Equities opened higher after U.S. lawmakers re-affirmed their commitment to work out some kind of bailout.

Both U.S. presidential candidates also came out in favour of raising U.S. government bank account insurance to $250,000 from $100,000. Federal Deposit Insurance Corporation Chairman Sheila Bair said the higher limits are needed to address growing fear.

Equity gains accelerated when the U.S. Securities and Exchange Commission issued clarifications on accounting rules. Some U.S. lawmakers have been calling for the suspension of mark-to-market accounting, a rule that forces companies to value assets at what the market is willing to pay for them.

Officials reaffirmed mark-to-market accounting, but said: "The results of disorderly transactions are not determinative when measuring fair value. The concept of a fair value measurement assumes an orderly transaction between market participants ¥ Determining whether a particular transaction is forced or disorderly requires judgment."

Equity markets rallied as the SEC issued the clarifications and continued to rise, wiping out most of Monday's losses.

Toronto's S&P/TSX composite index closed up 468 points to 11753, the Dow Jones industrial average closed up 485 points to 10851, the S&P 500 closed up 58 points to 1165 and the Nasdaq closed up 99 points to 2082.

European stock markets closed in positive territory with the Eurostoxx up 46 points to 2635, the UK FTSE 100 up 84 points to 4902 and the German DAX up 24 points to 5831.

U.S. two-year yields were up 30.3 bps to 1.96%, with five-year yields up 29.1 bps to 2.97%, 10-year yields up 24.2 bps to 3.82% and 30-year yields up 19.6 bps to 4.31%. The Eurodollar March 09 contract was down 27.5 ticks to 97.10. The yield curve was flatter, with the 10/2-year spread down 5.8 bps to 185.56 bps.

Yields on two-year Canadian government bonds were up 23.0 bps to 2.79%, with five-year yields up 22.6 bps to 3.13%, 10-year yields up 24.7 bps to 3.76% and 30-year yields up 15.2 bps to 4.18%. The December 08 BAX contract was down 23.5 ticks to 96.94.

In Germany, returns on two-year German bonds were up 4.0 bps to 3.48%, with five-year yields up 7.7 bps to 3.77%, 10-year yields up 4.3 bps to 4.01% and 30-year yields up 1.1 bps to 4.59%.

Yields on UK two-year bonds were up 0.5 bps to 4.01%, with five-year yields up 3.2 bps to 4.20%, 10-year yields up 6.6 bps to 4.45% and 30-year yields up 4.1 bps to 4.50%.

The Canadian dollar was down 0.0191 to 0.9391 against the U.S. dollar (1.0647 USD/CAD) and up 0.14 to 99.77 against the yen.

The U.S. dollar was up 2.05 to 106.23 against the yen and the Dollar Index was up 1.968 to 79.439.

The euro was down 0.0342 to 1.4095 against the U.S. dollar, down 0.0090 to 1.5007 against the Canadian dollar, down 0.0066 to 0.7916 against the pound sterling and was lower by 0.66 to 149.73 against the yen.

The pound sterling was down 0.0282 to 1.7805 against the U.S. dollar and up 0.0046 to 1.8960 against the Canadian dollar.

WTI crude oil was up $5.81 to $102.18. The front month gold contract at the Chicago Board of Trade was down $16.80 to $877.60 per ounce.

All data taken at 4:52 p.m. EDT.

By Adam Button, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it

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