World Market Overview

U.S. blue chip stocks edged higher Tuesday after minutes from the Federal Reserve's last meeting showed the central bank registered moderate improvement in the economy and saw no reason to modify its major bond buying program.

The Dow Jones Industrial Average rose 17 points, or 0.2%, to 11689.

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Paring earlier losses, the Nasdaq Composite fell 0.3% to 2682.

The Standard & Poor's 500 stock index shed 0.2% to 1269.

Traders said the market felt some relief that the minutes of the Fed's policy making committee's Dec. 14 meeting contained no major surprises.

In the minutes, the central bank said that a stronger U.S. economy is among the reasons behind the rise in government bond yields, which may undermine its efforts to keep the recovery going via low interest rates.

In November 2010, the Fed announced a $600 billion bond purchase program, known as quantitative easing or QE2.

Despite the improvement in the economy, Fed officials generally felt that the change in the outlook was not sufficient to warrant any adjustments to the asset-purchase program, the minutes showed.

Materials weighed on the S&P 500 after UBS cut its stock-investment ratings on two construction aggregate companies to neutral from buy, noting the stocks' strong performance in the fourth quarter even as the political appetite for road spending grew more uncertain.

Vulcan Materials fell 5.3%, while Martin Marietta Materials shed 6.4%.

Food retailers also lagged after Bank of Montreal downgraded Safeway, Vitamin Shoppe and Whole Foods to market perform from outperform, noting limited upside.

Safeway fell 3.2%, Vitamin Shoppe was off 4.5%, and Whole Foods shed 3.4%.

General Motors rose 1.3% after its U.S. light-vehicle sales climbed 8% in December thanks to continued strong demand for crossovers and pickups.

Meanwhile, the telecommunications sector gained, as shares of Motorola Mobility Holdings rose 9.4% and Motorola Solutions gained 3.8% as Motorola's long awaited split into two entities officially took place Tuesday.

U.S. listed shares of BP rose 2.3%, touching a six month high following reports that compensation payouts for the Gulf oil spill may be much lower than expected and amid lingering rumors that the company is a takeover target.

European Markets

Most European equity markets gained Tuesday, led by a sharp rise for many U.K. stocks as the London market reopened after a public holiday.

The Stoxx Europe 600 index advanced 0.9% to 280.38, extending Monday's rally.

Gains for banks and oil giant BP helped the U.K.'s FTSE 100 index touch 6,049.45, its highest level in about two and a half years.

The index closed up 1.9% at 6,013.87.

In the financial sector, shares of Royal Bank of Scotland Group PLC advanced 4.1% after the firm was upgraded to outperform from neutral at Exane BNP Paribas, which said worries over the impact of Ireland's debt crisis have been overdone.

Other U.K. banks also got a lift as they caught up with gains made by European rivals Monday. Barclays PLC rose 4.2%, and Lloyds Banking Group added 3.3%.

Among the other major indexes, the French CAC 40 climbed 0.4% to 3,916.03, while Germany's DAX 30 fell 0.2% to 6,975.35.

Italy's Fiat SpA was a strong performer, jumping more than 6% as Morgan Stanley initiated coverage of the firm with an overweight rating a day after it began to trade separately from Fiat Industrial SpA.

Shares in Fiat Industrial, which the broker rated at equal weight, declined 2.2%.

Other auto firms were mixed, with BMW down 1.2%, giving back some of the previous session's strong gains.

Europe's oil majors were higher Tuesday, led by a nearly 6% gain for BP after the Daily Mail newspaper reported that rival Royal Dutch Shell had weighed a takeover bid in the wake of the Gulf of Mexico oil spill.

In peripheral markets, Ireland's ISEQ rose 0.3% and Portugal's PSI 20 index gained 1%.

The Greek ASE Composite, however, dropped 1.6% as shares in Piraeus Bank weighed on the market.

The lender slumped more than 11% in Athens after it announced plans to raise over EUR800 million by selling new shares at a 43% discount to their recent price.

Asian Markets

Asian markets ended mostly higher Tuesday, with China coal plays advancing, but Australian shares were held back as insurers were hurt amid concerns over devastating floods in Queensland state.

South Korea's Kospi climbed 0.7% and Hong Kong's Hang Seng Index added 1.0%, with both stretching their winning run to a fifth straight trading day, while China's Shanghai Composite advanced 1.6%, for its fourth successive positive finish.

Japan's Nikkei Stock Average rose 1.7%.

But Australia's S&P/ASX shed 0.1%.

Dow Jones Industrial Average futures climbed 22 points in screen trade, after the benchmark Average rose to hit two-year highs Monday, as improved manufacturing and construction data boosted investors' outlook for the economy.

The floods in Australia spurred coal mining stocks to extend gains in Hong Kong and Shanghai, as investors anticipate higher coal prices as several coal mines in Queensland were shut, which will hurt global coal supply.

Yanzhou Coal's Hong Kong listed shares added 3.1% and tacked on 2.0% in Shanghai.

Mainland property plays reversed recent declines, supported partly by rotational buying.

On the mainland markets, Gemdale rose by the 10% daily trading limit after falling 6.1% last week, while China Vanke ended 7.1% higher after an 8.8% decline over the same period.

In Hong Kong, China Overseas Land & Investment added 3.7%.

Base Metals

Base metals closed mixed on the London Metal Exchange Tuesday after a choppy first day of trade for the new year, with support from higher stock markets and increasingly positive demand prospects offset by a slump in the euro and easing supply concerns.

Market participants said many investors had looked to book profits as copper rallied to a fresh all time high of $9,754 a metric ton in the early European afternoon, pushing the flagship red metal into the red.

The LME's three-month copper contract ended the day down 0.2% at $9,580/ton.

A climbing U.S. dollar weighed on the markets, making the dollar denominated metals appear more expensive to other currency holders.

The greenback soared against the euro after U.S. factory orders data beat expectations.

According to a daily report from the LME, exchange listed stocks rose again on New Year's Eve, climbing 125 tons to 377,675 tons their highest level in three months.

Oil futures settled lower Tuesday, having tumbled below $89 a barrel amid a round of profit taking a day after crude soared to fresh two-year highs.

Light, sweet crude for February delivery settled $2.17 lower at $89.38 a barrel on the New York Mercantile Exchange after falling as low as $88.83 earlier in the session.

Gold futures traded at their lowest in roughly three weeks as optimism about the global economy dimmed the metal's safe haven appeal and investors migrated mostly to cash.

Gold for February delivery fell $44.10, or 3.1%, to settle at $1,378.80 an ounce on the Comex division of the New York Mercantile Exchange.

That was gold's lowest settlement since Dec. 16, when the metal settled at $1,371 an ounce.

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