Dec. 11 (Bloomberg) -- U.S. stocks rose after investors in Singapore and the Middle East agreed to buy $11.5 billion of UBS AG convertible bonds and home sales unexpectedly rose. Gold rose the most in two weeks as a decline in the value of the dollar against the euro boosted the appeal of the precious metal as an alternative investment. UBS AG to sell stakes after $10 billion writedown.

TOP STORIES/MOST READ ON BLOOMBERG

MBIA Gets $1 Billion From Warburg Pincus, Sees Losses

MBIA Inc., seeking to avert a crippling reduction of its AAA credit rating, will raise as much as $1 billion by selling a stake to private equity firm Warburg Pincus LLC.

MBIA, the world's biggest bond insurer, soared 27 percent as the financing offset the company's warning of ``significantly'' higher losses from the securities it guarantees. Warburg Pincus will buy $500 million of common stock and take up to $500 million in a shareholder rights offering next quarter, Armonk, New York-based MBIA said today.

The added capital may help avoid a cut in MBIA's AAA credit rating, which is under scrutiny by Moody's Investors Service, Fitch Ratings and Standard & Poor's. MBIA stands behind $652 billion of state, municipal and structured finance bonds, and losing the AAA stamp would endanger those ratings. Without the top ranking, MBIA may be unable to guarantee debt, a business that made up 90 percent of revenue last year.

UBS to Sell Stakes After $10 Billion in Writedowns

UBS AG will write down U.S. subprime mortgage investments by $10 billion, the biggest such loss by a European bank, and replenish capital by selling stakes to investors in Singapore and the Middle East.

Europe's largest bank by assets plans to raise 13 billion Swiss francs ($11.5 billion) from Government of Singapore Investment Corp. and an unidentified Middle Eastern investor by selling them bonds that will convert into shares, Chairman Marcel Ospel said on a conference call with reporters today.

UBS rose 1.4 percent in Zurich trading on optimism writedowns are now out of the way. The bank may post the first full-year loss since the Zurich-based company was created through a merger a decade ago. UBS followed Citigroup Inc., the largest U.S. bank, in taking on strategic investors to bolster capital.

Bank of America to Wind Down $12 Billion Cash Fund

Bank of America Corp., the second-largest U.S. bank, will liquidate a $12 billion enhanced cash fund after losses on holdings that included debt sold by structured investment vehicles, or SIVs.

The Columbia Strategic Cash Portfolio was closed last week and is being ``wound down,'' Robert Stickler, a spokesman for the Charlotte, North Carolina-based bank, said today in an interview. Investors with smaller amounts in the fund can get their money back at net asset value, while larger clients may take control of specific assets. The NAV of the fund, which had $33 billion two weeks ago, is 99.4 cents on the dollar today.

Enhanced cash funds are sold to wealthy individuals and institutions as an alternative to money-market funds. Some hold mortgage-backed securities or mortgage-related debt issued by SIVs that have fallen in value as delinquencies on home loans rose to the highest in 20 years in the third quarter, according to data compiled by the Mortgage Bankers Association in Washington.

Bernanke May Risk `Fool in Shower' Label for Economy

Federal Reserve Chairman Ben S. Bernanke may have to risk becoming the proverbial ``fool in the shower'' to keep the U.S. economy out of recession.

Renewed turbulence in financial markets puts Bernanke, 53, under pressure to open the monetary spigots wider to pump up the economy. Traders in federal funds futures are betting it's a certainty the Fed will cut its benchmark interest rate from 4.5 percent tomorrow, and they see a better-than-even chance the rate will be 3.75 percent or below by April.

The danger of such a strategy is that Bernanke may become like the bather, in an analogy attributed to the late Nobel- Prize-winning economist Milton Friedman, who gets scalded after turning the hot water all the way up in a chilly shower. The monetary-policy equivalent would be faster inflation or another asset bubble in the wake of aggressive Fed action to tackle the slowdown in the economy.

