DJI- NEW YORK, Sept 11 (Reuters) - The Dow industrials closed at the highest level in nearly five years on Tuesday in a lightly traded session before key decisions in Germany and the United States that could give markets a further boost.
Energy, industrial and financial firms led the advance. Contributing to gains by the Dow industrials, shares of International Business Machines Corp IBM.N rose 1.15 percent to $203.27. Heavy equipment manufacturer Caterpillar CAT.N added 1.72 percent to $88.60.
Equities have rallied in recent weeks on hopes for monetary stimulus by central banks. The Federal Reserve could announce Thursday additional steps to support low interest rates. On Wednesday, Germany's highest court will decide on the legality of the euro zone's new bailout fund.
The Nasdaq erased most of its gains in the afternoon as shares of Apple AAPL.O dropped in heavy volume. The stock slipped 0.32 percent to $660.59.
Economists forecast a 60 percent chance the U.S. central bank will announce another round of quantitative easing at the end of its two-day meeting. Disappointing U.S. August jobs data released last Friday bolstered that view. (Full Story)
"I do expect the Fed to (announce) an additional quantitative easing program. I don't think it's a good idea. I don't think it's warranted," said Jamie Cox, managing partner of Harris Financial Group in Richmond, Virginia.
Some investors have concerns that a lot of the good news has already been priced in, exposing markets to a decline should the Fed disappoint. They also argue that the Fed's actions have already distorted market prices.
"We're in a technically overbought situation, so those traders are going to take their profits going into the Fed meeting," Cox said. "The Nasdaq has run up so much over the last couple of days, any disappointment by the Fed could cause a reversal."
The Dow Jones industrial average .DJI ended up 69.07 points, or 0.52 percent, to 13,323.36. The Standard & Poor's 500 Index .SPX closed up 4.48 points, or 0.31 percent, to 1,433.56. The Nasdaq Composite Index .IXIC gained 0.50 point, or 0.02 percent, to 3,104.53.
Expectations Germany's Constitutional Court would approve the European Stability Mechanism -- the euro zone's new bailout fund -- also boosted sentiment. But legal experts believe it will impose tough conditions limiting Berlin's flexibility on future rescues, which could be seen as a negative by markets.(Full Story)
Another event which could cause turbulence in markets is a Dutch general election on Wednesday, with voters divided between bailouts for troubled euro zone economies and austerity measures. (Full Story)
Investors are keeping an eye on big-cap bellwether technology names because of their role in global business spending. Techs fell on Monday following Intel's INTC.O warning last week that reduced demand will hurt its third-quarter results. Shares were up 0.34 percent to $23.34 Tuesday.
Shares of Bank of America BAC.N rallied 5.24 percent to $9.03, leading bank stocks higher.
Knight Capital Group Inc KCG.N said it has hired IBM to look into the Aug. 1 trading glitch that cost the trading firm $440. (Full Story) The stock rose 1.12 percent.
Zynga Inc's ZNGA.O chief marketing officer resigned on Monday, becoming the latest senior executive to depart the struggling social games company behind popular Facebook Inc FB.O games such as Farmville. Zynga shares dropped 1.06 percent to $2.79. (Full Story)
On the New York Stock Exchange, two stocks rose for every one that fell. On the Nasdaq, three stocks rose for every one that fell.
Volume was light, with about 5.91 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion.
NYMEX- NEW YORK, Sept 11 (Reuters) - U.S. crude futures rose on Tuesday as expectations that the U.S. Federal Reserve will act to bolster the economy and that a German court will approve a euro zone rescue plan put pressure on the dollar and boosted crude futures.
FCPO SOYBEAN- Sept 11 (Reuters) - Soybean futures on the Chicago Board of Trade fell to a three-week low Tuesday, extending a five-day setback from last week's record highs as traders positioned for USDA's Sept. 12 supply/demand reports.
• Sell-stops triggered as the benchmark November soybean contract SX2 fell below its 20-day moving average for the first time since Aug. 15. The contract also dipped below psychological support at $17 for the first time since Aug. 21.
• Ahead of USDA's monthly report, the average analyst estimate pegged U.S. soybean production at 2.657 billion bushels, just below USDA's August forecast of 2.692 billion, but some analysts predicted an increase on ideas that August rains may have boosted soy yield prospects.
