11:30AM Wall Street traded modestly higher. Deal talk gave a boost.
U.S. stocks traded modestly higher, awaiting the Fed Reserve's interest-rate decision. Investors received well the Commerce Department's report that construction of new homes and apartments rose by 9%. However, homebuilders declined on the prospect of fewer permit applications. Toll Brothers (TOL: chart), D.R. Horton (DHI: chart), Centex (CTX: chart), KB Home (KBH: chart) and Hovnanian Enterprises (HOV: chart) moved to the downside. Some deal talk also generated positive sentiment. Affiliated Computer Services (ACS: chart) climbed 17% after an investment group said it is offering $5.93 billion in cash to take it private. Speculation arose over media reports on several other deals. Palm (PALM: chart) gained 4.5% on reports that cell phone manufacturer Nokia Corp. (NOK: chart) is trying to buy the company. American International Group (AIG: chart) was reportedly considering an acquisition of Prudential PLC.

Investors found comfort in news that Accredited Home Lenders (LEND: chart) received a $200 million term loan from Farralon Capital Management. The troubled lender surged 23% after falling 18% on Monday. The Dow was led by gains for Caterpillar (CAT: chart), up 1.5% and Wal-Mart Stores (WMT: chart), up 1.2%. In late morning trading, the Dow Jones industrial average rose 29.32, or 0.24%, to 12,255.49. The Standard & Poor's 500 index was up 4.33, or 0.31%, at 1,406.39, and the Nasdaq composite index rose 10.40, or 0.43%, to 2,404.81. Bonds rose, as the Treasury markets shrugged off the housing data and an announcement from China that the country doesn't intend to build up its reserves.


10:30AM London equities were lower on Tuesday. Whitbread surges on M&A.
The UK market was lower on Tuesday. In mid-morning trade, the FTSE 100 was down 7.5 points to 6,181.7.

Advancers

Shares in Whitbread, the leisure group, rallied 10.4% as rumours circulated of a possible 23 pound-a-share bid. Barclays gained 4.6% while Lloyds TSB firmed 2% and Royal Bank of Scotland added 1.7 % on expectations of further merger activity to come. Bid speculation also raised shares of ICAP, the inter-dealer broker, 3.6% higher. Prudential rose 3.3 % as Citigroup lifted its price target on the life assurer and confirmed a buy rating.

Mid-caps leisure stock were also upbeat on the Whitbread break-up story. Punch Taverns gained 2.7%, Mitchells & Butlers gained 2.6% and Marston advanced 2.1%.

Decliners

Friends Provident plunged 6.7 % after its annual profits declined 3% to 509 million pounds, mainly on lower earnings from asset management arm F&C. Broadcaster BSkyB shed 1.9% as media regulator Ofcom launched an investigation into the pay TV market that could lead to a Competition Commission probe into the industry.

Peruvian silver and gold miner Hochschild Mining was off 2.9% to profit taking after the profits of the group increased by 89%.


9:45AM Wall Street opened mixed ahead of Fed Reserve’s rate decision.
U.S. stock markets began trading in a mixed fashion on Tuesday, with investors cautious ahead of the Fed Reserve''s decision on interest rates, but relieved that the house construction increased. Housing starts rose 9% to a seasonally adjusted annual rate of 1.525 million in February from a revised 10-year low of 1.399 million in January, beating the expectations for an increase to 1.46 million.

Among early movers, Accredited Home Lenders (LEND: chart) climbed 20% after the mortgage company said it received a $200 million term loan from Farallon Capital Management. Shares of Barclays (BCS: chart) rose 4% in early trade after it confirmed that it was in merger discussions with ABN Amro. Speculation that the two were considering a merger helped spur Monday''s rally. In the tech sector, shares of Rambus (RMBS: chart) rose 6.1%. founder Darwin Deason and private equity fund Cerberus Capital Management said Tuesday they have proposed to buy ACS for about $6 billion.

Technology stocks were driven higher by solid gains for Affiliated Computer Services (ACS: chart). The stock jumped 18% after founder Darwin Deason and private equity fund Cerberus Capital Management said Tuesday they have proposed to buy ACS for about $6 billion. That price is about 16% higher than ACS''s Monday closing price of $51.29. In the first hour of trading, the Dow Jones industrial average rose 8.50 or 0.07%, to 12,234.67. The Standard & Poor''s 500 index was up 1.54, or 0.11%, at 1,403.60, and the Nasdaq composite index rose 3.34, or 0.14%, to 2,397.75. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.54% from 4.57% late Monday.

Housing starts increased 9% in February.
Tuesday morning, the Department of Commerce released its report on housing starts and building permits in the month of February, showing that housing starts rose much more than economists had been expecting. The report showed that housing starts rose 9.0 percent to a seasonally adjusted annual rate of 1.525 million units in February from a revised 1.399 million unit rate in January. Economists had expected starts to rise to a 1.445 million unit rate. The increase in housing starts was due in large part to a notable increase in housing starts in the West, which rose 26.4 percent compared to the previous month. Housing starts in the South rose 18.0 percent, while housing starts in the Northeast and Midwest fell 29.7 percent and 14.4 percent, respectively. The report also showed that single-family housing starts rose 10.3 percent to a 1.220 million unit rate in February, more than offsetting a 2.2 percent decline in the rate for units in buildings with five units or more. At the same time, the Commerce Department also said that building permits fell 2.5 percent to a seasonally adjusted annual rate of 1.532 million units in February from a 1.571 million unit rate in January. Building permits are seen as an indication of the outlook for housing demand.


9:00AM NY-7:00PM Mumbai Sensex gains in volatile trade, Ranbaxy rallies.
The Sensex on BSE finished 60.95 points, or 0.48%, higher at 12,705.94. The market-breadth was positive although it weakened at the end of the session. For 1,367 stocks that advanced, 1,201 declined and 67 remained unchanged. Of the 30 stocks in the Sensex 17 advanced, while the rest declined. The turnover on BSE was Rs 2,910.12 crore, higher than Rs 2,675.95 crore on Friday, but unusually low for the second day in a row. The turnover on NSE was Rs 6,056.26 crore, also much lower than Rs 4,965.07 crore.

Economic news

Heavy capital inflows drove the Indian rupee to an 18-month high against the dollar on Tuesday. At noon, the rupee stood at 43.98/99 per dollar, having struck a high of 43.9225 per dollar, its strongest since late-September 2005.

The Prime Minister Dr Manmohan Singh will preside over a meeting of the Planning Commission to work out state-wise strategies for achieving the annual farm growth to beyond 4%.