BLBG: Aluminum Falls to 7-Year Low as Slumping Car Sales Reduce Usage
U.S. stock futures rose, following gains in Europe, after Royal Bank of Scotland Group Plc said it will put assets into a U.K. government insurance program and Switzerland’s UBS AG replaced its chief executive officer.
Citigroup Inc. climbed 4.4 percent in German trading. American International Group Inc. advanced 33 percent as the Financial Times reported the insurer may consider splitting into three businesses. General Motors Corp. is among companies scheduled to report earnings today.
Standard & Poor’s 500 Index futures expiring in March added 1.3 percent to 771 as of 11:35 a.m. in London. Dow Jones Industrial Average futures gained 1.2 percent to 7,315 and Nasdaq-100 Index futures increased 1.3 percent to 1,168.75.
“It’s in banks’ best interest to find solutions to get through the crisis,” said Bernard Delattre, a fund manager at Prigest SA in Paris, which oversees about $766 million. “They represent a lot for the economy. We have to support them.”
Stocks in Europe rose for the first time in five days, with the Dow Jones Stoxx 600 Index adding 0.7 percent. Measures of banks and insurers posted the biggest gains, climbing more than 5 percent each. The MSCI Asia Pacific Index declined 0.9 percent.
RBS, the biggest bank controlled by the U.K. government, will put 325 billion pounds ($462 billion) of assets into a government insurance program and dispose of 20 percent of its remaining holdings after posting the biggest loss in U.K. history. UBS hired former Credit Suisse Group AG Chief Executive Officer Oswald Gruebel as its CEO to restore investor confidence eroded by record losses and a U.S. legal battle.
Budget Request
President Barack Obama’s first budget request would provide for as much as $750 billion in new aid to the financial industry, as well as for an overhaul of the U.S. health-care system and a program to cut carbon-dioxide emissions. The spending blueprint, being sent to Congress today, anticipates the government will run a deficit totaling $1.75 trillion in the year ending Sept. 30, equivalent to about 12 percent of gross domestic product.
U.S. stocks fell yesterday as dividend cuts triggered a sell-off in insurers and an unexpected drop in home sales dragged down industrial shares, overshadowing speculation that banks will pass the government’s so-called stress tests. Federal Reserve Chairman Ben S. Bernanke said that while the government may take “substantial” stakes in Citigroup and other banks, it doesn’t plan a full scale nationalization that wipes out stockholders.
Citigroup, the New York-based bank bailed out by the U.S. for $52 billion, climbed 4.4 percent to $2.63. JPMorgan Chase & Co. added 0.9 percent to $21.93 in Germany.
AIG Gains
AIG gained 33 percent to 61 cents in German trading. The company is in talks with U.S. authorities about a proposal to split the company into three U.S.-controlled businesses, the Financial Times reported, citing unidentified people.
The U.S. would amend a $60 billion loan to AIG and exchange its 80 percent AIG stake for holdings in the three units, consisting of AIG’s Asia business, international life insurance and U.S. personal lines, the report said.
Separately, China Life is in talks with AIG for its Asian unit’s assets, the insurance industry regulator said. China Insurance Regulatory Commission Vice Chairman Li Kemu was speaking in Beijing today.
The S&P 500 is down 15 percent this year after losing 38 percent in 2008 for its biggest annual tumble since 1937. Still, fewer stocks are falling to 52-week lows, a sign that the worst of the market’s losses may be over, according to Bespoke Investment Group LLC.
Economy Watch
Reports today may show orders for durable goods fell in January for a sixth straight month and sales of new homes slumped to a record low, signs the yearlong recession is plumbing new depths, economists said. The durable-goods data are set for 8:30 a.m. in Washington and the home-sales report is due at 10 a.m.
Separately, Labor Department figures may show more than 600,000 Americans filed first-time claims for jobless benefits for a fourth straight week, a survey of economists showed.
GM slipped 4.3 percent to $2.44 in German trading before the largest U.S. automaker reports earnings today.
Fluor Corp. climbed 13 percent to $37.25 in Germany. The largest publicly traded U.S. engineering firm reported profit of $1.04 a share in the fourth quarter, beating the average analyst estimate by 14 percent.
Salesforce.com Inc. added 3 percent to $28.94 after the biggest seller of Internet-based customer-management software said it expects to earn at least 54 cents a share this year, exceeding the average estimate of analysts surveyed by Bloomberg.
