Stocks rose, with the MSCI World Index headed for its biggest weekly rally in a year, copper gained and the yen depreciated on waning concern the global recovery will falter. The cost of insuring bank debt fell to the lowest in eight weeks.
The Stoxx Europe 600 Index advanced 0.4 percent at 11:35 a.m. in London. The Shanghai Composite Index surged 2.3 percent, the biggest jump among world equity gauges, while futures on the Standard & Poor’s 500 Index were little changed. Copper increased for the fourth day this week, while the yen weakened against 15 of its 16 most-traded peers.
French manufacturing expanded in May, spurred by improving global trade and a pickup in output at car plants, the Paris- based national statistics office Insee said today. European Central Bank President Jean-Claude Trichet said that while the fiscal crisis isn’t over, the economic signs are “encouraging.” Policy makers in South Korea, Malaysia, Taiwan and India raised rates in the past 15 days, signaling Europe’s debt crisis won’t derail economic growth.
“There are tentative signs that the pessimism has reached saturation point,” Graham Bishop and Ian Richards, analysts at Royal Bank of Scotland Group Plc in London, wrote in a note. “The macro risks may not have disappeared, but we believe they are amply discounted.”
European Stocks
The Stoxx 600 rallied for a fourth day. Michael Page International Plc climbed 1.7 percent in London after the U.K.’s second-largest recruitment company’s profit increased. Rio Tinto Group climbed 2.4 percent. Copper producer Antofagasta Plc surged 2.8 percent after Citigroup Inc. recommended buying the shares.
Copper rose 1.6 percent to $6,718 a metric ton on the London Metal Exchange. Aluminum climbed 0.7 percent to $2,002.25 a ton. Crude oil for August delivery jumped 0.4 percent to $75.71 a barrel, heading for its biggest weekly gain since May.
U.S. stock-index futures slipped 0.1 percent after the S&P 500 yesterday gained 0.9 percent for its first three-day rally since April. Alcoa Inc., the largest U.S. aluminum maker, is due to report earnings next week, the first company in the Dow Jones Industrial Average to announce results for the second quarter. Profits for S&P 500 companies are projected to have increased 34 percent in the April-June period, according to analysts’ estimates compiled by Bloomberg.
Emerging Markets
The MSCI Emerging Markets Index climbed 1.1 percent, headed for the biggest weekly advance in four months. China’s Poly Real Estate Co. led gains by developers after the Oriental Morning Post reported some Shanghai banks have resumed lending to third- home buyers. South Korea’s won jumped 1.1 percent versus the dollar after the Bank of Korea unexpectedly raised its benchmark interest rate.
Emerging-market stocks will rally as much as 25 percent by the end of the year as the global economy avoids a “double dip” recession and attractive valuations lure investors, Citigroup Inc.’s New York-based strategist Geoffrey Dennis wrote in a research report dated yesterday.
The yen depreciated 0.1 percent to 112.31 per euro and weakened 0.3 percent to 88.58 against the dollar. The euro slipped 0.2 percent at $1.2674, on course for a second consecutive weekly gain.
The Markit iTraxx Financial Index of credit-default swaps linked to 25 European banks and insurers fell 5.5 basis points to 133.5, the lowest since May 13, according to JPMorgan Chase & Co. The yield on the 10-year German bund rose almost one basis point to 2.63 percent, and the two-year note yield climbed three basis points to 0.76 percent.
To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net
