July 14 (Bloomberg) -- Stocks rose around the world and bonds fell on speculation earnings from Goldman Sachs Group Inc. will suggest that the worst of the financial crisis is over.

The MSCI World Index advanced 1.1 percent at 12:57 p.m. in London, posting a two-day gain for the first time this month. Futures on the Standard & Poor’s 500 Index increased 0.8 percent. Russia’s Micex Index climbed 3.9 percent and the ruble strengthened the most since April against the dollar on better- than-estimated earnings from OAO Sberbank, the nation’s biggest financial institution. Treasuries slid, sending the yield on the benchmark 10-year note 5 basis points higher to 3.40 percent.

Goldman Sachs will post the largest profit since a record set in 2007 when it reports second-quarter earnings today, according to analysts’ estimates compiled by Bloomberg. U.S. Treasury Secretary Timothy Geithner, speaking in Jeddah, Saudi Arabia, said the global economy may suffer setbacks during its recovery and credit conditions will remain “unusually tight.”

“Caution may well prevail in the financial markets until key earnings reports are released, some coming today like Goldman Sachs,” Derek Halpenny, European head of global currency research at Bank of Tokyo Mitsubishi UFJ Ltd., wrote in a report today. “If key earnings reports at least meet expectations, a clearer recovery in risk appetite may be imminent.”

Oil, Copper Rise

Crude oil for August delivery rose for the first time in three days, gaining 2.3 percent to $61.07 a barrel on the New York Mercantile Exchange. The Organization of Petroleum Exporting Countries will outline its expectations for a possible rebound in demand next year in a monthly report today. Copper for three-month delivery rose 2.2 percent on the London Metal Exchange to $5,000 a metric ton.

The rally in commodities helped push a gauge of European raw-material producers up 4.3 percent, leading the Dow Jones Stoxx 600 Index’s 1.4 percent advance. BHP Billiton Ltd., the world’s largest mining company, increased 3.1 percent in London, while Rio Tinto Group, the third-biggest, rallied 4.2 percent.

The MSCI Asia Pacific Index climbed 2.5 percent, the steepest rise in almost two months. Posco, South Korea’s largest steelmaker, added 2.3 percent in Seoul after saying 2009 output may be 6.4 percent higher than forecast.

Stocks maintained their gains even after the ZEW Center for European Economic Research gauge of German investor confidence showed an unexpected decline in July, suggesting the recovery in Europe’s largest economy may take longer to materialize. U.S. government data today may show that retail sales rose in June for the second straight month as price cuts brought shoppers back into stores, according to economists surveyed by Bloomberg.

Earnings Season

The MSCI World Index of 23 developed countries, which posted its biggest rally in a decade last quarter, still is down 2.1 percent since the start of July on speculation that earnings will signal the first global recession since World War II has not yet run its course.

Profits fell an average 35 percent at Standard & Poor’s 500 Index companies in the second quarter and will drop 21 percent from July through September, according to analyst projections compiled by Bloomberg. That would extend the streak of quarterly profit declines to a record nine, Bloomberg data show.

Johnson & Johnson added 1.9 percent to $58.83 in pre-market New York trading. The maker of thousands of health-care products from Listerine mouthwash to Topamax migraine pills posted second-quarter profit of $1.15 a share, beating the $1.12 a share estimate of 14 analysts surveyed by Bloomberg.

Goldman Sachs advanced 0.1 percent in New York, extending yesterday’s 5.3 percent gain. The bank will probably say it earned $2.2 billion in the three months through June, according to the average estimate of analysts surveyed by Bloomberg.

CIT Group, Russia

CIT Group Inc. surged 20 percent in pre-market New York trading. The century-old lender that’s been unable to persuade the government to back its debt sales said it’s in “active discussions” with regulators about a rescue before $1 billion of bonds mature next month.

The Micex posted its first back-to-back gains in a month after Sberbank said first-quarter net income was 600 million rubles ($18.4 million), topping estimates from Moscow-based brokerages Troika Dialog and KIT Finance. Financial shares led a rally in the MSCI Emerging Markets Index, which climbed 2.5 percent for the steepest intraday gain since June 24.

The ruble strengthened 1.7 percent against the U.S. currency, bolstered by oil’s rise. The won appreciated 1.4 percent versus the dollar after a rally in U.S. stocks yesterday and faster-than-expected economic growth in Singapore fueled speculation investors will purchase more higher-yielding assets.

The yen declined against 16 major currencies, dropping 0.4 percent versus the euro and 0.2 percent against the dollar.

Gilts, Australian Bonds

U.K. and Australian bonds fell the most among major fixed- income markets. The yield on the benchmark 10-year gilt rose 8 basis points to 3.75 percent after the Royal Institution of Chartered Surveyors reported that more London real-estate agents and surveyors said home values increased rather than fell for the first time in 20 months.

The yield on the Australian bond due 2019 climbed 7 basis points to 5.28 percent after a National Australian bank survey showed business sentiment turned positive in June for the first time since December 2007.

The U.S., Europe and Japan are grappling with their first simultaneous recessions since World War II after the collapse of subprime mortgages froze credit markets and spurred almost $1.5 trillion in losses and writedowns at financial firms. The World Bank said last month that the global economy will shrink 2.9 percent this year, a deeper slump than the 1.7 percent contraction forecast in March.

To contact the reporters on this story: Daniel Hauck in London at dhauck1@bloomberg.net.

Last Updated: July 14, 2009 08:02 EDT