Equity Indices

The S&P 500 and Nasdaq ended lower as another big drop in oil prices dragged down energy shares and Priceline's earnings forecast disappointed.  The S&P 500 energy sector fell 1.9 percent, extending the group's recent drop, the Energy Select Sector dropped 2.1 percent and Chevron Corp eased 1.2 percent to $115.37.  The Dow ended slightly higher, although it closed below Friday's record close.

 Interest Rates

 Benchmark Bond Yields

The Treasury on Tuesday accepted Euro 14 million in 28-day Treasury Bills at an average yield of 0.062% and Euro 13 million in 182-day Treasury Bills at an average yield of 0.146%.  Outstanding Treasury Bills amount to Eur253,990,000 - a decrease of Euro 7.5 million from the previous week.

U.S. manufacturing activity unexpectedly accelerated in October and automobile sales were strong, easing concerns of a significant moderation in economic growth in the fourth quarter.  The pick-up in manufacturing, which was driven by robust growth in new orders and production, suggested the economy was weathering a slowing of demand in major markets such as China and the euro zone.

Euro zone manufacturing activity expanded slightly slower than first thought last month as further discounts at the factory gate failed to drive up new orders.  A second month of price cutting, alongside only tepid expansion in Germany and contractions in France and Italy, will be disconcerting for the European Central Bank as it battles to prevent deflation.

Inflation in the 18 countries sharing the euro edged up slightly in October, reinforcing the view that the European Central Bank will hold fire on any additional policy action at its meeting next week.

Consumer prices in the euro zone rose by 0.4 percent in October, in line with market expectations. The ECB, which has a mandate to keep inflation below but close to 2 percent, has committed to an expansionary policy, including an asset-buying plan, and has said it will consider further measures if needed.

The fragile euro zone will need another year to reach even a modest level of economic growth, the European Commission said on Tuesday, revising down its forecasts and predicting more of the low inflation and high joblessness that plagues the bloc.  In its autumn estimates, the EU executive said the euro zone's economy would expand 0.8 percent this year, 1.1 percent next year and by 1.7 percent in 2016 - a level the Commission said six months ago would be achieved next year. The delay in the upturn was due to drag on the economy from France and Italy.

Forex

The dollar rose to a seven-year high against the Japanese yen after a victory by Republicans in the United States' mid-term elections raised hopes for an end to political gridlock in Washington, boosting sentiment for riskier assets. The euro also stemmed its fall against the dollar as investors took some profits on their bets against the common currency after a report of a rift at the European Central Bank over its easing strategy.