BLBG:Stocks Rebound With U.S. Futures as China Acts to Boost Lending; Oil Gains
European stocks rose for a fourth day, U.S. index futures rallied and oil jumped above $100 a barrel after China cut its reserve requirement for banks. Italian bonds dropped while the German one-year yield sank below zero for the first time.
The Stoxx Europe 600 Index added 1.1 percent at 6:50 a.m. in New York, paring this month’s slump to 3.8 percent. Standard & Poor’s 500 Index futures gained 0.8 percent. The 10-year Italian bond yield rose six basis points to 7.29 percent, with the equivalent Spanish yield climbing one basis point. Germany’s one-year yield dropped 12 basis points to minus 0.04 percent. Oil jumped 0.4 percent to $100.12, after falling 0.9 percent.
China will cut reserve requirement ratio for banks by 0.5 percentage points from Dec. 5, the central bank said on its website today. Finance ministers yesterday agreed to guarantee as much as 30 percent of new bond sales from troubled governments to enhance the region’s bailout fund, and to improve its ability to cap yields by buying bonds. Stocks fell earlier after S&P cut debt ratings on lenders from Bank of America Corp. to Goldman Sachs Group Inc. to UBS AG.
“The Chinese move reflects how concerned they are about the European Union debt threat and that’s how investors also see it,” Chris Weafer, chief strategist at Troika Dialog in Moscow, said by e-mail. “That is still the dominant issue affecting all markets and will remain so well into 2012.”
The next 10 days will be a “critical period” to complete the crisis response, European Union Economic and Monetary Affairs Commissioner Olli Rehn said today in Brussels.
Debt Contagion
More than $3 trillion has been erased from the value of global equities this month as rising borrowing costs in Italy and Spain signaled Europe’s debt crisis was worsening.
Five stocks advanced for every one that declined in the Stoxx 600. Royal Dutch Shell Plc and BP Plc led oil companies higher, advancing more than 1 percent.
The gain in U.S. index futures indicated the S&P 500 will pare a 4.6 percent retreat in November, its sixth month of declines in seven. Bank of America slid 0.4 percent in pre- market trading, and Citigroup Inc. lost 2.1 percent in Germany.
U.S. companies probably added 130,000 workers in November, economists said before an ADP Employer Services’ report today, up from 110,000 the previous month. Data on nonfarm productivity and pending sales of existing homes are also due today, and the Federal Reserve is scheduled to release its Beige Book, surveying economic conditions.
Euro-Era Record
The yield on the Portuguese 10-year bond advanced to 14.06 percent, a euro-era record, while the benchmark German bund yield retreated four basis points. That drove the difference in yield between the securities to 11.77 percentage points, also a euro-lifetime high.
Italian bonds fell even as the European Central Bank bought the nation’s securities, according to three people with knowledge of the transactions, who declined to be identified because the deals are private. A spokesman for the ECB in Frankfurt declined to comment.
The MSCI Emerging Markets Index (MXEF) advanced 0.4 percent, paring this month’s decline to 8.3 percent in November. Poland’s WIG20 Index jumped 2.2 percent after a report showed the economy grew more than economists forecast in the third quarter. Benchmark gauges in Russia, South Africa and Turkey climbed more the 1 percent. The Shanghai Composite Index (SHCOMP) fell 3.3 percent earlier after central bank adviser Xia Bin said China’s policy “fine-tuning” doesn’t mean credit controls will be loosened.
----With assistance from Will Hadfield, Sharon Lindores, Daniel Tilles and Jason Webb in London. Editors: Stephen Kirkland, Mark Gilbert
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net
To contact the editor responsible for this story: at jcarrigan@bloomberg.net
