The yen hovered near fresh lows against the dollar and Japanese stock markets jumped on Tuesday after a U.S. official voiced support for Japan’s drive to beat deflation, assuaging fears that criticism of its aggressive stance on monetary policy would mount.

The euro rallied from nearly three-week lows against the dollar on Monday after a European Central Bank policymaker said Europe’s shared currency was not overvalued at current levels.  Brent crude oil futures fell on Monday, with gasoline futures leading losses after last week’s blizzard in the U.S. Northeast, one of the world’s biggest gasoline markets, is expected to have had little impact on regional fuel supplies.

U.S. Treasuries dipped slightly but remained within recent ranges on Monday before new Treasury supply this week and a day ahead of President Barack Obama’s State of the Union address, which will be watched for any signs of a deal on spending cuts.

    LOCAL MARKETS PREVIOUS CLOSE

•      BSE index 19,460.57 (-0.12 pct)
•      NSE index 5,897.85 (-0.10 pct)
•      Rupee 53.8450/8550 per dollar (53.50/51)
•      10-year bond yield 7.86 pct (7.84 pct)
•      5-year OIS rate 7.26 pct (7.23 pct)
•      1-year OIS rate 7.63 pct (7.60 pct)
•      Call money 7.80/7.85 pct (7.80/7.85 pct)

India’s current account deficit is likely to reach a record high in the fiscal year that ends in March, its central bank governor warned, a gap which the bank said previously needed to shrink for it to cut interest rates further.

India-based Cipla Ltd has put on hold a $215 million bid for control of South African generic drug firm Cipla Medpro, the chairman of the Indian drug maker said.

Bank of India is hoping to raise up to $500 million in dollar bonds, and is expected to meet investors in Europe and Asia later this month, two sources with direct knowledge of the deal said.

The BSE index is up 0.25 percent and the 50-share NSE index rises 0.16 percent.  Shares in India’s state-run Oil and Natural Gas Corp rose 2 percent a day after its October-December net profit beat market expectations, while Hindustan Petroleum Corp rose 0.6 percent ahead of its October-December results later in the day.

Jindal Steel and Power falls 1.4 percent ahead of its October-December earnings later in the day.  India will release industrial output data for December around 0530 GMT. According to a Reuters’ poll of analysts, the worst is probably over for flagging Indian factories and  industrial production could grow an annual 1.1 percent in December.