BLBG: Canadian Stocks Advance as Commodity Producers Climb with Oil
Stocks climbed, sending the MSCI World Index higher for a third day, and oil advanced above $72 a barrel as speculation mounted that the worst of the global recession is over.
The MSCI World Index of 23 developed countries added 0.5 percent at 10:00 a.m. in London, while futures on the Standard & Poor’s 500 Index increased 0.3 percent. Crude oil rose as much as 1.2 percent in New York as the International Energy Agency increased its oil-demand forecast for the first time in 10 months. Treasuries rose, rebounding from a drop yesterday that pushed 10-year yields to the highest level since October, after Russia and Brazil said they will allocate $20 billion of their foreign-exchange reserves to International Monetary Fund bonds.
Retail sales in the U.S. probably rose in May for the first time in three months, a Bloomberg survey of economists showed before the Commerce Department reports the data today. China said spending on factories, real estate and roads increased the most in five years following the government’s 4 trillion yuan ($585 billion) stimulus package.
“There are more positive signs visible on the economic outlook,” said Matthias Fankhauser, a Zurich-based fund manager with Clariden Leu AG, which oversees about $100 billion. “Markets seem to believe that the economy will turn.’
Europe’s Dow Jones Stoxx 600 Index advanced for a third day, adding 0.6 percent. The gauge has rebounded 35 percent since March 9 on speculation that the $12.8 trillion pledged by the U.S. government and the Federal Reserve will help end the first global recession since World War II.
U.S. Futures
The Stoxx 600 is now valued at 24.9 times the earnings of its companies, the most expensive level since 2004, weekly data compiled by Bloomberg show.
S&P 500 futures indicated that the benchmark index for U.S. equities may rebound after dropping for the third time in four days yesterday on concern higher interest rates and accelerating inflation will snuff out the economic rebound.
Retail purchases last month probably climbed 0.5 percent, economists said before a Commerce Department report at 8:30 a.m. in Washington. Sales probably increased 0.2 percent excluding autos, led by gains at service stations as gasoline prices rose. At the same time, the Labor Department may report that 615,000 workers filed claims for jobless benefits last week, compared with 621,000 a week earlier, according to the survey median.
‘‘The tone of commentary coming from central banks is that the pace of decline in growth is slowing, and recovery will evolve late this year, but when it does, it will be anemic,” Greg Gibbs, a strategist at Royal Bank of Scotland Group Plc in Sydney, said in a research note.
Oil Advances
Crude oil futures rose as much as 1.2 percent to $72.18 on the New York Mercantile Exchange.
Oil prices have gained 32 percent so far this year, as investors return to the commodity on speculation consumption will improve once the economy recovers. The Paris-based IEA raised its 2009 oil demand forecast by 120,000 barrels a day to 83.3 million in its latest monthly report today, saying the revisions may “signal the bottoming out of the recession.”
Oil between $60 and $90 is in “the right sort of price range,” Tony Hayward, the chief executive of BP Plc, Europe’s second-biggest oil company, said yesterday in London. The dollar dropped against higher-yielding currencies on speculation the recession is easing. The Australian dollar rose 1.3 percent to 81.39 U.S. cents and the New Zealand dollar gained 2.4 percent to 64.12 U.S. cents. Against the euro, the greenback slipped 0.2 percent to $1.4016.
Pound Rallies
The pound climbed against the dollar and the euro after Bank of England policy maker Andrew Sentance said the U.K. recession may be “bottoming out,” setting the scene for a recovery as soon as this year. Sterling advanced 0.5 percent to $1.6443, gaining for the fourth consecutive day.
Treasuries gained, with the yield on the 10-year note falling three basis points to 3.93 percent. The yield on the security, a benchmark for consumer and company borrowing costs, reached 3.9975 percent yesterday after the U.S. sold $19 billion of the securities and Russia said it may move out of U.S. debt to buy IMF bonds. China will purchase $50 billion and India may announce similar funding, Brazil’s Finance Minister Guido Mantega said.
The plan by the so-called BRICs may be more a signal of their growing financial clout than a lack of demand for U.S. assets, according to Goldman Sachs Group Inc.
“They’re saying they are part of the big leagues,” Alberto Ramos, an economist at Goldman Sachs, said in New York. “They’re not buying IMF bonds to diversify reserves. They want to be seen as having a large voice” in global markets, he said.
Soybeans for July delivery rose as much as 1 percent to $12.58 a bushel in Chicago, the highest since Sept. 4, after the U.S. Department of Agriculture yesterday reduced it estimate for inventories of the oilseed.
