From Morrison Securities Pty Ltd.

U.S. Stock Markets

U.S. stocks rallied as domestic home building jumped to the highest level in nearly two years and another successful Spanish debt auction buoyed investor sentiment.

The Dow Jones Industrial Average surged 332 points, or 2.8%, to 12098 Tuesday about an hour before the closing bell. The rally comes after the blue-chip Dow dropped 100 points Monday and closed at the lowest level of the month.

The Standard & Poor's 500-stock index climbed 36 points, or 3%, to 1241. All 10 of the S&P 500's sectors rose, led higher by financial, material and energy stocks.

The technology-heavy Nasdaq Composite advanced 78 points, or 3.1%, to 2601. Trading volume was light as many investors are closing their books prior to the year end and ahead of the holidays.

J.P. Morgan Chase led the Dow higher, rising 5.1%. Walt Disney rose 4.4% and Caterpillar tacked on 4.3%. Bank of America gained 3.7% and moved back above the key $5 level. The market got a boost following a better-than-expected report on the housing sector.

U.S. housing starts surged 9.3% in November, rising to the highest level in 19 months. Construction permits also grew. Both are encouraging signs for the housing market, which has struggled for years. Stocks of home builders and apartment operators gained following the data. Beazer jumped 13%, Lennar rose 6.3% and Home Properties advanced 3.4%.

European Stock Markets

European stock markets ended with strong gains Tuesday, boosted by upbeat news on the German economy and sharply lower borrowing costs for Spain.

The Stoxx Europe 600 index closed 2% higher at 238.4, getting an additional lift after November U.S. housing starts hit the highest annual rate since April 2010.

In Spain, the Treasury successfully auctioned EUR5.64 billion of three- and six-month bonds, raising more than it had initially hoped, as borrowing costs dropped. The yield on the 10-year Spanish bond fell to 5.05% from 5.15% late the prior day. The Spain IBEX-35 index rose 2.4% to 8,454.4, with shares of heavily weighted Banco Santander SA up 3.6% and BBVA SA up 4.4%.

The German DAX 30 index closed over 3% higher at 5,847.0. The Ifo Institute's business-climate index for December climbed to 107.2 from 106.6 in the prior month, against a consensus for a reading of 106.

The Swedish car maker SAAB filed for bankruptcy Monday after attempts to secure funding from Chinese investors ran into objections from General Motors Co. In Frankfurt, economy-sensitive car companies BMW AG and Daimler AG rose 4.3% and 5.9%, respectively.

Deutsche Bank AG rose 5.5%. Heavyweight drug group Bayer AG rose 5%. The company said it has four potential blockbusters in its pharmaceutical pipeline, and lifted sales forecasts for several products. Shares of AstraZeneca fell 1.5% after the drug group said it will take a pre-tax charge of $381.5 million over research-and-development expenses related to two drug studies. In the same sector, shares of GlaxoSmithKline PLC fell 0.3%. The FTSE 100 index ended the day 1% higher at 5,419.6. The French CAC 40 index rose 2.7% to 3,055.4, with banks such as BNP Paribas SA up 6%, Credit Agricole SA up 7% and Societe Generale SA up 4.7%.

Asia-Pacific Stock Markets

South Korean and Japanese shares advanced Tuesday, winning back some of Monday's losses as fears aroused in the wake of North Korean leader Kim Jong Il's death subsided.

South Korea's Kospi rose 0.9% to 1793.06, after sinking 3.4% Monday. Japan's Nikkei Stock Average gained 0.5% to 8336.48 and Taiwan's Taiex added 0.4% to 6662.64. Elsewhere, China's Shanghai Composite dropped 0.1% to 2215.93 and Hong Kong's Hang Seng Index rose 0.1% to 18,080.20, after each index changed direction a few times.

Pipe manufacturer Hyundai Hysco soared 9.2% after five consecutive days of losses, including a 4.4% drop Monday, while STX Offshore & Shipbuilding Co. rose 3.5% after heavy losses in the previous three sessions. In Tokyo, shares of Olympus Corp. climbed 16.4% after a string of recent losses. Shipping firms also advanced, with Mitsui O.S.K. Lines Ltd. rising 4% and Nippon Yusen K.K. climbing 2.7%.

Commodities
Base metals closed higher on the London Metal Exchange Tuesday, boosted by a stronger euro and an uptick in risk appetite. Flagship three-month copper was 2.1% higher at $7,409.50 a metric ton at the close, its highest close in seven days.

Dollar-denominated assets such as base and precious metals were spurred higher Tuesday as the euro jumped above $1.31 for the first time in a week as improved risk appetite displaced fears over Europe's ongoing debt problems.

Oil futures jumped in early trading Tuesday along with equity markets after the latest report on U.S. housing starts showed home building surging well past expectations, in a positive sign for the U.S. economic recovery.

The market was also watching news of unrest in an oil-producing province of Kazakhstan and a meeting of world leaders in Rome to consider sanctions on Iran's oil exports.

Light, sweet crude for January delivery settled up $3.34 at $97.22 a barrel on the New York Mercantile Exchange. Gold futures closed higher, as weakness in the U.S. dollar helped lift prices by more than $20 an ounce, marking the biggest single-session gain of the month so far.

Gold for February delivery rose $20.90, or 1.3%, to settle at $1,617.60 an ounce on the Comex division of the New York Mercantile Exchange. That marked the biggest one-day gain since Nov. 30 and prices saw their first close above $1,600 since Dec. 13.