Stocks set for early bounce

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NEW YORK�(CNNMoney) -- U.S. stocks were headed for a higher open Tuesday, following better-than-expected retail sales and manufacturing data.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures rallied more than 1% ahead of the opening bell. Futures measure current index values against perceived future performance.

The first round of economic data this week helped set the stage for an early rally.

The Commerce Department said retail sales slid 0.2% in May. While it was the first decline in 11 months, it was much less of a decline than economists had expected.

Additionally, the Labor Department issued a brighter report on the producer price index, also known as manufacturer inflation. The PPI rose 0.2% in May, slightly better than the 0.1% that economists had forecast.

U.S. stock futures were higher all morning, on the heels of positive data out of China. The country released a report on industrial production that beat expectations and said inflation picked up in May -- easing worries about a sharp economic slowdown.

"We've had six straight weeks of down for stocks, so any type of positive news is going to help," said Anthony Conroy, head trader at BNY ConvergEx Group. "Right now we're getting a little bit of a bounce from the pretty good news out of China."

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On Monday, stocks began the session higher following a series of corporate deals. But the gains were short lived after credit agency Standard & Poor's downgraded its rating on Greece to "CCC." S&P also kept its negative outlook on Greece. The major indexes ended little changed.

Companies: Smartphone makers Apple (AAPL, Fortune 500) and Nokia (NOK) agreed to settle their long-running patent dispute early Tuesday. Apple will pay Nokia a one-time sum, and ongoing royalties will go to Nokia. Shares of Nokia jumped 4% in premarket trading, while shares of Apple edged up less than 1%.

Meanwhile, Honda (HMC) released its full-year forecast Tuesday, announcing that it expects a 63.5% drop in 2011 profit. Shares of Honda slid 1.7%.

Shares of Best Buy (BBY, Fortune 500) climbed more than 5%, after the consumer electronics retailer reported first-quarter results that beat expectations.

World markets: European stocks were higher in morning trading. Britain's FTSE 100 rose 0.3%, the DAX in Germany jumped 1.5% and France's CAC 40 added 0.8%.

Asian markets ended the session mixed. The Shanghai Composite climbed 1.1% and Japan's Nikkei rose 1.1%, while the Hang Seng in Hong Kong ended barely below breakeven.

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China released inflation data that showed the nation's rapid pace of inflation picked up again in May -- even though the government has stepped up efforts to tame rising prices.

The country's inflation rate rose slightly to 5.5% in May, up from an increase of 5.3% in April, according to China's National Bureau of Statistics.

After the announcement, China's central bank raised the reserve requirement ratio for depository financial institutions by half a percentage point, effective June 20.

While inflation remains high, Conroy said the report eased fears of stalling growth.

"It's either inflation or a slowdown -- there's always something to worry about," he said. "But I think you would rather worry about inflation than things really falling off a cliff."

Currencies and commodities: The dollar fell against the euro and the British pound but was flat against the Japanese yen.

Oil for July delivery gained 30 cents to $97.63 a barrel.

Gold futures for August delivery rose $4.10 to $1,519.70 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury slipped, pushing the yield up to 3.01% from 2.99% late Monday.