GOOD MORNING. Stocks in Asia closed higher today, European shares are up, and U.S. shares are pointing to a slightly higher open.

U.S. markets could move today on the March reading of the Conference Board’s consumer confidence index, which is scheduled to be released at 10 a.m. Traders will be looking for signs of whether consumers are feeling better about their spending capabilities and job security – and what that means for the recovery. Economists expect the index to have risen to 51 this month. In February, the index fell to 46 – a 10.5-point drop from January and the lowest level since April 2009. A reading above 90 is considered healthy and above 100 suggests strong economic growth.

A particularly surprising reading of the index can cause large swings in near-term trading because personal consumption represents such a significant portion of U.S. economic activity (about two thirds of the gross domestic product). “If we [gain] at least of what we lost in February, you’ll see an improvement in the market,” says Bruce McCain, chief investment strategist at Key Private Bank. “It will take a fairly negative number to set the market back on its heels.”

This month’s number could carry some extra weight because mixed data have left traders uncertain over how the recovery has progressed over the last couple months. In February, for example, retail sales rose while consumer confidence declined. “You might be seeing pent-up demand, and people who have jobs are spending to a certain degree, but the confidence data seems more forward looking,” says Brian Sozzi, a research analyst at Wall Street Strategies, an independent equity research firm. “I don’t think retail sales can continue to go up in straight line.” Heading Into the second quarter, job creation and increased access to credit will be necessary to sustain retail sales, he says.

Recently, consumer activity has been a murky barometer of the recovery – in part because consumers seem to be defying economic conditions. Despite a high unemployment rate and mounting foreclosures, consumer spending rose slightly in February, according to data released yesterday by the Commerce Department. The uptick came despite no change in personal income from the prior month, suggesting the gain was mostly funded by running down savings rate.

“What we find in the markets and in consumer spending in general is that people don’t really operate in a consciously rational basis,” says McCain. “It’s much more based on a good feeling or if you really believe the economy is improving enough and that your circumstances will improve that [makes you] willing to spend more aggressively.”

IN OTHER NEWS:

  • Apple (AAPL) plans to release a new version of the iPhone that would work on networks outside AT&T (T), The Wall Street Journal reported, citing anonymous sources briefed by the company. LINK
  • Royal Bank of Scotland (RBS) has been fined for giving confidential information to Barclays (BCS). LINK
  • In the face of mounting pressure from the U.S., two advisers to China’s central bank called for the yuan to resume its gradual appreciation — a request at odds with the stance of the country’s commerce chief. LINK

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