09:35 GMT. The dollar slid and stocks trundled higher on Tuesday as investors appeared more relaxed about the pace of global monetary tightening and worries about sovereign debt receded. The FTSE World equity index rose 0.3 per cent, and the euro rallied in response to the greenback’s weakness. Traders are hopeful that Ben Bernanke, chairman of the US Federal Reserve, will tell Congress on Wednesday that interest rates will remain low “for an extended period”, and that his decision last week to raise the discount rate charged to banks was merely a technical move. The brief wobble caused by the unexpected timing of the discount rate rise seems to have been forgotten. But markets are likely to need further evidence that the – albeit fragile – economic recovery remains on track if the risk rally is to advance. “The first half of January was good for risky assets, the second half was bad, and in February risky assets are rallying back. This picture is clear across stocks, credit, commodities and high beta currencies,” said strategists at Royal Bank of Scotland in a note. US weekly chain store sales and a survey on US consumer confidence will be keenly eyed. As will the Case-Shiller house price index. US equity futures point to Wall Street opening with a rise of 0.2 per cent. ● The dollar’s relationship with the risk-on/risk-off trade appeared intact. Signs of improved market sentiment saw the buck fall 0.4 per cent on a trade-weighted basis, and it lost 0.5 per cent versus the euro. The euro also gained 0.2 per cent against the yen as investors waited to see if a rumoured Greek bond issue would materialise. A weaker than forecast German business sentiment index only marginally crimped the single currency’s advance. ● European bourses got off to a reasonable start – apart from in Athens, where protesters blockaded the entrance to the stock exchange. The FTSE Eurofirst 300 rose 0.2 per cent and the FTSE 100 in London added 0.5 per cent. The FTSE Asia-Pacific index climbed 0.4 per cent, with few drivers cited by traders beyond a partial resumption of the recent rally. The Hang Seng in Hong Kong advanced 1.2 per cent, and the Sensex in India rose 0.1 per cent, but Shanghai fell 0.7 per cent and the Nikkei 225 in Tokyo was off 0.5 per cent. ● Gold took advantage of the dollar’s weakness to gain 0.1 per cent to $1,114. Oil fell 0.4 per cent to $79.97, however, as commodities put in a mixed performance, with copper dipping 1 per cent on worries about thinning demand from China. ● Government bonds were generally weaker as investors preferred riskier assets. The yield on the US 10-year benchmark rose 1 basis point to 3.80 per cent. The US will auction $44bn of two-year notes later. The yield on Greek 10-year bonds was a touch lower at 6.40 per cent.

Source