The euro strengthened while European stocks and Standard & Poor’s 500 Index futures rose after the leaders of France and Germany pledged a plan to stem the debt crisis in three weeks. Commodities gained for a fourth day. Europe’s 17-nation currency appreciated 1.5 percent versus the dollar at 7:57 a.m. in New York. S&P 500 futures added 1.2 percent and the Stoxx Europe 600 Index climbed 0.6 percent, extending a three-day advance. The S&P GSCI gauge of raw materials increased 1.2 percent. The cost of insuring against default on Belgian government debt rose for a second day. German Chancellor Angela Merkel and French President Nicolas Sarkozy said yesterday they will deliver a plan to recapitalize European banks and address the Greek debt crisis by the Nov. 3 Group of 20 summit. Belgium said today it will buy part of Dexia SA and provide security for depositors as part of a plan to rescue the lender. Data this week may show U.S. retail sales increased in September at the fastest pace in six months, adding to evidence that growth is rebounding. “The Merkel-Sarkozy announcement is positive as it focuses on banks,” Alberto Gallo, a strategist at Royal Bank of Scotland Group Plc in London, wrote in a note. “The timing appears ambitious, however. Having a full response to the crisis by month-end sets a high bar.” The euro traded at $1.3578 after Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital. The shared currency weakened on Oct. 7 after Fitch Ratings lowered Spain’s foreign and local debt to AA- from AA+ and cut Italy’s to A+ from AA-, citing an “intensification” of the region’s crisis. Lending Unit Belgium’s purchase of the local consumer-lending unit of Dexia will end a 15-year cross-border experiment with France after the European debt crisis deepened. The Belgian federal government will pay 4 billion euros ($5.4 billion) for the division and guarantee 60 percent of a so-called bad bank to be set up for Dexia’s troubled assets, Finance Minister Didier Reynders said at a press conference today. Shares of the bank will resume trading today after being suspended Oct. 6. Credit-default swaps on Belgium rose 10 basis points to 293, helping drive the Markit iTraxx SovX Western Europe Index of swaps linked to 15 governments two basis points wider to 333. Contracts on France climbed 3 to 180 and Germany’s advanced 2 to 100, according to CMA. Increases signal worsening perceptions of credit quality. Greek, Belgian Bonds The yield on the Greek 10-year bond advanced 28 basis points, driving the premium investors demand to hold the securities instead of benchmark German bunds 25 basis points higher to 21.78 percentage points. Belgian 10-year bond yields rose five basis points, with similar-maturity French yields also six basis points higher. Portuguese, Spanish and Italian 10-year debt also declined. Treasuries aren’t trading today because of the Columbus Day holiday. Erste Group Bank AG tumbled 13 percent after saying it will post a full-year loss of as much as 800 million euros because of writedowns at its Hungarian and Romanian units. Ferrovial SA jumped 4.4 percent after agreeing to reduce its indirect holding in BAA Ltd., which owns London’s Heathrow airport. S&P 500 futures climbed, indicating the U.S. equity benchmark will extend last week’s 2.1 percent advance. The Federal Reserve will release the minutes of its latest interest- rate setting meeting tomorrow. Data this week may show U.S. retail sales increased in September at the fastest pace in six months, helping to ease concern the recovery is faltering. Retail Sales The rise in September retail sales anticipated by economists in a Bloomberg survey follows better-than-expected jobs figures reported last week, a rebound in construction spending in August and an acceleration in manufacturing in September. Earnings per share for the S&P 500, excluding financial companies, may have increased 14 percent in the third quarter, the smallest gain since the end of 2009, analysts’ estimates compiled by Bloomberg show. Alcoa Inc., the biggest U.S. aluminum producer, will report earnings Oct. 11 after U.S. markets close, the first member of the Dow Jones Industrial Average to do so in the third quarter. The Swiss franc gained against all 16 of its most-traded peers, rising 2.1 percent versus the dollar. The Dollar Index, which tracks the U.S. currency against those of six trading partners, slid 1.1 percent and dropped to the lowest level since Sept. 29. Australia’s dollar climbed 1.5 percent against its U.S. peer, rising for the fifth straight day. Oil, Silver Oil advanced for a fourth day, rising 1.7 percent to $84.39 a barrel in New York. Silver jumped 2.9 percent to $32.055 an ounce. Soybeans climbed 2.2 percent to $11.8375 a bushel. Gold added 1.3 percent to $1,659.49 an ounce. The MSCI Emerging Markets Index rose 0.4 percent, on course for its fourth consecutive advance, its longest winning streak since Sept. 1. The Bombay Stock Exchange Sensitive Index, or Sensex, jumped 2 percent. The WIG20 Index gained 1.6 percent after Prime Minister Donald Tusk won yesterday’s Polish general election. The EGX30 Index slid 2.4 percent in Egypt after Coptic Christian protesters clashed with security forces in Cairo yesterday. China’s yuan advanced 0.6 percent to 6.3486 per dollar in Shanghai, the most since the currency’s July 2005 revaluation, on speculation policy makers will tolerate gains after the U.S. said the Asian nation undervalues its currency. It was the strongest closing level since the country unified the official and market exchange rates at the end of 1993, according to the China Foreign Exchange Trade System. To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Stuart Wallace at swallace6@bloomberg.net To contact the editors responsible for this story: Richard Dobson at rdobson4@bloomberg.net; Justin Carrigan at jcarrigan@bloomberg.net

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