US markets

Soaring bank shares led the broader U.S. stock market higher Tuesday as Bank of America raised hopes it will increase dividends and share buybacks. The Dow Jones Industrial Average jumped 127 points, or 1.1%, to 12217, while the Standard & Poor's 500-stock index added 11 points to 1321 and the Nasdaq Composite gained 18 points to 2764.

[Get this delivered to your inbox for FREE. Subscribe to our daily Markets Newsletter.]

Leading the gains were financial stocks, including Dow components Bank of America, up 4.4%; American Express, up 4%; and J.P. Morgan Chase, up 2.8%. PNC Financial Services Group soared 4.5%, Citigroup added 2.3%, Wells Fargo gained 2.4% and Goldman Sachs Group increased 1.3%. Bank of America's gains came after Chief Executive Brian Moynihan said he believes the bank has the ability to earn between $35 billion and $40 billion a year in pretax earnings when the business normalizes.

Speaking at the bank's first investor-day conference since 2007, Moynihan said the bank has no intention of making more acquisitions and will instead look to cut costs and focus on customers. Moynihan said the bank was focused on returning every dollar in capital to shareholders, through regular dividends, share buybacks and special cash dividends. Weighing on the market was McDonald's, off 1.3%, after the fast-food chain reported that same store sales rose by a better than expected 3.9% in February, though results in its U.S. restaurants missed Wall Street's expectations. Energy stocks were also weak, as crude prices fell in volatile trading.

European markets

European stocks ended a choppy session with small gains Tuesday, as potential deal news for Deutsche Telekom AG sent those shares solidly higher. The Stoxx Europe 600 index ended the day up 0.4% at 281.81 after two consecutive days of losses. Deutsche Telekom rallied 4% after Bloomberg News reported that U.S. based Sprint Nextel Corp. may buy the firm's T-Mobile USA unit. A spokesperson from Deutsche Telekom declined to comment. Mining stocks were among the biggest decliners in Europe, as gold prices fell. Randgold Resources Ltd. slumped 8.2% and African Barrick Gold PLC fell 3.6%.

Greek banks also posted sharp losses, with Piraeus Bank SA down 7.3% a day after Greece's sovereign debt rating was downgraded. On the upside, Lundin Petroleum AB rallied 4.4% after Merrill Lynch reportedly upgraded the energy group to buy from neutral. Another gainer was Austrian high-tech machinery maker Andritz AG, which reported a 75% jump in fourth-quarter net profit and said it expects sales to rise substantially in 2011 versus 2010. Shares surged nearly 5% in Vienna.

Oil pulled away from 29-month highs Tuesday amid media reports that Libyan leader Moammar Gadhafi may step down. The German DAX 30 index ended virtually flat, rising just 2.82 points to close at 7,164.75. In Paris, gainers included tire maker Michelin SA, which rose 2.9%, and French insurer AXA SA, which advanced 2.6%. The French CAC 40 index rose 0.6% to end at 4,015.91. In London, BG Group PLC and Tullow Oil PLC lost 1.6% and 2.2%, respectively. The FTSE 100 index ended little changed, gaining 0.98 point to close at 5,974.76.

Asian markets

Asian stock markets ended higher Tuesday, with merger activity bolstering Tokyo shares, while a mild fallback in crude oil futures helped inspire some investors. Japan's Nikkei Stock Average added 0.2%, South Korea's Kospi Composite tacked on 0.8%, Hong Kong's Hang Seng index was up 1.7%, and the Shanghai Composite rose 0.1%. Macquarie Securities said in a research note Tuesday that emerging markets would return to favor in coming quarters after investors showed a cold shoulder to the region amid concerns over policy tightening and other worries.

In Tokyo, bargain hunting and mergers-and-acquisition activity propped up the Nikkei. Hitachi added 1.8% after U.S. rival Western Digital agreed to acquire its hard disk drive business for about $4.3 billion, and medical-equipment maker Terumo tacked on 3.1% on news Monday that it will buy major U.S. blood transfusion technology firm CaridianBCT Holding for $2.63 billion. Still, underscoring the fragile offshore environment, many exporters struggled to hold ground; Sony was off 0.6%, Honda Motor lost 0.3% while Toyota Motor nudged up 0.1%. Seoul shares advanced, though gains were capped as foreigners were net sellers. Construction stocks led the rebound following recent weakness.

Samsung Engineering added 2.2% and GS Engineering rose 3.5%. Shares in China ended modestly higher, after dipping earlier, underpinned by gains in property stocks. China Vanke's Shenzhen-listed shares were up 1.7%. After the close of markets Monday, the company said its net income last year rose 37% to 7.28 billion yuan, up from 5.33 billion yuan in 2009. Anhui Conch Cement's Shanghai shares dropped 1.9% while its Hong Kong ones added 0.9%.

Base metals

Copper closed higher on the London Metal Exchange Tuesday, recovering day-earlier losses as an easing oil price triggered bargain hunting, though trading is likely to remain volatile in the coming days as the metal markets remain glued to macro events, said market players. At the PM kerb close, LME three-month copper traded at $9,530 a metric ton, up 0.3% on the day. Reports that allies of Libyan leader Moammar Gadhafi are debating his exit triggered a light retreat in oil Tuesday, as trade players took a less bearish view on the geopolitical picture. The equity markets were also boosted by the news, moving into positive territory.

Once again, nickel was the notable loser of the complex, ending the day 2.4% lower at $26,800/ton. Crude futures retreated Tuesday as investors sought to lock in profits following reports that allies of Libyan leader Moammar Gadhafi are debating the leader's exit. Light, sweet crude for April delivery settled 42 cents lower at $105.02 a barrel on the New York Mercantile Exchange. Gold prices retreated as safe harbor demand for gold dimmed in the absence of new developments in the Middle East. The most actively traded contract, for April delivery, settled down $7.30, or 0.5%, at $1,427.20 a troy ounce on the Comex division of the New York Mercantile Exchange. The thinly traded March-delivery contract slipped $7.20, or 0.5%, to $1,426.90 a troy ounce.

More from Global Markets:
Newsletter: To receive Global Markets update, sign up here