• Analysts expected USDA to lower its forecasts of U.S. 2011/12 and 2012/13 soybean ending stocks.
• USDA late Monday said 32 percent of the U.S. soybean crop was rated good to excellent, an improvement from 30 percent a week earlier. US/SOY
• Some traders noted anecdotal yield reports from the early U.S. soybean harvest that were not as bad as feared after this summer's historic drought.
• Strong export demand for U.S. soybeans will keep CBOT prices firm in the coming months, despite a setback from record highs hit this month, due to poor 2012 harvests in South America - analysts Oil World.
• CBOT has yet to report any deliveries of soybeans or soymeal against September futures, but soyoil deliveries for Tuesday totaled 534 contracts.
FCPO- SINGAPORE, Sept 11 (Reuters) - Malaysian crude palm oil futures slipped on Tuesday to their lowest in nearly a month, as traders turned cautious about high stocks and ahead of key reports by the U.S. Department of Agriculture (USDA) due this week.
The Malaysian Palm Oil Board (MPOB) reported August stocks at a 10-month high of 2.1 million tonnes, erasing some gains in palm oil futures that are trading 8 percent lower this year. (Full Story)
Traders also avoided taking risky positions ahead of the USDA's monthly supply-demand and crop production reports on Wednesday that could give insight into the extent of drought damage to soybean crops. GRA/
"Today's selloff is purely technical," said a trader with a foreign commodities brokerage in Malaysia. "Basically we saw long liquidation coming in early in the morning. After the market broke below 2,900 ringgit, further selling came in."
The benchmark November contract FCPOc3 on the Bursa Malaysia Derivatives Exchange slipped 0.6 percent to close at 2,919 ringgit ($945) per tonne. Prices had earlier fallen to 2,874 ringgit, the lowest level since Aug. 15.
Total traded volume stood at 52,583 lots of 25 tonnes each, more than double the usual 25,000 lots.
Technicals will remain neutral until palm oil falls out of the range of 2,895 to 2,943 ringgit, said Reuters market analyst Wang Tao, adding that a drop below 2,895 ringgit would extend to 2,867 ringgit. (Full Story)
Demand strengthened as Malaysia's palm oil exports rose as much as 30 percent for the Sept. 1-10 period from a month ago, cargo surveyor data showed on Monday. PALM/ITS PALM/SGS
"Though the latest data shows optimism on the export side on the back of higher tax-free crude palm oil quota, a growing concern is on the stockholding level, which has now spiralled to more than 2 million tonnes," Malaysia-based TA Securities said in a note to clients.
"This would adversely impact the price of crude palm oil moving forward. To aggravate further, Indonesia's stock level appears to be higher than consensus expectations."
In a bullish sign for palm oil, oil rose above $115 a barrel on Tuesday, lifted by expectations the U.S. Federal Reserve would unveil further steps to stimulate its economy this week. O/R
In other vegetable oil markets, U.S. soyoil for December delivery BOZ2 fell 0.2 percent by 1004 GMT. The most active January 2013 soyoil contract DBYF3 on the Dalian Commodity Exchange closed 0.5 percent lower.
REGIONAL EQUITY- Sept 11 (Reuters) - Most Southeast Asian stock markets edged down for a second day on Tuesday with Malaysia falling to a more than two-month closing low as investors waited for cues from a U.S. Federal Reserve meeting and a German ruling on the euro zone's new bailout fund.
Malaysia .KLSE fell 0.4 percent to its lowest close since July 4, led by financials with large-cap CIMB Group Holdings Bhd CIMB.KL losing 1.6 percent.
"Investors are still waiting to see what is happening outside and they are not really keen to rush back to the market," said Song Seng Wun, an economist at CIMB, based in Singapore.
The Fed may decide on a third round of bond buying or quantitative easing (QE3) at its two-day meeting starting on Wednesday, while Europe faces another testing week as it seeks to pull itself out from its debt woes.
On Wednesday, Dutch voters will go to the polls and Germany's constitutional court is set to rule on new powers for the European Stability Mechanism, the euro zone's new bailout fund.
Thailand .SETI lost 0.2 percent, while Indonesia .JKSE and the Philippines .PSI eased 0.1 percent each. Vietnam .VNI , the region's smallest bourse, fell 0.6 percent to a two-week low.
Bucking the trend, Singapore .FTSTI gained 0.3 percent.
