators said they were revising guidelines that could reduce lenders' risks of having to buy back soured mortgages.

Bank of America jumped 4.5% to lead the Dow's advance. Microsoft, also a Dow component, jumped 2.9% after the software company unveiled its Surface tablet computer, which will compete with Apple's iPad.

The Nasdaq Composite rose 34.43 points, or 1.2%, to 2929.76. The technology-heavy Nasdaq rose for the fourth session in a row, its longest streak of gains since February.

The Federal Reserve's policy-setting committee convened a two-day meeting Tuesday, with a series of statements and forecasts scheduled to begin around midday Wednesday.

Investors will be watching closely for hints that the central bank is prepared to intervene again in the U.S. economy, perhaps through additional purchases of government securities, or a variation of an existing program set up to extend maturities of the central bank's bond holdings.

In U.S. economic news, home building slowed in May but new permits reached their highest level since 2008, suggesting future demand for new houses.

In deal news, Walgreen slid 5.9% after the drugstore chain said it was buying a 45% stake in pharmacy-led health and beauty group Alliance Boots for $6.7 billion in cash and stock. In other corporate news, Oracle gained 3.1% after the company reported its fourth-quarter profit increased 7.5% in a surprise announcement three days ahead of schedule.

EUROPEAN STOCK MARKETS

A Spanish debt auction that yielded results deemed slightly better than expected drove a stocks rally in Madrid and delivered relief more broadly for European markets Tuesday.

European stocks rose Tuesday and Spanish government bond yields eased off highs despite a distinct lack of good news, with investors betting on further monetary stimulus by central banks as they await the formation of a coalition in Greece.

The Stoxx Europe 600 index closed up 1.6% at 248.27. The U.K.'s FTSE 100 finished 1.7% higher at 5586.31, Germany's DAX ended up 1.8% at 6363.36 and France's CAC-40 rose 1.7% to 3117.92.

Elsewhere, Spain's IBEX-35 closed up 2.7% at 6693.90, Italy's FTSE Mib added 3.4% to 13,445.46 and Greece's ASE gained 3.3% at 600.07. It was a decidedly calmer picture in Spanish bond markets.

The yield on the 10-year government bond fell just below the critical 7% level to 6.99%, according to Tradeweb, well off the euro-era high reached Monday.

Spain's auction of 12- and 18-month Treasury bills saw good demand, just above the top targeted amount of EUR3 billion. Thursday, Spain will attempt to sell between EUR1 billion and EUR2 billion of bonds with maturities in 2014, 2015 and 2017.

Spanish bank shares recovered from pressure that followed the central bank's confirmation that a banking audit would be delayed until September.

Banco Bilbao Vizcaya Argentaria gained 2.6% and Banco Santander added 2.8%.

More broadly, expectations of more economic stimulus in Europe and the U.S. drove sentiment Tuesday, boosted by a weak reading from the German ZEW survey.

The economic-expectations index fell to minus-16.9 in June from 10.8 in May, against expectations for a reading of 2.8. The current-conditions index also fell short of expectations.

U.K. inflation data added weight to the argument for more easing. The consumer-price index rose 2.8% on the year in May, compared with expectations for it to remain at 3%.

At the same time, the U.S. Federal Reserve's Open Market Committee began a two-day rate-setting meeting. Goldman Sachs said it expects the FOMC to ease monetary policy in response to weaker economic reports and increased downside risks from the intensifying crisis in Europe.

In corporate news, Home Retail Group surged 24% after the U.K. general-merchandise retailer affirmed its outlook for full-year profit.

Drug makers were also trading higher. Roche Holding rose 3.2%, while Sanofi added 2.5% and Novartis gained 1.4%. Bucking the trend, France's Danone lowered its 2012 targets as demand in Europe, particularly in Spain, dropped faster than expected in the second quarter. Its shares dropped 6%, while Unilever fell 0.6%.

ASIA-PACIFIC STOCK MARKETS

Asian markets were mostly lower Tuesday as Spain's financial problems cast a fresh shadow over Europe's economic outlook, with Japanese and Chinese stocks leading losses.

The performance came against the backdrop of unrelenting worries over the euro zone, after Spanish bond yields Monday hit a euro-era high, and data showed bad loans also spiked, fuelling fears the country may require a sovereign bailout.

There was also caution as investors wait and see what policy makers decide after a series of key meetings--such as the summit of G-20 leaders in Mexico and a meeting of the Federal Open Market Committee this week.

Japan's Nikkei Average was 0.8% lower at 8655.87, South Korea's Kospi ended flat at 1891.77, Hong Kong's Hang Seng Index ended little changed at 19416.67, while the China Shanghai Composite dropped 0.7% to 2300.80.

In company news, Tsingtao Brewery dropped 7.8% in Hong Kong following news of a share placement by a major shareholder.

Also in Hong Kong, L'Occitane International climbed 2.9% after announcing a 22% rise in net profit for the year ended in March. Mengniu Dairy gained 3.8% after a 6.8% climb Monday prompted by news that Denmark's Arla Foods has become a strategic investor.

In Japan, shares in Sharp climbed 3.2%, consolidating a 5.6% rise during Monday's session on the firm's announcement that the company is looking into a phone partnership with Taiwanese manufacturer Hon Hai Precision.

COMMODITIES

Base metals closed mostly higher on the London Metal Exchange Tuesday, gaining alongside equities and the euro as investors looked to the Federal Reserve's rate-setting meeting for signs of further economic stimulus.

At the close, LME three-month copper was 1.3% higher at $7,608 a metric ton. Aluminum lagged the complex, closing 0.1% lower on the day at $1,925.50/ton.

Oil futures settled slightly higher Tuesday due to the influence of outside markets and expectations the U.S. Federal Reserve will announce some sort of stimulus after its rate-setting meeting concludes Wednesday. Light, sweet crude for July delivery settled up 76 cents, at $84.03 a barrel.

Brent crude on the ICE futures exchange for August delivery traded at 95.81, up 0.5%, or five cents. Gold futures edged lower in tight trading as traders awaited news from the Federal Reserve and European leaders.

The most-actively traded contract, for August delivery, fell 0.2%, or $3.80, to settle at $1,623.20 a troy ounce on the Comex division of the New York Mercantile Exchange.