US markets

The consumer sector led U.S. stocks higher Tuesday after McDonald's posted strong January sales, putting the Dow Jones Industrial Average on track for its seventh straight gain. The Dow added 48 points, or 0.4%, to 12209. It hit an intraday high of 12211.24, the measure's highest intraday level since June 2008. If the Dow stays in positive territory through the close, it would represent the measure's seventh straight gain. It hasn't had such a long winning streak since July 2010. McDonald's led the climb with a 3% jump. The fast food company's same store sales rose 5.3% in January from a year earlier, topping expectations on 3.1% growth in the U.S. thanks to the diversity of its menu and the addition of oatmeal to it.

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The Nasdaq Composite rose 0.1% to 2788. The Standard & Poor's 500-stock index added 0.2% to 1322. Consumer stocks were in the lead, lifted by McDonald's. Tuesday's advance came after China's central bank said it will raise its benchmark deposit and lending rates by 0.25 percentage point each, the first rate increase this year, as the battle escalates to fend off rising inflation. The rate move, effective Wednesday, signals more tightening may follow in the months ahead if consumer prices continue to rise. While some previous tightening moves by China have been met with concerns over how they would impact upon global growth, the market took Tuesday's rate increase in stride because the inflation it is meant to help stave off has become an increasing concern.

Meanwhile, a massive crowd gathered at central Cairo's Tahrir Square, as protesters ignored incremental moves by Egypt's government toward promised reforms and renewed their demand for an immediate exit for President Hosni Mubarak.

The latest round of earnings reports came in mixed. ArcelorMittal jumped 3.8%. The steelmaker swung to a fourth-quarter net loss as market conditions remained challenging, but investors were encouraged by a forecast from its chief executive for demand to gradually improve in 2011. Toyota Motor climbed 4.4% after the auto maker predicted its net profit would jump in the current fiscal year ending in March thanks to strong sales overseas and extensive cost cutting. However, Avon Products tumbled 4.9%. The direct retailer's fourth-quarter earnings fell 15% as currency fluctuations weighed on revenue growth and higher product costs hurt margins. The company's earnings came in below analysts' estimates.

European markets

Equity benchmarks in France and Germany rallied to new 2011 closing highs Tuesday, led by car makers such as BMW AG and PSA Peugeot Citroen SA. The broader Stoxx Europe 600 index fell 0.06% to end at 288.56, breaking a five-session winning streak. U.S. stocks were higher by the close of European trading, helping boost sentiment. Germany's DAX 30 index gained 0.5% to 7,323.24, and France's CAC 40 index rose 0.4% to 4,108.27.

Car stocks posted strong gains, as Toyota Motor Corp. lifted its profit and revenue forecasts for the full year through March. In Frankfurt, shares of BMW AG rallied 4.7% after the company said its global car sales surged 28% in January from the same period a year ago. Daimler AG rose 3.1%, and Volkswagen AG added 3.3%. Among French car makers, shares of Peugeot rose 4.3% and those of Renault SA gained 3%.

The FTSE 100 index gained 0.7% to 6,091.33. Shares of engineering and satellite group Inmarsat PLC rose 3.6% after Bank of America Merrill Lynch upgraded the firm to buy from neutral. Most mining stocks fell after the People's Bank of China raised interest rates in a bid to stem rising inflation. Miners are sensitive to rate increases in China since the nation is a heavy user of natural resources. Lonmin PLC fell 0.5%, and Vedanta Resources PLC dropped 0.7%.

Asian markets

Japanese stocks ended at their highest levels in several months Tuesday on upbeat corporate earnings, even as concerns about inflation and interest rate increases pulled South Korean shares lower. The Nikkei Stock Average's 0.4% rise took the Japanese benchmark to its best closing level in more than nine months. Most other regional markets took the opposite path, with South Korea's Kospi falling 0.6%, Hong Kong's Hang Seng index slipping 0.3% and Taiwan's Taiex falling 0.4%. China's central bank announced after the markets closed that it would raise its key lending rates effective Wednesday. Markets in China are set to reopen on Wednesday. In Tokyo, Sumitomo Metal Mining rose 1.7% after the nonferrous-metal firm late Monday raised its earnings outlook for the fiscal year through March due to higher than expected prices of gold, copper and other metals. KDDI jumped 5.8% after Credit Suisse upgraded the stock to outperform from neutral on the company's smartphone-business performance and a change of chief executive officer. Meanwhile, fears of likely monetary policy tightening gripped markets in South Korea and India. In Seoul, market bellwether Samsung Electronics dropped 1.1% and Hyundai Motor gave up 2.2% ahead of the Bank of Korea's policy-rate decision Friday. The Bank of Korea is widely expected to raise interest rates by 0.25 percentage points Friday.

Base metals

Base metals closed mostly higher on the London Metal Exchange Tuesday, following a day colored by nervous trading in the wake of China's announcement that it is raising interest rates. Otherwise quiet LME trade was interrupted mid-morning when China announced its decision to raise its benchmark deposit and lending rates 0.25 percentage point, in its latest move to manage inflation. The base metals, which are used heavily in manufacturing and construction in China, reacted to the news with a decisive slide, exaggerated by a lack of physical buying to prop up prices. But the markets stabilized somewhat once the dust had settled and nerves eased. After plunging to $9,880 a metric ton in the wake of the news, copper regained some ground to trade up 0.1% on the day at $10,059/ton at the PM kerb close. Tin, originally brought into negative territory by the news, reclaimed some ground to close at $31,350/ton, though failed to reach the record high of $31,650/ton it hit before the announcement.

Oil

Oil prices fell back Tuesday from a brief intraday jump on talk of possible disruptions to Suez Canal operations. Crude oil futures breached $88 a barrel amid speculation, apparently originating from an Egypt based website, that some workers affiliated with the Suez Canal began a sit in. However, the subdued nature of crude oil's price move indicates that operations at the key energy transit point were normal. Light, sweet crude oil for March delivery settled 54 cents lower on the day at $86.94 a barrel on the New York Mercantile Exchange after rising as high as $88.11. Gold futures neared three week highs as a Chinese interest rate hike highlighted simmering global inflation pressures. The most actively traded contract, for April delivery, rose $15.90, or 1.2%, to settle at $1,364.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded front-month gold gained $15.80, to 1,363.40, its strongest close since Jan. 19.
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