As widely predicted by economists, the Bank of Canada has cut the overnight bank rate by 25 basis points to 2.5%. The bank is citing the adverse impact of the higher dollar on exports.

Canada’s chartered banks have responded by lowering their prime lending rates.

Meanwhile, Statistics Canada is reporting that the composite leading index grew 0.8% in December, comparable with its revised increases of 0.9% in November and 0.8% in October.

“Business services, notably temporary help, continued to raise their payrolls for a fourth straight month, while manufacturers extended their workweek for a second month in a row,” Statistics Canada said.

In business news, Barrick Gold says it achieved its full-year production target of 5.51 million ounces in 2003 and has been slashing its price-hedging total as planned. The average cash production cost of US$189 US, the company says.

On Wall Street, futures markets are pointing to a positive start to equities trading.

In Europe the markets are mostly flat at midday. Paris’s CAC40 was unchanged at 3,689 from Monday’s close. In Frankfurt, banks fell on profit-taking after very strong performances in recent days. The Xetra Dax is slightly higher at 4.146.05. Insurance shares are leading in London. London’s FTSE100 is almost unchanged, down 0.1% at 4,511.80.

In Tokyo, the Nikkei Stock Average gained 66.77 points, or 0.61%, to 11,103.1, its best finish since Oct. 22. Stocks surged following an announcement from the Bank of Japan that it is raising the amount of cash in the financial system to ensure that economic recovery continues. In Hong Kong, the Hang Seng Index rose 317.12 points, or 2.4%, to 13,570.43, its highest close since June 13, 2001.

On Monday, U.S. markets were closed for the Martin Luther King Jr. holiday. In Toronto a 3.85% boost in the information technology sector helped send the S&P/TSX composite index up 58.10 points to 8,580.36. The TSX Venture Exchange added 7.99 at 1,775.40.