1:00PM NY, 5:00 PM Frankfurt European markets rallied, boosted by financial and airline stocks.
European stock markets rebounded from recent weakness to post their best one-day gains since the middle of March. Stocks were led higher by strong financial sector, as positive earnings and deal news managed to offset continued credit-markets concerns. The U.K. surged 2.5% at 6,360.10, France jumped 1.9%, and Germany climbed 1.7%.
In Frankfurt insurance firms advanced, with shares of Allianz rising 2.9%. Deutsche Bank posted gains of 4%. Car makers also moved notably higher, with Volkswagen advancing 3.2% and Porsche moving up 4.2%. Shares of German truck maker Man rose 4.3% after it posted higher first-half net income as sales increased 12%.
In Paris insurance stocks also advanced, with shares of AXA up 2.9%. On the side of the losers, Alcatel-Lucent dropped 9.3% after the world''s largest maker of telecoms equipment posted a bigger-than-forecast Q2 loss.
In London financials gave a strong boost, with shares of retail banking giant Lloyds TSB rising 4.4% after it agreed to sell its Abbey Life Assurance unit to Deutsche Bank for 977 million pounds in cash. Besides, Lloyds TSB said its first-half net profit rose 26% and also raised its dividend payout for the first time in five years.
Among other stocks in focus, hedge fund manager Man Group was up 4%, while property firm Land Securities jumped 3.6%. Airlines also stood out among gainers. Ryanair jumped 11.6% as the low-cost carrier reported a 20% increase in quarterly profit, while rival EasyJet climbed 12.9% after an upgrade at Goldman Sachs. Drug maker GlaxoSmithKline rose 3.3%
11:30AM U.S. market averages erased some of the earlier gains amid cautiousness.
U.S. market averages traded off earlier highs as investor cautiousness led to choppy trading. Better-than-forecast earnings from Dow component General Motors, Sun Micro and positive inflation data have been helping market to continue recovery.
Auto maker General Motors (
GM: chart) rise 3% to give blue-chip stocks a boost. Other gainers on the Dow included, Altria Group (
MO: chart), up 3.6%, Verizon (
VZ: chart), up 3%, Caterpillar (
CAT: chart) and Alcoa (
AA: chart), each rising more than 1.3%. Tobacco, utilities and real estate stocks posted strength.
Nasdaq traded in a choppy fashion, pressured by networking and disk drive stocks. Apple (
AAPL: chart) weighed on the tech-heavy average with a decline of 2.5%. However, computer server and software developer Sun Microsystems (
SUN: chart) climbed 7% as it swung to profit from year-ago losses.
On the deal news front, Marathon Oil (
MRO: chart) fell 2.8%, as it announced a deal to acquire Canada''s Western Oil Sands in a deal worth $6.2 billion. Shareholders of Western Oil Sands will receive $3.6 billion in cash and 34.3 million Marathon shares and securities exchangeable for Marathon stock. Separately, Marathon posted Q2 earnings drop.
In late morning trading, the Dow Jones industrial average rose 44.95, or 0.34%, to 13,403.26, after rising more than 120 points earlier. The Standard & Poor''s 500 index gained 2.63, or 0.18%, at 1,476.54, and the Nasdaq composite index added 0.36, or 0.01^, at 2,583.64. The 10-year Treasury note''s yield dipped to 4.80% from 4.81% late Monday.
Construction spending dropped 0.3% in June.
Tuesday morning, the Department of Commerce released its report on construction spending in the month of June, showing that spending on construction unexpectedly fell compared to the previous month. The report showed that
construction spending fell 0.3 percent in June following an upwardly revised 1.1 percent increase in May. With the decrease, June spending is down 2.4 percent compared to the same month last year. Economists had expected spending to rise 0.2 percent compared to the 0.9 percent increase originally reported for the previous month. The unexpected decrease in construction spending came as spending on private construction fell 0.3 percent, while spending on public construction was nearly unchanged.
10:00AM New York, 7:30 PM Mumbai – Regional rebound, earnings from Reliance Communication, Bhel, and Aditya Birla Nuvo propel the index near record level.
Sensex in Mumbai trading soared 290.08 to 15,550.99 or 1.9%. For the month of July Sensex jumped 12%. Of the thirty stocks in the index 17 advanced and the rest declined. In the broader market 1,695 stocks gained, 973 declined, and 79 were unchanged but on a lower trading volume. The daily turnover in the market declined to 5,272 crore rupees from 5,057 crore rupees.
The Reserve Bank of India increased the capital requirement ratio for banks to stem the rising liquidity and expanding loan portfolios. The bank raised the ratio to 7% from 6.5% to stem the inflation forces. After the credit committee meeting the bank left the reverse repo and bank rates at 6% and left its current fiscal forecast unchanged to 8.5%.
Gainers 
