"It appears that as quickly as the headwinds of selling blew into US equity markets yesterday, they seem to be dissipating today," said Colin Cieszynski, market analyst at CMC Markets Canada.

Toronto's S&P/TSX composite index is up 16 points to 8422, the Dow Jones industrial average is up 254 points to 8403, the S&P 500 is up 30 points to 847 and the Nasdaq is up 49 points to 1447.

European stock markets closed with the Eurostoxx up 36 points to 2065, the UK FTSE 100 up 57 points to 4123 and the German DAX up 137 points to 4532.

Treasury yields are generally lower, extending the huge declines on Monday. Sean Murphy, a Treasury trader in New York at RBC Capital Markets, said Federal Reserve Chairman Ben Bernanke's comments yesterday suggesting the U.S. government may buy longer-dated Treasuries is still resonating and that's why we're seeing yields fall even as stocks rally.

U.S. two-year yields are flat at 0.90%, with five-year yields down 4.2 bps to 1.67%, 10-year yields down 3.5 bps to 2.70% and 30-year yields up 1.6 bps to 3.23%. The Eurodollar March 09 contract is up 4.5 ticks to 98.20. The yield curve is flatter, with the 10/2-year spread down 3.5 bps to 179.20 bps.

Yields on two-year Canadian government bonds are down 1.0 bps to 1.59%, with five-year yields down 1.3 bps to 2.27%, 10-year yields up 2.1 bps to 3.17% and 30-year yields up 1.7 bps to 3.78%. The December 08 BAX contract is down 1.0 tick to 98.12.

In Germany, returns on two-year German bonds are down 1.1 bps to 2.11%, with five-year yields down 5.3 bps to 2.46%, 10-year yields down 12.6 bps to 3.04% and 30-year yields down 16.5 bps to 3.47%.

Yields on UK two-year bonds are down 28.1 bps to 1.76%, with five-year yields down 20.2 bps to 2.85%, 10-year yields down 17.2 bps to 3.49% and 30-year yields down 13.9 bps to 3.93%.

In foreign exchange, risk aversion has generally dissipated but most currencies are little changed.

The focus of the day has been on automakers, who will be releasing November's sales data throughout the day, culminating in national and domestic vehicle sales. Domestic vehicle sales are expected at 7.8 million, just shy of the 7.9 million reported in October, and total vehicle sales are expected to slide to 10.5 million from 10.6 million previously.

As well, Detroit's Big Three automakers, Chrysler, Ford, and General Motors, will unveil their spending plans to the U.S. Congress on Tuesday for how to use a combined $25 billion loan from the government.

The Canadian dollar is up 0.0034 to 0.8047 against the U.S. dollar (1.2429 USD/CAD) and up 0.62 to 75.29 against the yen.

The U.S. dollar is up 0.40 to 93.59 against the yen and the Dollar Index is down 0.239 to 86.485.

The euro is up 0.0105 to 1.2714 against the U.S. dollar, up 0.0065 to 1.5805 against the Canadian dollar, up 0.0037 to 0.8506 against the pound sterling and is higher by 1.48 to 118.99 against the yen.

The pound sterling is up 0.0066 to 1.4950 against the U.S. dollar and up 0.0012 to 1.8585 against the Canadian dollar.

WTI crude oil is down $0.10 to $49.18. The front month gold contract at the Chicago Board of Trade is up $11.70 to $780.20 per ounce.

All data taken at 12:36 p.m. EST.

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

CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.