Stocks advanced, driving European shares up the most in two weeks, as commodities and the euro rose on optimism policy makers are moving closer to containing the debt crisis. Spain and Italy’s government bonds gained. The Stoxx Europe 600 Index added 1.8 percent at 9:31 a.m. New York time, paring a weekly loss to 0.5 percent. The Standard & Poor’s 500 Index added 1 percent. Copper futures surged 5 percent after falling 10 percent in four days, and oil increased 3 percent. The euro added 0.7 percent to $1.3875 and the yen climbed to a post-World War II high versus the dollar. Spain’s 10-year debt broke a nine-day losing streak, and the yield on Italian 10-year notes dropped below 6 percent. European finance ministers are meeting today, starting a six-day negotiation over how to save Greece from default, shield banks from the fallout and build more powerful defenses against the debt crisis. As much as 940 billion euros ($1.3 trillion) might be deployed, two people familiar with the discussions said yesterday. Federal Reserve Governor Daniel Tarullo said yesterday that the central bank should consider resuming purchases of mortgage bonds to boost growth. “Markets have pretty much discounted a poor outcome coming into this, so the potential for a short-term rally or surprise on the upside is definitely there,” Steve Brice, chief investment strategist at Standard Chartered Plc in Singapore, said in a Bloomberg Television interview. Greece, Ireland Aid packages of 256 billion euros for Greece, Ireland and Portugal have failed to stabilize markets or prevent the turmoil spreading as far as France, co-anchor with Germany of the European economy. With U.S. President Barack Obama stressing the “urgency” of a fix, divisions between Germany and France festered as finance ministers arrived in Brussels. Banks in the Stoxx Europe 600 Index advanced 2.9 percent for the third-biggest advance among 19 industries. UniCredit SpA (UCG) and BNP Paribas SA, the biggest banks in Italy and France climbed more than 4.7 percent. The S&P 500 climbed for a second day. McDonald’s Corp. rallied 2.6 percent after the world’s largest restaurant chain beat the average analyst profit projection. Tarullo said the Fed should consider resuming purchases of mortgage bonds to boost economic growth and help combat a “crisis” in employment. He joins Fed Bank of Chicago President Charles Evans and Eric Rosengren of Boston in urging policy makers to increase record stimulus in an effort to spur the recovery and bring down an unemployment rate stuck near 9 percent or higher for 30 consecutive months. Emerging Markets The MSCI Emerging Markets Index climbed 1 percent, after yesterday’s 2.7 percent drop. South Korea’s Kospi Index (KOSPI) added 1.8 percent on speculation company earnings will withstand a slowing global economy. The Shanghai Composite Index retreated 0.6 percent, capping the benchmark index’s steepest weekly drop in five months, on speculation slowing economic growth and the nation’s tighter monetary policies are hurting earnings. Italy’s 10-year bond yield dropped 12 basis points to 5.90 percent. Spanish 10-year bonds snapped a nine-day decline, with yields falling six basis points to 5.47 percent. The ECB bought small amounts of Spanish and Italian government debt today, according to two people with direct knowledge of the transactions, who asked not to be identified because the deals are confidential. The Dollar Index, which gauges the currency against six major trading partners, slumped 0.7 percent. Japan’s yen strengthened to a post-World War II high against the U.S. dollar, climbing to 75.82. French Insurance The cost to insure against default on French debt rose for a second day with credit-default swaps increasing two basis points to 191, according to data provider CMA. Contracts on Germany climbed two basis points to 93, Italy was up 5 basis points to 461 and Spain added two to 388.5 basis points. “There’s a lot of information and a lot of uncertainty whether this weekend’s meeting will come out with a definitive plan,” said Stephen Halmarick, the Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “The market is still very unsure and very uncertain.” German business confidence fell to a 16-month low in October as the euro region’s worsening debt crisis threatened to push the economy into recession. The Munich-based Ifo institute’s business climate index, based on a survey of 7,000 executives, dropped to 106.4, the lowest since June 2010, from 107.4 in September. S&P said in a report today that France is among euro-region sovereigns likely to be downgraded in a stressed economic scenario. The ratings of Spain, Italy, Ireland and Portugal would also be reduced by one or two levels in either of two stress scenarios, the New York-based ratings firm said. To contact the reporter on this story: Andrew Rummer in London at arummer@bloomberg.net To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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