U.S. MARKET AVERAGES

Broader market averages fell at close reflecting general worries related to inflation, fall in General Motors stock and tech stocks losing early firmness in the day.

General Motors fell below $20 and closed at $19.85, lowest level since October 1987, as report from J. D. Power Associates said that the company is still losing market share to Asian manufacturers. Also after the close investment arm controlled by investor Kirk Kerkorian reported to have sold 12 million shares of General Motors and register investment loss for tax purposes. This sale will reduce his stake close to 7.8% from 12%.

Housing stocks failed to respond to a better than expected November construction report. Oil rose for the most of the day but energy stocks did not rise reflecting general strength in the energy market.

Yield on ten year bond rose from 4.44% to 4.47% even though the wholesale inflation report suggested a decline.

After the close Nike reported second quarter earnings of $1.14 compared to 97 cents a year ago on revenue growth of 10%.

ECONOMIC NEWS

The Department of Commerce released its report on housing starts in the month of November on Tuesday, showing that housing starts rose unexpectedly. The report also showed a notable increase in building permits.

The report said that housing starts rose 5.3 percent to a seasonally adjusted annual rate of 2.123 million units in November from a revised 2.017 million unit rate in October. The increase came as a surprise to economists, who had expected starts to fall to a 2 million unit rate.

The increase in housing starts reflected growth in all regions but the South, with double-digit growth in the Northeast, the Midwest, and the West more than offsetting a 1.3 percent drop in housing starts in the South.

Producer prices fell more than expected in the month of November, according to a report from the Department of Labor, reflecting a significant decrease in energy prices. The report also showed that core prices rose less than expected.

The Labor Dept. said that its producer price index (PPI), a key gauge of wholesale inflation, fell 0.7 percent in November after rising 0.7 percent in October. Economists had been expecting the index to fall by a more modest 0.5 percent.

As mentioned above, the drop by the PPI was largely due to a steep drop in energy prices, which fell 4.0 percent in November after increasing by 4.1 percent in October. The Labor Dept. said that residential natural gas prices led the downturn in energy prices.

The report also showed that the core PPI, which excludes food and energy prices, rose 0.1 percent in November after falling 0.3 percent in October. The increase came in slightly below economist estimates of an increase of 0.2 percent.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished Tuesday session generally higher. The Nikkei climbed 1.6% on news that U.S. insurer American International Group will buy a Tokyo development property for $3.5 billion. Among other regional markets Sydney’s All Ordinaries rose 0.4%, South Korea’s Kospi gained 0.1%, while Hong Kong’s Hang Seng declined 0.4%.

European stocks traded in a tight range Tuesday to close steady as the downside trend was limited by upbeat U.S. economic data, higher opening on Wall Street and gains from mining and utility stocks. The German DAX 30 finished flat, the French CAC 40 added 0.1%, and London’s FTSE 100 was also flat.

OIL, METALS, CURRENCIES

Crude oil prices advanced ahead of petroleum report, expected to show a decrease in oil inventories. Light sweet crude for January delivery gained 8 cents to $58.17 a barrel on the Nymex. Heating oil advanced to $1.7495. Gasoline added less than a cent to $1.5350. Natural gas edged down to $14.10 per 1,000 cubic feet. London Brent climbed 32 cents to $56.43.

Gold traded mixed in European trading. In London gold closed at $502.10, down from $506.70 per troy ounce. In Zurich the precious metal rose to $507.30 from $506.95. In Hong Kong gold fell $2.65 to close at $505.95. Silver closed at $8.51, down from $8.55. In New York gold was down $3.20 to $493.80 per ounce and silver was down 8 cents to $8.315 at close.