PBOC's Zhou says China has tools to aid economy as G-20 meets Oil extends weekly gain as producer talks on output continue Share on Facebook Share on Twitter Stocks rallied around the world and oil gained with industrial metals as China’s central bank said it sees room for monetary easing in the build-up to Group of 20 finance chiefs’ discussions on the global economy. Shares in Europe headed for their second weekly advance and futures signaled the Standard & Poor’s 500 Index will extend gains after Thursday reaching levels last seen at the start of the year. Industrial metals rebounded, Brent crude climbed for a third day, credit markets strengthened and Russia’s ruble led gains in emerging-market currencies. Royal Bank of Scotland Group Plc plunged after saying it would take longer than originally planned to resume shareholder payouts. People’s Bank of China Governor Zhou Xiaochuan saying he still has monetary policy tools at his disposal and there is no reason for yuan depreciation as the G-20 meet in Shanghai. While stocks gained and oil prices extended a rebound from a 13-year low, the recovery remains weak with more than $6 trillion erased from the value of global equities this year. China’s slowdown has fed into other markets by weakening commodity prices and raising concern producers will struggle to repay debt. “With a lot of policy events coming there is a fair chance of more stimulus plans so the markets can squeeze higher,� said Benno Galliker, a trader at Luzerner Kantonalbank AG. “The big reversal shows that there is some expectation building up into those events.� Stocks The Stoxx Europe 600 Index rose 1.8 percent at 10:25 a.m. in London, heading for its second consecutive weekly gain. Still, the gauge has fallen 9.2 percent in 2016 amid concern over China’s slowdown, routs in banks and oil, and dissipating faith in central-bank support. Glencore Plc and Rio Tinto Group pushed miners to the best performance of the 19 industry groups on the equity gauge Friday. Total SA and Royal Dutch Shell Plc led energy stocks higher. RBS slid 8.4 percent following its eighth consecutive annual loss. S&P 500 futures rose 0.5 percent before data that will show personal income and spending increased in January, while a measure of consumer sentiment improved in February, according to Bloomberg surveys of economists. Gross domestic product probably increased 0.4 percent in the fourth quarter, revised down from 0.7 percent reported earlier, another survey indicated. Emerging Markets The MSCI Emerging Markets Index climbed 1.1 percent, lifting the gauge to a 0.3 percent gain for the week. Benchmark gauges in Russia, South Africa and Indonesia climbed more than 1 percent on Friday. The Hang Seng China Enterprises Index of mainland shares in Hong Kong climbed 2.1 percent, halting a three-day loss. The Shanghai Composite Index rose 1 percent, trimming its first weekly retreat this month to 3.3 percent. "China still has some monetary policy space and multiple policy instruments to address possible downside risks," Zhou said at a conference in Shanghai, speaking hours before meeting his counterparts from the Group of 20 developed and emerging markets. The PBOC separately published a statement defining current policy as "prudent with a slight easing bias." The central bank had previously used language pledging to maintain a prudent policy while maintaining "reasonable, ample" liquidity. Commodities Base metals rose, supported by Zhou’s comments, with nickel in London rising 1.7 percent and copper advancing 1.6 percent. Oil extended gains as Russia said talks with Iran are continuing before a planned producer meeting next month on a proposed output freeze amid a global glut. West Texas Intermediate rose 2.1 percent to $33.75 a barrel. Russia’s output cap with Saudi Arabia will need to be in place for a minimum of 12 months to support prices, Energy Minister Alexander Novak said Thursday. A meeting with Iranian Oil Minister Bijan Namdar Zanganeh is possible next month, he said. Iran, seeking to boost exports after sanctions were lifted, said the deal is “ridiculous,� while Iraq said a pact hinges on unified support. Currencies The ruble climbed 0.7 percent and Mexico’s peso advanced 0.4 percent. A gauge of 20 developing-nation exchange rates rose 0.1 percent in a second week of gains, with rallies of more than 1 percent in the period for the ruble, Brazilian real and Colombia’s peso. The kiwi jumped 0.4 percent on Friday, bringing its climb in the week to 1.8 percent, after New Zealand unexpectedly posted its first trade surplus in eight months. Bonds Treasury 10-year notes headed for a fifth weekly gain, the longest run in 13 months, on concern this year’s financial-market turmoil will slow global economic growth. The U.S. is due to sell $28 billion of seven-year notes on Friday after the Treasury postponed the a planned sale on Thursday “due to a technical issue.� Germany’s government bonds headed for their sixth weekly gain before a report that’s set to show inflation in Europe’s largest economy vanished this month, heaping more pressure on the European Central Bank to provide meaningful stimulus. The cost of insuring corporate debt fell for a second day, reaching the lowest in about three weeks. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies dropped three basis points to 106 basis points. An index of swaps on junk-rated corporate issuers fell 16 basis points to 424 basis point.

Source