Fed Vice-Chairman is Positive About Negative Rates

The Conference Board said its consumer confidence index rose to 101.1 this month, an 11-month high.

The financial index .SPSY was trading at its highest level since December 16, when the Fed raised interest rates for the first time in almost 10 years.

Federal Reserve: Yellen told a conference of central bankers in Jackson Hole, Wyoming, last week that the US economy might be strong enough for an interest rate hike.

Mounting expectations for a Fed hike this year boosted financial stocks on both sides of the Atlantic, limiting losses in US shares and helping the pan-European STOXX 600 hit its highest level since mid-August.

The sector typically rises with talk of higher rates, on the expectation that banks’ income could rise as they charge more for loans.

Apple dragged down US stocks after European Union antitrust regulators ordered the company to pay about $14.5 billion in back taxes to the Irish government, but a gain in financial stocks limited the impact.

Wells Fargo WFC.N , Bank of America BAC.N , JPMorgan JPM.N and Citigroup C.N gained between 0.8-1.5 percent and were among the top influences on the S&P.

A Wall Street sign is pictured outside the New York Stock Exchange in New York.

The yen remained weaker on speculation strong USA jobs data later this week will boost the likelihood the Federal Reserve will raise interest rates, widening policy divergence with the Bank of Japan.

Aug 30 Sterling slipped against the dollar on Tuesday on divergent expectations for monetary policy, with investors increasingly betting USA interest rates could rise by year-end while British rates may be cut again.

The Dow Jones industrial average closed down 48.69 points, or 0.26 percent, at 18,454.3. South Korea’s Kospi added 0.4 percent to 2,039.74.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.4 percent, recouping around half of Monday’s loss.

Oil prices fell for a second straight day on the dollar’s strength and worries about crude oversupply.

A stronger us dollar usually weighs on gold, as it dampens the metal’s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

In New York, West Texas Intermediate fell 66 cents to $46.98 a barrel.

ENERGY: Benchmark U.S. crude oil rose 37 cents to $47.35. Fed funds futures are back down to 32%, the S&P 500 is above where it was last Thursday and US Treasury yields are back to where they were beforehand.

With the Fed decision looming about three weeks away, shorter maturities trailed gains on Monday in longer-dated debt, which was also attracting demand because of month-end buying, traders said.