In European Equity Markets stocks hovered around three-month highs on Tuesday as a sell-off in Spanish stocks eased and financials gained as Wall Street set fresh records. The pan-European STOXX 600 index ended the session up 0.2 percent, with Germany closed for a holiday. Spain’s blue chip index was flat in percentage terms as Madrid and Catalonia appeared to carefully weigh their next steps following Sunday’s independence referendum, which the central government has declared illegal.  Financials and materials stocks also provided a sizeable boost to STOXX 600, offsetting weaker utilities. Ferguson was up 4 percent after the British heating and plumbing products supplier reported a rise in trading profit and announced a share buyback plan.

In Currency Markets the dollar was slightly weaker against the euro on Tuesday as investors squared positions after a three week greenback rally, and before three days of heavy data culminating in Friday’s employment report for September. The euro bounced a quarter of a percent to $1.1758 and was trading above a $1.16955, a level it last hit on Aug. 18. The dollar’s rise put the pressure on carry trade currency favorites such as the Aussie and the New Zealand dollar, which were down by more than 0.3 percent each. The Australian dollar fell to its lowest in more than two months after the Reserve Bank of Australia left interest rates unchanged and gave a cautious assessment of the local economy.

In Commodities Markets oil prices fell on Tuesday as speculators took profits for a second day after big third-quarter gains, but prospects for reducing the global crude glut lent support. Brent crude futures were down 0.07 percent at $55.90 a barrel, having lost almost 2.5 percent on Monday. U.S. crude futures fell 0.2 percent to $50.34. Spot gold was up 0.1 percent at $1,272.05 an ounce. Silver was up 0.4 percent at $16.61 an ounce but still near its lowest level since Aug. 9. Platinum was 0.3 percent higher at $913.30 and palladium was down 0.1 percent at $908.70 an ounce, falling below platinum after reaching price parity for the first time in 16 years last week.

In US Equity Markets  all the three main stock indexes hit fresh record highs on Tuesday, buoyed by a rally in tech stocks and gains in Ford Motor and General Motors after the carmakers reported strong September sales. The Dow was up 0.27 percent, at 22,618.65, while the S&P 500  was up 0.04 percent, at 2,530.09. The Nasdaq Composite was up 0.05 percent, at 6,519.97. General Motors’ shares rose 3.7 percent, while Ford’s stock was up 2.05 percent. But rival Tesla Inc was down 2 percent after the luxury electric vehicle maker said its planned ramp-up for the new Model 3 mass-market sedan faced production bottlenecks. Lennar Corp’s shares rose about 3 percent following a higher-than-expected quarterly profit from the No.2 U.S. homebuilder.

In Bond Markets U.S. Treasury debt yields were slightly lower on Tuesday in volatile trading as market sentiment remained cautious two days after a mass shooting in Las Vegas, with investors also continuing to weigh the prospects of another interest rate hike this year. In mid-morning trading, the benchmark 10-year U.S. Treasury note yield was 2.328 percent, down slightly from 2.332 percent late on Monday, while the 30-year yield was up at 2.871 percent compared with Monday’s 2.865 percent. U.S. two-year notes were at 1.479 percent, down from 1.487 percent on Monday.

European Equity Upgrades/Downgrades

• SAINSBURY (SBRY LN) INITIATED WITH A BUY RATING AT BERENBERG
• MORRISONS (MRW LN) INITATED WITH A SELL RATING AT BERENBERG
• BAE SYSTEMS (BA/ LN) DOWNGRADED TO HOLD FROM BUY AT BERENBERG
• ANGLO AMERICAN (AAL LN) UPGRADED TO BUY FROM HOLD AT HSBC
• THYSSENKRUPP (TKA GY) DOWNGRADED TO UNDERWEIGHT FROM EQUAL WEIGHT AT BARCLAYS
• SOCGEN (GLE FP) DOWNGRADED TO UNDERPERFORM FROM NEUTRAL AT CREDIT SUISSE
• NATIXIS (KN FP) UPGRADED TO OUTPERFORM FROM NEUTRAL AT CREDIT SUISSE
• AIR LIQUIDE (AI FP) UPGRADED TO BUY FROM NEUTRAL AT GOLDMAN SACHS
• REED ELSEVIER (REE SM) DOWNGRADED TO NEUTRAL FROM OVERWEIGHT AT JP MORGAN CHASE
• IBERDROLA (IBE SM) DOWNGRADED TO NEUTRAL FROM OVERWEIGHT AT JP MORGAN CHASE
• STRAUMANN UPGRADED TO NEUTRAL FROM SELL AT CITI
• ERICSSON (ERICB SS) DOWNGRADED TO UNDERPERFORM FROM NEUTRAL AT CREDIT SUISSE
• ELECTORLUX (ELUXB SS) REITERATED WITH UNDERWEIGHT AT JP MORGAN CHASE