May 18 (Bloomberg) -- Global stocks rallied and copper and oil rebounded as European finance ministers said deficit-cutting measures won’t trigger another recession, while U.S. housing starts and earnings at Wal-Mart Stores Inc. topped estimates. The euro stabilized above a four-year low.
The MSCI World Index of 23 developed nations’ stocks climbed 1.2 percent at 9:50 a.m. in New York, its first advance since May 12. The Standard & Poor’s 500 Index increased 0.9 percent. Copper rose 3.7 percent, erasing some of yesterday’s 6.5 percent slump, and oil rebounded above $72 a barrel. The euro strengthened 0.2 percent to $1.2425, extending yesterday’s rebound after touching the weakest level since April 2006.
The European Union transferred 14.5 billion euros ($18 billion) to Greece, the first installment from an almost $1 trillion emergency loan package aimed at preventing sovereign defaults. In the U.S., builders broke ground on the most homes since 2008 in April, bolstering confidence that the recovery in the world’s largest economy will be sustained.
“They’re now trying to handle the problem, prevent the contagion,” Thomas Nyheim, a Greenville, Delaware-based fund manager for Christiana Bank & Trust Co., which oversees $5.6 billion, said of European leaders. “It’s going to be a constant theme that’s running through. The euro zone is as big as the U.S. in terms of the economy, so you just can’t avoid it, it’s so big.”
The gain in the Standard & Poor’s 500 Index was led by energy producers and financial companies, with Exxon Mobil Corp. rising 1.3 percent and Bank of America Corp. climbing 2 percent.
Wal-Mart, the world’s largest retailer, and Home Depot Inc., the biggest home-improvement chain, climbed more than 1.5 percent on better-than-estimated earnings.
LBO Talks
Fidelity National Information Services Inc. tumbled 6.3 percent after takeover talks with private-equity firms fell apart, according to people familiar with the situation, scuttling what would have been the biggest leveraged buyout in almost three years.
The S&P 500 has fallen more than 6 percent from its high for the year on April 23 as concern grew that the global economic recovery would be jeopardized as European governments struggle with budget deficits.
‘Out of Their Cave’
“A lot of the things that would drive investors out of the market have been somewhat abated,” said Peter Sorrentino, who helps oversee $13.3 billion at Huntington Asset Advisors in Cincinnati. “The Greek bailout is beginning to fire up and run. The euro hit that low and hasn’t cascaded down dramatically. In the U.S., the latest housing figures and Wal-Mart earnings show that the consumers are coming out of their cave and willing to spend some money.”
The ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations dropped to 45.8 from 53 in April as the debt crisis threatened to break up the euro zone. Economists expected a slide to 47, according to the median of 35 forecasts in a Bloomberg News survey.
The Stoxx Europe 600 Index climbed 1.6 percent as shares of banks and basic resources companies rebounded. Banco Santander SA, Spain’s biggest lender, gained 5.5 percent in Madrid, snapping a three-day, 11 percent plunge. Rio Tinto Group, the world’s third-largest mining company, rallied 3.1 percent in London.
Electrolux AB rose as much as 4.4 percent to 200.40 Swedish krona, the highest level on record in Stockholm, as a report late yesterday showed shipments of major home appliances in the U.S. rose 12.1 percent in April.
China Rebounds
China’s Shanghai Composite Index jumped 1.4 percent, rebounding from its biggest plunge since August yesterday, when the gauge tumbled 5.1 percent. Most Asian stocks declined, sending the MSCI Asia Pacific Index down 0.3 percent.
Copper for delivery in three months rose 3.7 percent to $6,710 a metric ton, after declining 6.6 percent yesterday. Aluminum, nickel and zinc also gained.
Gold for immediate delivery fell 0.7 percent to $1,213.90 an ounce in London. The metal reached a record $1,249.40 on May 14. The S&P GSCI Index advanced 1.9 percent, after falling 2.8 percent to a three-month low of 487.395 yesterday.
Crude oil rose for first time in six days on forecasts that demand is picking up in the U.S, after prices yesterday dipped below $70 a barrel to a five-month low in New York. Crude for June delivery gained as much as 3.4 percent to $72.49 a barrel in electronic trading on the New York Mercantile Exchange and was last at $72.16.
Euro, Sterling, Gilts
The 16-nation euro traded near $1.24 after falling to as low as $1.2235 yesterday, the weakest level since April 2006.
U.K. government bonds fell, with the yield on the 10-year gilt climbing 4 basis points to 3.78 percent, as inflation accelerated more than economists forecast in April to the fastest pace since 2008, enough to prompt a public letter of explanation from Bank of England Governor Mervyn King. The pound weakened 0.1 percent to 85.755 pence per euro.
The MSCI Emerging Markets Index gained 0.8 percent, its first advance in three days. Life Healthcare Group Holdings Ltd., the South African hospital owner, said it will start selling today as much as 8.04 billion rand ($1.06 billion) of shares in what would be Africa’s biggest initial public offering.
To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net.
