By Stephen Kirkland and Lynn Thomasson
Stocks climbed and commodities rallied to a six-month high after Chinapledged to invest in Europe’s bailout funds. Emerging-market shares gained the most in two weeks, while the dollar weakened.
The MSCI All-Country World Index (MXWD) added 0.7 percent at 10:20 a.m. in London, following a 0.4 percent drop yesterday. The MSCI Emerging Markets Index (MXEF) rose 1.3 percent. Standard & Poor’s 500 Index futures gained 0.6 percent. The Dollar Index (DXY) fell 0.2 percent. The German 10-year bund yield rose three basis point and the similar-maturity Italian yield jumped four basis points. The S&P GSCI gauge of 24 commodities advanced 0.7 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 SA and Heineken NV beat estimates. U.S. industrial output probably had its biggest gain in six months in January, economists said before Federal Reserve data today.
“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.”
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.
Stocks Rally
The Stoxx Europe 600 Index gained 0.8 percent as more than four shares advanced for each that declined. BNP Paribas (BNP), France’s largest bank, rallied 5.6 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. Output at factories, mines and utilities rose 0.7 percent, according to the median estimate of 81 economists surveyed by Bloomberg. Other data may show manufacturing in the New York region picked up this month and homebuilder confidence climbed to the highest level since 2007. The yield on the 10-year U.S. Treasury note rose almost two basis points to 1.95 percent.
The euro strengthened 0.3 percent to $1.3175, and climbed 0.4 percent versus the yen. The pound weakened against 13 of its 16 most-traded peers before the Bank of England delivers its quarterly inflation report.
Default Risk
Gross domestic product in the 17-nation euro area fell 0.3 percent from the prior three months, the first drop since the second quarter of 2009, the European Union’s statistics office in Luxembourg said today. Economists forecast a 0.4 percent drop, the median of 42 estimates in a Bloomberg survey showed.
The cost of insuring against default on European government bondsrose for a sixth day to the highest this month. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments climbed four basis points to 337.
The GSCI climbed as much as 0.8 percent to the highest since Aug. 2. Oil in New York rose 1 percent to $101.71 a barrel and copper increased 0.7 percent to $8,477 a metric ton. China is the world’s biggest buyer of the metal and second-biggest user of oil.
Chinese stocks listed in Hong Kong gained 2.4 percent and benchmark indexes in South Korea, Taiwan and Turkey advanced more than 1 percent. Russia’s Micex Index added 0.7 percent. The BSE India Sensitive Index, or Sensex, added 1.9 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
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