US Markets

U.S. stocks surged Tuesday as another dose of bleak economic data raised hopes that the Federal Reserve will take additional measures to stimulate the economy. The Dow Jones Industrial Average rose 322.11 points, or 2.97%, to 11,176.76. The steep gains were disturbed momentarily by a magnitude 5.8 earthquake centered in Virginia. Tremors were felt on the East Coast, through Washington, D.C., and up to New York City. But the earthquake failed to rattle investors, as stocks climbed in the final trading hour.

The Standard & Poor's 500-stock index rose 38.53 points, or 3.43%, to 1162.35, as energy, technology and consumer discretionary stocks registered the strongest gains. All 10 of the S&P 500's sectors finished in positive territory. The technology-oriented Nasdaq Composite rallied 100.68 points, or 4.29%, to 2446.06.

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Another round of dismal economic reports prompted hopes that Federal Reserve Chairman Ben Bernanke will employ more accommodative measures to boost the economy. The Richmond Fed's regional manufacturing survey showed sharply declining economic activity this month. New home sales also dropped for a third straight month and fell to the lowest level since February.

The downbeat reports have put more of an emphasis on Bernanke's scheduled speech in Jackson Hole, Wyo., Friday. Investors hope Bernanke will be more open to new easing measures, but at the same time are unclear as to what the central bank may have in store.

Many analysts say the Fed doesn't have as much political support to announce a third full-fledged bond-buying program, commonly known as quantitative easing, or QE3.

European Markets

European stocks ended a choppy session in the black Tuesday, as investors grappled with a mixed bag of economic data. Expectations of another round of quantitative easing in the U.S. also influenced markets. The Stoxx Europe 600 index gained 0.8% to 226.63, the U.K.'s FTSE 100 index added 0.7% to 5129.42, France's CAC-40 index rose 1.1% to 3084.37 and Germany's DAX advanced 1.1% to 5532.38.

A couple of bleak U.S. reports added weight to hopes of a third round of quantitative easing in the world's largest economy, which Federal Reserve Chairman Ben Bernanke is expected to allude to at Friday's meeting of central bankers in Wyoming. It wasn't all good news on the European front, either. The German ZEW index fell to -37.6 in August, following July's unrevised -15.1 and against expectations of a fall to -26. However, strong manufacturing data from China overnight ensured Europe got off to a strong start and lifted the basic resources and auto sectors.

Less gloomy than expected euro-zone PMI figures and a decent Spanish auction added to the upbeat tone, although initial strong gains wavered as the day progressed, with traders pointing to high levels of volatility in holiday-thinned volumes.

A bullish note by Barclays Capital also helped to underpin sentiment. In major stock action, Deutsche Telekom rallied 4.8% after Barclays Capital upgraded the European telecommunications sector to overweight from underweight. Car maker BMW rose 2.6% and industrial gases and engineering group Linde rose 2%.

Drug maker Bayer rose 1.8% after the U.S. Food and Drug Administration granted fast-track status to its experimental prostate-cancer therapy. The company's Norwegian partner, Algeta, soared 11% on the news. Airline stocks were lower after Deutsche Bank downgraded several firms as the broker adjusted its sector forecasts to account for a slower economic recovery. Air Berlin fell 10% and Deutsche Lufthansa dropped 1.9%.

In the U.K., security firm G4S rose 8.5% after it said growth is accelerating in most of its markets and that it has a healthy pipeline of bidding opportunities, especially for U.K. government contracts.

Asian Markets

Asian stock markets posted a strong rebound Tuesday after a string of recent losses as data showed an improvement in Chinese anufacturing activity, while optimism the Federal Reserve may take steps to boost the U.S. economy lifted investor sentiment. South Korea's Kospi and Taiwan's Taiex--the two regional indexes that rank among this month's biggest losers posted the best gains, rising 3.9% and 3.3%, respectively. Hong Kong's Hang Seng Index rose 2.0%, China's Shanghai Composite added 1.5% and Japan's Nikkei Stock Average climbed 1.2%.

Gains for most markets accelerated after preliminary data released by HSBC showed China's Manufacturing Purchasing Managers Index for August came in at 49.8 from a final reading of 49.3 in July. The data implied factory activity in China contracted, but turned out to be much better than the markets had feared, laying the ground for a stronger relief rally.

Optimism over Federal Reserve Chairman Ben Bernanke's speech at Jackson Hole, Wyoming, on Friday also served to prop up markets. Resource stocks rose with crude-oil and copper prices. Aluminum Corp. of China climbed 5.5% in Hong Kong, Jiangxi Copper added 2.2% in Shanghai and Korea Zinc climbed 4.7% in Seoul.

Among energy shares, Cnooc added 2.7% in Hong Kong. Shipping and shipbuilding stocks soared to retrace some heavy recent losses, with Korea Line Corp. surging 11%, and Hyundai Heavy Industries climbing 6% in Seoul, Mitsui O.S.K. Lines rising 2.2% in Tokyo and China Cosco Holdings soaring 6.8% in Hong Kong and 2.1% in Shanghai. Battered technology stocks also rebounded, with Toshiba rising 3.2% in Tokyo, while Samsung Electronics rose 4.6% in Seoul.

Commodities

Base metals closed mostly higher on the London Metal Exchange Tuesday as the dollar continued to flounder and firmer equity markets boosted risk sentiment, a further sign of the metals' recent reliance on exogenous factors for direction. At the close, LME three-month copper was 1.5% higher at $8,845 a metric ton. Lead rose the most, ending the open outcry session at $2,335/ton, up 3.3% on the day, but nickel closed a tad lower, losing 0.9% to $20,660/ton. Oil futures rebounded Tuesday on the back of stronger equities, but the latest fighting in Libya kept a lid on the rally as rebels made strides toward securing the capital.

Light, sweet crude for October delivery settled up $1.02, or 1.2%, at $85.44 a barrel on the New York Mercantile Exchange. Brent crude traded up $1.41, or 1.3%, at $109.77 a barrel. Although an afternoon earthquake which originated in Virginia but could be felt in cities across the East Coast took some steam out of the rally in both stocks and oil, Nymex crude futures still finished at their highest level in almost a week.

Gold futures fell, snapping a rally that took prices to a record just shy of $1,900 an ounce as profit-taking ensued and as global equity markets posted gains. Gold for December delivery fell $30.60, or 1.6%, to end at $1,861.30 an ounce on the Comex division of the New York Mercantile Exchange.