March 11 (Bloomberg) -- Stocks in Europe and Asia advanced as record oil prices boosted the earnings outlook for energy producers and investors speculated the Federal Reserve will accelerate the pace of interest-rate cuts. U.S. futures gained.

BP Plc, Europe's second-biggest oil company, and Total SA climbed as oil traded above $109 a barrel. Vodafone Group Plc rose the most in a month after it was added to Goldman Sachs Group Inc.'s ``conviction buy'' list. Mitsubishi UFJ Financial Group Inc., Japan's largest bank, increased after the Wall Street Journal said the Fed may consider alternative measures to head off a recession. Citigroup Inc. advanced in Germany.

The MSCI World Index added 0.5 percent to 1,397.71 as of 11:58 a.m. in London. The measure is down 12 percent this year on concern the collapse of U.S. subprime mortgages and a slowdown in the world's largest economy will curb profit growth. Futures on the Standard & Poor's 500 Index climbed 0.6 percent.

``Hopes of further rate cuts, and more imminently, direct actions by authorities to ease problems in the credit markets have given sentiment a nice lift,'' said Richard Scott, who helps oversee about $2.4 billion at Iimia MitonOptimal Plc in Exeter, England.

The 2008 retreat left the MSCI World valued at 14.5 times earnings yesterday, near the lowest since at least 1995, according to data compiled by Bloomberg.

The MSCI Asia Pacific Index gained 0.7 percent, after earlier falling as much as 1.2 percent. Japan's Nikkei 225 Stock Average and South Korea's Kospi index both added 1 percent.

Rate-Cut Speculation

Interest-rate futures traders started betting on a 1 percentage-point cut in the Fed's overnight target lending rate between banks to 2 percent next week. Fed funds futures on the Chicago Board of Trade show a 10 percent chance that the central bank will lower the rate by a full percentage point, compared with 6 percent a day earlier.

Europe's Dow Jones Stoxx 600 Index increased 0.5 percent. France's CAC advanced 0.6 percent, and the U.K.'s FTSE 100 rallied 1.1 percent. Germany's DAX gained 0.2 percent.

Investor confidence in Germany unexpectedly rose for a second month in March, adding to evidence Europe's largest economy is coping with the euro's appreciation and a U.S. slowdown.

Indexes pared some gains after European Central Bank council member Axel Weber said he doesn't see any leeway to lower borrowing costs after oil prices jumped to a record.

BP climbed 1.8 percent to 543.5 pence. Total advanced 1.4 percent to 48.56 euros. Crude oil for April delivery rose as much as $1.30, or 1.2 percent, in electronic trading on the New York Mercantile Exchange.

Vodafone, Banks

Vodafone, the world's largest mobile-phone company, rallied 2.4 percent to 155 pence. ``We expect Vodafone to continue to benefit from growth in wireless data without an offsetting risk of exposure to incumbent wireless assets,'' Goldman analysts wrote in a note to investors. The brokerage has a price estimate of 203 pence on the stock.

Mitsubishi UFJ, Japan's largest publicly traded bank, added 1.8 percent to 865 yen. The U.S. central bank may consider buying mortgage-backed securities and lending to financial institutions other than banks, the Wall Street Journal said.

Citigroup, the biggest U.S. bank, increased 1.9 percent to $20.06 in Germany.

Cadbury Schweppes Plc advanced 3 percent to 555.5 pence. The world's largest candy maker said its U.S. soft-drinks unit signed an agreement with five banks for loans as the British company prepares to spin off the division.

Grupo Ferrovial SA, owner of airport operator BAA Ltd., jumped 5.6 percent to 46.10 euros after the U.K. aviation regulator permitted an increase in fees at London's Heathrow and Gatwick airports, allowing the company to go ahead with its debt refinancing.

Iberdrola, Thales

Iberdrola SA gained 5.2 percent to 10.56 euros. Electricite de France SA may make a bid valued at 15 euros a share for Spanish rival Iberdrola, Negocio reported, citing market traders it didn't identify. The French state-owned utility has the backing of its government to proceed with the offer, the newspaper reported.

Electricite de France spokeswoman Carole Trivi wasn't immediately available to comment.

Thales SA added 3.9 percent to 41.01 euros. Shares in Europe's largest defense-electronics maker were upgraded to ``buy'' from ``hold'' by Societe Generale SA after the French company's 2007 profit more than doubled.

Nokia Oyi slumped 6.2 percent to 20.15 euros, dragging technology shares lower. Texas Instruments Inc., the world's second-biggest maker of chips that run mobile phones, slumped 3.3 percent to $28.66 in Germany after Vice President Ron Slaymaker said demand for chips used in phones that can download music and access the Internet was lower than expected.

Fewer orders from Nokia, the largest maker of handsets and Texas Instruments's biggest customer, caused the shortfall in wireless orders, said Ashok Kumar, an analyst at CRT Capital Group in San Francisco.

To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.

Last Updated: March 11, 2008 08:05 EDT