BLBG: Stocks, Commodities Rise on China Aid Pledge
Stocks climbed and commodities rallied to a six-month high after China said it will get more involved in Europe’s bailout effort. The euro weakened on concern European officials won’t be able to reach an agreement to give assistance to Greece.
The MSCI All-Country World Index (MXWD) added 0.5 percent at 8:35 a.m. in New York, following a 0.4 percent drop yesterday. The Standard & Poor’s 500 Index futures gained 0.7 percent. The euro slipped 0.4 percent to $1.3081. The cost of insuring against default on European government bonds gained for a sixth day. The S&P GSCI gauge of 24 commodities rose 0.6 percent.
China, which holds the world’s largest currency reserves, can provide help through avenues including the central bank and its sovereign wealth fund, said People’s Bank of China Governor Zhou Xiaochuan. The euro-area economy performed better than analysts anticipated, and earnings for BNP Paribas (BNP) SA and Heineken NV beat estimates. A Federal Reserve report showed manufacturing in the New York region expanded in February at the fastest pace since June 2010.
“China could make Europe’s problems go away,” said Peter Jolly, head of market research at National Australia Bank Ltd. in Sydney. “They have the funds. To the extent that China will participate in the European solution, it takes away some of the flight to quality in Treasuries.”
Increasing Pressure
European finance ministers are increasing pressure on Greece to deliver budget cuts in exchange for a 130 billion euros ($171 billion) rescue package. The ministers canceled a Brussels meeting slated for today on concern about the lack of assurances from Greek leaders to stick to spending cuts. They will hold a teleconference instead. The euro erased earlier gains after Reuters reported that policy makers are examining delays to a second bailout program for Greece.
The Stoxx Europe 600 Index gained 0.7 percent as more than three shares advanced for every one that declined. BNP Paribas, France’s largest bank, rallied 6 percent. Heineken, the world’s third-biggest brewer, climbed 4.5 percent.
The increase in S&P 500 futures indicated the U.S. equities gauge will erase yesterday’s 0.1 percent drop. The Fed Bank of New York’s general economic index increased to 19.5 this month from 13.5 in January. The index exceeded all forecasts in a Bloomberg News survey or economists.
Another report may show U.S. industrial output probably had its biggest gain in six months in January. Output at factories, mines and utilities probably rose 0.7 percent, according to the median estimate of 81 economists surveyed by Bloomberg.
European Growth
The euro weakened 0.3 percent versus the yen. The currency strengthened earlier after the European Union said gross domestic product in the euro area fell 0.3 percent from the prior three months, the first drop since the second quarter of 2009. Economists forecast a 0.4 percent drop, the median of 42 estimates in a Bloomberg survey showed.
The extra yield investors demand to hold Portuguese 10-year bonds instead of benchmark bunds increased eight basis points. Portugal sold 3 billion euros of three-, six- and 12-Month bills. Spanish 10-year bonds fell, sending the yield three basis points higher, with the yield on the Greek bond due in October 2022 jumping 32 basis points to 33.30 percent, while the price dropped to 21.37 percent of face value.
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed four basis points to 337.
The S&P GSCI climbed as much as 0.8 percent to the highest since Aug. 2. Oil in New York rose 0.8 percent to $101.53 a barrel.
MSCI Emerging Markets Index (MXEF) climbed 1.3 percent. Chinese stocks listed in Hong Kong gained 2.4 percent and benchmark indexes in South Korea and Taiwan advanced more than 1 percent. Russia’s Micex Index added 1.1 percent. The BSE India Sensitive Index, or Sensex, added 2 percent.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at Swallace6@bloomberg.net
