World Market Overview

Major banks led the Dow Jones Industrial Average higher as deal activity boosted financials and a Chinese official's comments boosted sentiment around the fragile euro zone.

The blue chip measure rose 50 points, or 0.4%, to 11529.

Financial components were the Dow's top three components in recent trading, with J.P. Morgan Chase up 3%, American Express up 2% and Bank of America up 1.7%.

The Nasdaq Composite gained 0.6% to 2666.

The Standard & Poor's 500-stock index rose 0.5% to 1254, led by its financials sector.

Investors said financials appeared to be getting a boost from expectations that deal-making in the sector will continue next year after Canadian bank Toronto-Dominion Bank agreed to acquire Chrysler Financial, the auto lender owned by Cerberus Capital Management, for $6.3 billion.

Shares of Toronto-Dominion rose 2.7%.

Global stocks rose broadly after China Vice Premier Wang Qishan said that China supports efforts by European officials to stabilize the global markets hit by the euro zone's debt crisis.

Later in the session, Fitch Ratings became the third major credit ratings agency this month to put Greece's ratings on review for a possible downgrade into junk territory.

The market had little reaction to the news, as investors have braced themselves for a long recovery in Europe.

Investors predicted trading would slow through the end of the year, though stock moves may be amplified by thin trading volumes.

Investors in European markets largely shrugged off a warning by Moody's Investor Service that it may lower Portugal's A1 rating by one or two notches, citing uncertainties over the longer term health of Portugal's economy, which could suffer from the government's fiscal austerity plans.

Among stocks in focus, Martek Biosciences soared 35% after the company agreed to a $1.09 billion, or $31.50 a share, bid from Dutch life sciences and materials science group Royal DSM.

European Markets

European stocks rose for a second day Tuesday, as a senior Chinese official expressed support for measures taken to address the euro zone debt crisis.

Investors, meanwhile, shrugged off news that Portugal's credit rating may be lowered by Moody's Investors Service.

The Stoxx Europe 600 index closed up 1% at 281.11, bringing its monthly gains to 7.4%.

In London, the FTSE 100 index rose 1% to 5,951.80, led higher by shares of Barclays PLC, which gained 2.8%, and Royal Bank of Scotland Group PLC, which surged 4.5%.

Chinese Vice Premier Wang Qishan said Tuesday that China backs the actions taken by the European Union and the International Monetary Fund to respond to the euro zone debt crisis, according to reports.

Equity markets took in stride news that Moody's placed Portugal's government bond ratings on review for possible downgrade.

The ratings agency said economic uncertainty and concerns about the nation's ability to access the capital markets at a sustainable price may lead to a downgrade by a notch or two.

In Lisbon, the PSI 20 index gained 0.6%, while in neighboring Spain, the IBEX 35 index rallied 2.1%.

Spanish banking giant Santander surged 2.9% and rival BBVA rose 3.1%.

Italy's FTSE MIB rose 1.8%, as shares of Banco Popolare extended gains from the previous session when a media report said the Cariverona Foundation may acquire a stake in the bank.

Shares of Banco Popolare soared 3.6% on Tuesday.

Asian Markets

Asian shares ended higher Tuesday, with markets bolstered by easing tensions on the Korean peninsula, while Japan's euro-sensitive exporters got an extra fillip from China's support for European officials' moves to stabilize financial markets.

Japan's Nikkei Stock Average ended up 1.5%, South Korea's Kospi Composite rose 0.8%, China's Shanghai Composite Index gained 1.8% and Hong Kong's Hang Seng Index added 1.6%.

Investors around the region were relieved South Korean artillery tests conducted Monday didn't provoke a military response from Pyongyang.

China Vice Premier Wang Qishan's comments midday that China supports efforts by European officials to stabilize global markets following the European debt crisis supplied an additional positive jolt.

In Tokyo, euro linked shares rose sharply, as the euro climbed against both the dollar and the yen.

Canon rose 1.6% and Nikon gained 2.8%.

Sony added 2.7%, getting an extra boost after a senior executive said the firm is targeting an increase in TV sales in the next fiscal year.

In Seoul, steelmakers gained on hopes for better earnings in early 2011.

Posco gained 5.1%, Hyundai Steel rose 7.6% and Dongkuk Steel Mill climbed 5.7%.

In Hong Kong and China, coal producers' stocks rose on expectations of robust winter sales.

China Coal's Hong Kong shares added 1.7% and its Shanghai ones tacked on 3.7%.

China Shenhua Energy, China's largest listed coal producer by output, added 3.7% in Hong Kong and rose 6.0% in Shanghai after the company said it will buy CNY8.7 billion worth of assets from its parent as part of a plan to boost its coal reserves and expand production.

Base Metals

Base metals closed mostly higher on the London Metals Exchange Tuesday following a day of relatively active copper trading that saw the price of the metal hit new record highs.

The LME's three month copper contract closed at $9,365 a metric ton, up 1.8% on the day, after reaching a record $9,392 a metric ton earlier in the day.

Positive trade data from China and a bullish market sentiment following Monday's announcement that Chilean copper mine Dona Ines de Collahuasi had declared force majeure on its concentrate sales contracts due to a collapse at its port boosted copper, and pulled up the price of other metals in the complex in copper's wake.

Anticipation over upcoming physically backed exchange-traded products in copper also drove prices, Smith said, combined with a general increase in risk appetite.

Crude oil futures rose for a third day Tuesday as optimism about the economy in the new year increased.

Crude for February delivery settled 45 cents, or 0.5%, higher at $89.82 a barrel on the New York Mercantile Exchange, a two-year high.

Gold made a late session reversal higher by the close of New York floor trading.

Gold for February delivery ended up $2.70, or 0.2%, at $1,388.80 an ounce after spending much of the session lower.

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