SINGAPORE (AP) -- World markets were mostly higher Tuesday ahead of a U.S. Treasury report that will likely steer clear of labeling China as a currency manipulator, a status that could trigger penalties and cause trade tensions to escalate.
KEEPING SCORE: France's CAC 40 added 0.3 percent to 5,107.94, while Britain's FTSE 100 fell 0.2 percent to 7,012.82. Germany's DAX rose 0.4 percent to 11,655.74. U.S. shares were set for an upbeat open, with Dow futures gaining 0.3 percent to 25,278.00. The broader S&P 500 futures edged 0.3 percent higher to 2,758.30. Italy's FTSE MIB jumped 1.1 percent to 19,498.17, even as lawmakers endorsed a budget that raises the government's deficit to as much as 2.4 percent of gross domestic product next year in defiance of European Union guidance.
U.S. TREASURY REPORT: The U.S. Treasury will release a currency report later Tuesday. Reports that U.S. Treasury Secretary Steven Mnuchin was advised against labeling China as a currency manipulator have raised hopes it won't do further damage to relations. Mnuchin met with Yi Gang, the head of China's central bank, on the sidelines of the IMF-World Bank annual meeting last week and said they had a "constructive discussion." But Mnuchin expressed concern about the weakness of the yuan, which weakened against the dollar in recent months.
ASIA'S DAY: Japan's benchmark Nikkei 225 rallied 1.3 percent to 22,549.24. The Kospi in South Korea was flat at 2,145.12. Hong Kong's Hang Seng index, which has fallen 22 percent since early January, was 0.1 percent higher at 25,462.26. The Shanghai Composite dropped 0.9 percent to 2,546.33. Australia's S&P/ASX 200 gained 0.6 percent to 5,869.90. Shares rose in Taiwan, Indonesia and Thailand but fell in Singapore.
CHINESE INFLATION: The National Bureau of Statistics said China's consumer price index gained 2.5 percent in September from a year earlier, supported largely by fresh food prices and in line with market expectations. This follows a 2.3 percent increase in August. The country's producer price index gained 3.6 percent from a year earlier, slowing from the previous month. Rising inflation is a double-edged sword. The central bank has tended to shrug off rising prices, but the trend could limit its room for loosening monetary policy in coming months.
ANALYST'S VIEWPOINT: "Policymakers are likely to look through the latest pick-up in consumer price inflation and focus instead on evidence of cooling economic momentum, including slower core inflation and weaker factory gate price pressures," Julian Evans-Pritchard of Capital Economics said in a commentary.
ENERGY: U.S. benchmark crude oil lost 49 cents to $71.29 per barrel. The contract rose 0.6 percent to close at $71.78 per barrel in New York. Brent crude, the international standard, gave up 46 cents to $80.32. It gained 0.4 percent to $80.78 in London.
CURRENCIES: The dollar strengthened to 112.11 yen from 111.78 yen late Monday. The euro eased to $1.1576 from $1.1580.