| NEW YORK
NEW YORK U.S. stocks rose on Tuesday following strong quarterly results from Travelers and Apple, while the dollar and yen climbed against most of their major counterparts as China implemented a clampdown on bank lending.
U.S. Treasury debt prices turned flat as stocks advanced, paring earlier gains from China and President Barack Obama's call for a freeze on federal spending on many domestic programs.
China's central bank ordered banks that need to raise their reserve ratios to implement the change on Tuesday, banking sources said. In recent weeks, China has moved to cool bank lending to curb inflation and forestall asset bubbles.
"Since China has started its banking proposals ... this has generally been seen as a concern," said Justin Urquhart Stewart, director at Seven Investment Management.
The dollar and yen climbed against higher-yielding currencies on speculation China, the world's growth engine, will take further steps to cool its economy, discouraging demand for higher-yielding assets.
World stocks as measured by the MSCI world equity index .MIWD00000PUS fell 0.23 percent with their emerging market component .MSCIEF -- a sector particularly sensitive to China -- down 2 percent. Emerging stocks, last year's star performer with a nearly 75 percent gain, have lost more than five percent so far this year.
Adding to China worries, Standard & Poor's cut its outlook on Japan. The rating agency threatened to cut Japan's credit rating unless it produced a credible plan to rein in soaring debt and lift growth in an economy plagued by persistent deflation.
Japan's Nikkei closed down 1.8 percent. That was before S&P cut its outlook.
US STOCKS UP ON EARNINGS
In stocks, the Dow Jones industrial average .DJI was up 65.07 points, or 0.64 percent, at 10,261.93, while the Standard & Poor's 500 Index .SPX was up 4.60 points, or 0.42 percent, at 1,101.38. The Nasdaq Composite Index .IXIC was up 11.98 points, or 0.54 percent, at 2,222.78.
Shares of Travelers (TRV.N) led gains on the Dow after the property-casualty insurer posted a profit that beat Wall Street's estimate. The stock advanced 3.6 percent to $50.66.
IPhone maker Apple Inc (AAPL.O) gained 3.5 percent to $210.27, a day after reporting results. Apple was the top positive on the Nasdaq, followed by Microsoft Corp (MSFT.O), which is scheduled to report later this week.
Firm demand for a $44 billion auction of 2-year notes was offset by a higher than expected yield. That added to pressure on Treasuries.
For its part, the benchmark 10-year U.S. Treasury note was up 1/32, with the yield at 3.6246 percent. But the 2-year U.S. Treasury note was down a touch at 1/32, with the yield at 0.8237 percent, while the 30-year U.S. Treasury bond was down 2/32, with the yield at 4.5538 percent.
In currencies, the dollar was up against a basket of major trading-partner currencies, with the U.S. Dollar Index .DXY up 0.25 percent at 78.384 from a previous session close of 78.190.
The euro was down 0.40 percent at $1.4094 from a previous session close of $1.4150. Against the Japanese yen, the dollar was down 0.79 percent at 89.52 from a previous session close of 90.230.
In energy and commodities prices, U.S. light sweet crude oil fell 52 cents, or 0.69 percent, to $74.74 per barrel, while spot gold prices rose $1.10, or 0.10 percent, to $1098.90. The Reuters/Jefferies CRB Index .CRB was down 2.10 points, or 0.76 percent, at 274.64.
(Additional reporting by Jeremy Gaunt and Richard Leong; Editing by Andrew Hay)