Dec. 8 (Bloomberg) -- European stocks rallied, led by industrial and commodity shares, after U.S. President-elect Barack Obama pledged the largest spending on infrastructure since the 1950s to revive the biggest economy.

Siemens AG, Europe’s largest engineering company, and Hochtief AG jumped more than 10 percent after Obama said he’s planning the biggest public works program since President Dwight D. Eisenhower created the interstate highway system. BHP Billiton Ltd. rose 16 percent, and Royal Dutch Shell Plc advanced 8.3 percent as copper and oil rebounded.

Daimler AG led auto shares higher as U.S. lawmakers agreed in principle with the Bush administration on providing funds to prevent the collapse of General Motors Corp. and Chrysler LLC.

The Dow Jones Stoxx 600 Index gained 6.7 percent to 202.61, the most in two weeks. The gauge is still down 44 percent in 2008, headed for its worst year on record.

Obama’s spending plan “is important in terms of it being another sign that policy response is ongoing and we should expect to see more from authorities through 2009,” said Robert Talbut, who helps manage $31 billion of assets as chief investment officer at Royal London Asset Management. “That should help restore confidence in equity markets.”

U.S. Treasuries declined and the yen fell against the euro as investor appetite for the safest assets decreased. The cost of protecting corporate bonds from default also retreated.

National benchmarks climbed in all 17 western European markets that were open. The FTSE 100 gained 6.2 percent as BHP and Anglo American Plc led the advance. France’s CAC 40 rose 8.7 percent, with Total SA jumping 11 percent. Germany’s DAX added 7.6 percent, led by Siemens and Deutsche Boerse AG.

Profits for Free

Governments worldwide have introduced measures this year to buttress their economies from the worst financial crisis since the Great Depression as more than $31 trillion was erased from the value of global equities. Debt losses and writedowns by the world’s largest lenders and insurers approached $1 trillion.

Stocks have fallen so far that 2,267 companies around the globe are offering profits to investors for free. That’s eight times as many as at the end of the last bear market, when the shares rose 115 percent over the next year.

Companies in the MSCI World trade for an average $1.17 per dollar of net assets, the lowest since at least 1995, and 39 percent sell at a discount to shareholder equity, data compiled by Bloomberg show.

Siemens, Europe’s largest engineering company, advanced 10 percent to 49.40 euros, while CRH Plc, the world’s second- biggest building materials maker, rallied 6.3 percent to 18.60 euros. Obama said on Dec. 6 he will boost investment in roads, bridges and public buildings to create and preserve 2.5 million U.S. jobs. Hochtief, Germany’s biggest builder, climbed 16 percent to 30.94 euros.

Dubai Concourse

Leighton Holdings Ltd., Australia’s largest construction company which is controlled by Hochtief, yesterday won a 4.9 billion dirham ($1.3 billion) contract to build a new concourse at Dubai Airport.

Daimler led a rally in carmakers as U.S. lawmakers hammer out details of legislation to bail out ailing auto companies after reaching an agreement in principle with the Bush administration.

Daimler, the world’s second-biggest producer of luxury cars, gained 9.7 percent to 24.60 euros. Bayerische Motoren Werke AG, the largest luxury-car maker, climbed 5.7 percent to 20.94 euros.

The legislation is taking shape after House Speaker Nancy Pelosi dropped her opposition to drawing on $25 billion in funds from the Energy Department intended to help automakers develop more fuel-efficient vehicles, according to a Democratic aide who declined to be identified.

Commodities Rally

BHP, the world’s largest mining company, climbed 16 percent to 1,128 pence as copper rallied on the London Metal Exchange. Xstrata Plc, the world’s fourth-biggest copper producer, increased 10 percent to 633 pence. Anglo American Plc jumped 16 percent to 1,429 pence.

Copper for delivery in three months rose for the first time in eight days, reaching a high of $3,336. Commodities gained on speculation Obama’s public-works program will boost demand for raw materials.

Shell, Europe’s biggest energy producer, added 8.3 percent to 1,691 pence as crude oil rebounded in New York. Total, Europe’s third-largest, increased 11 percent to 39.68 euros.

Oil snapped a six-day rout, with crude for January delivery climbing as much as 9.5 percent to $44.70 a barrel on the New York Mercantile Exchange.

Eni SpA gained 14 percent to 17.58 euros after the Italian government said the Libyan Energy Fund is interested in buying a stake in Italy’s biggest oil company.

Il Sole 24 Ore reported yesterday Libya could buy as much as 10 percent of Eni for as much as 9 billion euros ($11.5 billion), citing Libyan Ambassador to Italy Hafed Gaddur.

Deutsche Boerse

Deutsche Boerse, which runs the Frankfurt stock exchange, rallied 11 percent to 56.01 euros after saying the company had considered a merger offer for NYSE Euronext, operator of the world’s largest stock market. Deutsche Boerse said the talks had “ended without any conclusion.”

HSBC Holdings Plc gained 5.5 percent to 749.25 pence after Europe’s largest bank said it will increase the amount of money it loans for U.K. home mortgages next year by 20 percent to 15 billion pounds ($22 billion).

The announcement came less than a day after the bank created a $5 billion fund to increase access to credit for small and medium-sized businesses.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

Last Updated: December 8, 2008 12:09 EST