BLBG:Europe Stocks Gain With Commodities on German Confidence
European stocks had their first back-to-back gains in a month, commodities rose and the euro strengthened as German investor confidence topped forecasts. The cost of default insurance on German debt fell to a 15-month low.
The Stoxx Europe 600 Index (SXXP) advanced 0.5 percent at 7:21 a.m. in New York and futures on the Standard & Poor’s 500 Index (MXEF) added 0.3 percent. The S&P GSCI gauge of commodities climbed 0.2 percent, with copper up 0.7 percent. The euro rose 0.5 percent to $1.301, while the yen dropped against 14 of its 16 major peers. Credit-default swaps on German sovereign bonds declined 1.5 basis points to 42.5, the lowest since July 2011.
German investor confidence rose for a second month in October and another report today may show U.S. industrial production expanded in September. Growth in the world’s largest economy will probably pick up to 3.5 percent next year, reducing the unemployment rate to close to 7 percent, Federal Reserve Bank of St. Louis President James Bullard said late yesterday. Of the 41 companies in the S&P 500 (SPX) that have reported since Oct. 9, 71 percent posted earnings that exceeded analyst estimates, according to data compiled by Bloomberg.
“We are positive for the rest of the year,” Benoit Peloille, equity market strategist at Natixis in Paris, said in a Bloomberg Television interview. “We think the market will refocus on the growth issue so we try to find stocks that are exposed to international growth, especially in the U.S. The U.S. is an area for growth over the next few months, probably next few years.”
European Stocks
More than two shares gained for each that fell in the Stoxx 600, which was on course for the first back-to-back advance since Sept. 12. Bellway Plc (BWY) climbed 2.9 percent to the highest price in almost five years after the U.K. homebuilder said annual profit increased 58 percent. Petropavlovsk Plc, a miner of gold in Russia, added 3 percent in London trading after reporting a gain in production.
In Germany, the ZEW Center for European Economic Research’s index of investor and analyst expectations rose to minus 11.5 this month from minus 18.2 in September, according to a Bloomberg survey of economists. Economists had forecast a reading of minus 14.9, according to the median of 36 estimates in a Bloomberg News survey.
“It does feel like there’s some momentum there in the economy,” said Matt Riordan, who helps manage about $6.5 billion in Sydney at Paradice Investment Management Pty. “We’ve got a reasonable rebound.”
U.S. Futures
The increase in S&P 500 futures indicated the U.S. gauge will extend yesterday’s 0.8 percent rally. U.S. industrial production probably increased 0.2 percent in September from the previous month, when it fell 1.2 percent, according to the median estimate of economists surveyed by Bloomberg before the Fed releases the figures at 9:15 a.m. New York time.
Goldman Sachs Group Inc. and Johnson & Johnson are among U.S. companies reporting earnings before the start of trading today. Some 84 members of the S&P 500 are releasing results this week, according to data compiled by Bloomberg.
Commodities advanced for the first time in three days. Copper rose to $8,154 a metric ton. Oil in New York fell less than 0.1 percent to $91.82 a barrel. Inventories in the U.S., the world’s biggest oil user, rose 1.5 million barrels last week, according to a Bloomberg News survey before a government report tomorrow.
Japan’s currency depreciated as much as 0.4 percent to 78.94 per dollar, its fourth straight decline, taking it to the weakest level since Sept. 19. It weakened 0.8 percent to 102.6 yen per euro.
Spanish Bonds
Spain’s 10-year bonds fell, pushing the yield two basis points higher to 5.84 percent, as the nation sold 4.86 billion euros ($6.3 billion) of debt, exceeding its 4.5 billion-euro target. The Treasury auctioned 12-month bills at an average yield of 2.823 percent, compared with 2.835 percent at the previous auction on Sept. 18, and sold 18-month securities at 3.022 percent, compared with 3.072 percent last month.
Demand for the 12-month notes was 2.71 times the amount sold, up from 2.03 last month and the bid-to-cover for the longer-dated bills was 3.04 compared with 3.56 in September.
Spain is prepared to seek financial aid from the euro area and is waiting for a decision on how the request would affect Italy, the Financial Times reported, citing a senior official in Spain’s economy ministry it didn’t name.
German bunds fell, pushing the yield two basis points higher to 1.49 percent, while the rate on similar-maturity Treasuries increased one basis point to 1.68 percent.
The cost of insuring corporate and financial European debt fell for a fourth day. The Markit iTraxx Financial index of credit-default swaps linked to 25 banks and insurers dropped 3.5 basis points to 172.5, a 15-month low.
The MSCI Emerging Market Index rose 0.6 percent, jumping the most in more than a week. South Korea’s Kospi advanced 0.8 percent and Taiwan stocks added 0.7 percent. Equity gauges in Turkey, Russia, South Africa, Hungary and the Czech Republic also gained.
To contact the reporter on this story: Andrew Rummer in London at arummer@bloomberg.net and @AndrewJRummer on Twitter
To contact the editor responsible for this story: Chris Nagi at chrisnagi@bloomberg.net
