Star Metro - Stocks higher on US Fed rate cuts bets

The gains, helped also by some strong earnings and generally easing concerns about tariffs, followed strong advances on Monday.

The dollar jumped against the euro and yen.

Oil prices retreated after US President Donald Trump renewed his threat to raise tariffs on India over its purchases of Russian crude.

Wall Street was steady at the opening bell, with the Dow flat and the S&P 500 and Nasdaq Composite edging up. However they quickly pushed higher.

"While sentiment towards equity markets continues to remain positive for the time being, that's not to say things will remain rosy in the coming weeks," said City Index and FOREX.com analyst Fawad Razaqzada, pointing to high stock valuations amid a weakening economy.

Briefing.com analyst Patrick O'Hare said "expectations of lower interest rates in the months ahead" were providing support for equities.

Data released on Friday showing weakness in the US jobs market caused stock markets to slump as they raised concerns that the world's biggest economy is in worse shape than expected.

Stocks rebounded on Monday, however, as those worries fanned bets that the Fed will cut interest rates in September.

According to CME Group's FedWatch tool, investors have priced in two interest rate cuts -- in September and October -- and see another one as possible in the third and final meeting in December.

Some analysts remained sceptical, however.

"I continue to believe the Fed will not reduce rates at all this year given rising inflation caused by tariffs and a relatively stable unemployment rate," said Lazard chief market strategist Ronald Temple.

European markets were solidly higher in afternoon trading.

"European markets continue to wave off any concerns around the direction of travel for the US economy and Thursday's looming tariff day," noted Joshua Mahony, chief market analyst at Rostro trading group.

Trump's fresh tariffs on dozens of US trade partners are set to kick in on August 7, almost one week later than planned.

The European Union on Tuesday announced the suspension of its retaliatory tariffs on US goods worth 93 billion euros ($107 billion) after Brussels struck a deal with Washington last month.

"The commission has today adopted the necessary legal procedures to suspend the implementation of our EU countermeasures, which were due to kick in on August 7," EU trade spokesman Olof Gill said.

Trump on Tuesday renewed his threat to impose tariffs on imported pharmaceuticals of up to 250 percent, although he said the tariff amounts would start small.

Investors shrugged off the threat, with share prices of European pharmaceutical firms, which have announced major investments to build manufacturing sites in the United States as Trump has demanded, mostly higher.

Ahead of the new deadline, Mahony said traders were focused "on the continued strength seen in second-quarter earnings season and the new dovish outlook for the Federal Reserve".

On the corporate front, shares in BP climbed 2.5 percent in London midday deals after the British energy giant surprised with better-than-expected earnings in the second quarter.

- Key figures at around 1330 GMT -

New York - Dow: FLAT at 44,168.17 points

New York - S&P 500: UP less than 0.1 percent at 6,334.05

New York - Nasdaq Composite: UP 0.1 percent at 21,075.81

London - FTSE 100: UP 0.4 percent at 9,168.87

Paris - CAC 40: UP 0.3 percent at 7,651.60

Frankfurt - DAX: UP 0.8 percent at 23,941.01

Tokyo - Nikkei 225: UP 0.6 percent at 40,549.54 (close)

Hong Kong - Hang Seng Index: UP 0.7 percent at 24,902.53 (close)

Shanghai - Composite: UP 1.0 percent at 3,617.60 (close)

Euro/dollar: DOWN at $1.1551 from $1.1573 on Monday

Pound/dollar: UP at $1.3293 from $1.3285

Dollar/yen: UP at 147.53 yen from 147.08 yen

Euro/pound: DOWN at 86.90 pence from 87.11 pence

West Texas Intermediate: DOWN 1.5 percent at $65.29 per barrel

Brent North Sea Crude: DOWN 1.3 percent at $67.84 per barrel

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A.Desjardins--SMC