Stocks trade flat

By Herbert Lash

NEW YORK (Reuters) - Global stocks were flat on Tuesday as U.S. housing data reinforced the view of a sluggish recovery, while the U.S. dollar fell on speculation the Federal Reserve may lower expectations of a rate increase.

Oil prices rebounded more than 2 percent as the dollar eased and disruptions from Nigeria, a member of the Organisation of the Petroleum Exporting Countries, stoked supply concerns.

Renewed dollar losses supported commodities denominated in the greenback, pushing the benchmark Reuters-Jefferies CRB Index of 19 commodity futures .CRB up 1.5 percent.

Investors awaited what Fed policy-makers say after their two-day meeting ends on Wednesday. With no move on interest rates expected, investors will focus on what the Fed says about the economic outlook and its debt-buying program.

U.S. Treasury debt prices rose as exceptionally strong demand for $40 billion (24.3 billion pounds) of two-year notes came on top of the housing data, which bolstered the view the economy's recovery from its longest recession since the 1930s would be tepid.

Demand for the notes, as measured by the bid-to-cover ratio, hit its highest in nearly two years, while a key gauge of interest by foreigners and large institutional investors was nearly twice its usual average.

"It's a recognition of a stagnating economy," said Jessica Hoversen, fixed-income market analyst at MF Global Research in Chicago.

"It's naive to wish a swift recovery, given this unprecedented downturn. The consumer is still highly deleveraged and companies are reluctant to hire," she said.