GLOBAL MARKETS: European Stocks Looking Flat Despite US Rally

LONDON -- European stocks are expected to open mostly flat Tuesday, despite the rally in the U.S. and strong earnings news from companies such as Apple, which smashed forecasts.

Although Wall Street rallied hard in the first few hours of trade Monday, the latter part of the session offered little new direction, paving the way for a quiet start in Europe, said Ben Potter, research analyst at IG Markets.

Fresh recent highs were seen for London's FTSE 100 and Paris's CAC-40 on Monday. However, for today's session, Potter sees a flat start for the FTSE, down 2.5 points at 5279.0. He calls Frankfurt's DAX up 3.4 points, or 0.1%, at 5856.0 and Paris's CAC-40 up 2.6 points, or 0.1%, at 3895.0.

"Earnings news out of the U.S. yesterday was in general of reasonable quality, once again countering suggestions that expectations had been somewhat overdone although there are still plenty of high-profile companies left to report," he said.

U.S. stocks ended up on high earnings expectations and the Industrial Average closed at another high for the year.

Closed up 1.0% at 10,092.2, marking its highest close since Oct. 3, 2008. Gains were led by Caterpillar, up 6.0% ahead of its third-quarter report on Tuesday. Also helping the Dow, American Express rose 2.3% ahead of its third-quarter report on Thursday.

The Standard & Poor's 500 increased 0.9% to 1097.9, also marking its highest close since Oct. 3, 2008.

The Nasdaq composite tacked on 0.9% to 2176.3, ending at its highest close since Sept. 26, 2008.

Technology could get a further boost on Tuesday after Apple posted a fiscal fourth-quarter profit increase of 47% after the bell. The company sold more Macintosh computers and iPhones than in any previous quarter, which helped drive revenue. Apple shares closed the regular session up 1%, and added another 6.6% in after-hours activity.

Asian share markets were higher Tuesday, with liquid-crystal-display stocks rising in Taiwan and South Korea, while Australia's market was buoyed by bullish comments on the economy from the country's central bank.

Australia's S&P/ASX 200 was up 1.2%, with Japan's Nikkei 225 up 1.0% and Korea's Kospi Composite 0.5% higher. Hong Kong's Hang Seng Index was 0.8% higher after touching a fresh 14-month high, while Shanghai's benchmark was up 0.9%.

Risk appetite continued to spur emerging market assets and the Australian dollar, while Nymex front-month crude oil briefly nosed over $80 a barrel on Globex.

Despite the gains already made in recent times, "it's clear the market is itching to creep higher because the macro environment we're dealing with just keeps looking more and more promising every day. Companies too are showing that consumers are still spending and that investment portfolios are growing,"

"We're still in a stimulus-laden environment, though, and volumes continue to remain subdued," he added.

In the European foreign exchanges Tuesday, the euro was higher against the dollar as the U.S. currency remained under pressure around the globe.

The single currency was trading at $1.4979 at 0630 GMT, up from $1.4964 late in New York. The dollar eased to Y90.16 from Y90.55, while sterling firmed to $1.6437 from $1.6387.

November Nymex crude oil futures were 30 cents higher at $79.91 per barrel on Globex, having touched $80.05, a year-high. A note by ING said that unless the dollar recovers, oil could be heading to an average $90-$100 per barrel in 2010. It suggested buying Russia and other oil exporters on the weaker greenback.

Meanwhile, spot gold was down 20 cents from New York, at $1067.85 per troy ounce.

European government bond markets opened higher, with December bund futures up 0.03 at 121.33.