Tuesday begins with good news for Canadian investors from the manufacturing sector. Statistic Canada is reporting that manufacturers “put in a solid effort in July, following a dismal second quarter. Widespread increases contributed to a 1.7% rise in shipments to $43 billion.”

Led by motor vehicle manufacturing, 16 of 21 industries, representing three-quarters of total shipments, reported increases in July, says StatsCan. “The breadth of July’s increase was encouraging, since the Canadian economy has faced several setbacks in recent months.”

In the U.S., the Labor Department is reporting that the consumer-price index increased 0.3%, after a gain of 0.2% in July. The “core” index, which excludes volatile food and energy items, climbed slightly, up 0.1%. Economists had expected a 0.3% increase in the overall index and a 0.2% gain in the core index.

The CPI report has had little impact on Wall Street futures trading. Not much is happening ahead of the rate announcement due from the U.S. Federal Reserve this afternoon.

The Street consensus is that the Fed will leave rates unchanged, but everyone is hoping that accompanying statement, issued with the rate announcement, will provide investors with a sense of stability about economic growth going forward, rather than a sense of uncertainty.

Optimism about the economy prevailed in Tokyo where the Nikkei average gained 174.22 points, or 1.6%, to 10,887.03. Automakers and bank stocks led the way.

In Hong Kong, the Hang Seng Index rose 78.65 points to 11,071.38. The market opened lower on news that a Hong Kong woman was being tested for SARS, but rebounded as news came that she was not infected with the disease.

The big news for both China and Canada today is an announcement by Nortel Networks that it is shifting more of its research and development to China. The telecommunications equipment maker plans to double its Chinese R&D workforce this year, and invest US$200 million over the next three years, including construction of a large new research centre in Beijing.

In Europe at midday, London’s stock market is up about 0.4% o 4276.4. Frankfurt’s DAX is up 1%, while the Paris CAC has advanced 0.9%.

On Monday, the TSX/S&P Composite Index fell 4.78 points to 7,575.29.

The Dow Jones industrial average fell 22.74 points to 9,448.81. The tech-heavy Nasdaq composite index slipped 9.33 points to 1,845.70. The broader S&P500 shed 3.52 points to 1,014.81.