MAIN ECONOMIC RELEASES TODAY Figures are based on Bloomberg survey of economists:

China Consumer Prices Seen Rising 6.5%, Same as Previous Month China May Release Trade Data; Surplus Likely Held Near Record Australia Business Confidence Data for November Released by NAB Japanese Consumer Confidence Seen Staying at Three-Year Low Australia's Reserve Bank Governor Stevens Gives Speech Philippines Export Growth Seen Slowing in November to 4.3% New Zealand Terms of Trade Index Seen Improving to 3% From 0.6%

MAIN COMPANIES/EARNINGS

TPV Technology Ltd., the world's largest contract manufacturer of computer monitors, may say third-quarter profit rose on higher flat-screen television sales.

Daewoo Shipbuilding & Marine Engineering Co., the world's third-largest shipyard, may say profit last month more than doubled from a year earlier as it built more vessels at higher prices.

MAIN ANALYST UPGRADES/DOWNGRADES *MITSUBISHI RAISED TO `OUTPERFORM' AT CREDIT SUISSE *SAMSUNG ELECTRONICS RAISED TO `BUY' FROM `HOLD' AT CITI *MILBON CUT TO `OUTPERFORM' FROM `STRONG OUTPERFORM' AT MUFJ *COCHLEAR CUT TO `UNDERWEIGHT' AT JPMORGAN *SUMITOMO RAISED TO `OUTPERFORM' AT CREDIT SUISSE *HYNIX SEMICONDUCTOR RAISED TO `HOLD' FROM `SELL' AT CITI

ASIAN MARKETS

The Nikkei 225 futures contract due in December rose 55 points to 15,930. The Hang Seng Index futures for December fell 462 to 28,534. The S&P/ASX 200 Index futures due in December gained 33 to 6,685 at 7:59 a.m. in Sydney.

U.S. STOCKS RISE, LED BY BANK; BUILDERS, MINERS, DRILLERS GAIN

U.S. stocks rose, led by banks and builders, after investors in Singapore and the Middle East agreed to inject $11.5 billion into UBS AG and home sales unexpectedly advanced.

Financial shares in the Standard & Poor's 500 Index climbed to the highest level in a month, boosted by JPMorgan Chase & Co., Citigroup Inc. and MBIA Inc. D.R. Horton Inc., the largest U.S. homebuilder, gained after contracts to buy previously owned homes increased for a second month. Energy producers and miners advanced on speculation a Federal Reserve interest rate cut tomorrow will spur economic growth.

The S&P 500 added 11.3, or 0.8 percent, to 1,515.96. The Dow Jones Industrial Average increased 101.45, or 0.7 percent, to 13,727.03. The Nasdaq Composite Index gained 12.79, or 0.5 percent, to 2,718.95.

TREASURIES FALL ON SPECULATION BOND INSURERS WON'T LOSE RATINGS

Treasuries fell for a fifth day, extending the 10-year note's decrease to the longest since May, as an investment of up to $1 billion in MBIA Inc. encouraged speculation that bond insurers won't lose their credit ratings.

Traders maintained bets that the Federal Reserve will cut borrowing costs by at least a quarter-percentage point tomorrow to prevent the housing slump from causing a recession. MBIA, the world's biggest bond insurer, will receive an investment from the private equity firm Warburg Pincus LLC, while UBS AG will sell stakes to investors in Singapore and the Middle East.

Ten-year note yields increased 5 basis points, or 0.05 percentage point, to 4.15 percent at 2:55 p.m. in New York, according to bond broker Cantor Fitzgerald LP. The price of the 4 1/4 percent note due in November 2017 fell 3/8, or $3.75 per $1,000 face amount, to 100 25/32.

The last time 10-year notes had a longer losing streak was when yields rose during a six-day period ended May 18. Yields touched 3.79 percent on Nov. 26, the lowest since March 2004, on concern that subprime mortgage losses would deepen.

YEN FALLS TO ONE-MONTH LOW VERSUS EURO ON FED CUT SPECULATION

The yen fell to a one-month low versus the euro and dollar as speculation the Federal Reserve will cut interest rates tomorrow encouraged investors to buy higher-yielding assets funded by loans in Japan.

Currencies from Australia to South Africa gained as traders bet a Fed rate reduction will support global economic growth. Futures contracts show investors see a 100 percent likelihood the central bank will lower its benchmark overnight rate by at least a quarter-percentage point tomorrow to 4.25 percent to keep a housing slump from sparking a recession.

The yen declined to 164.24 per euro at 3:22 p.m. in New York from 163.73 on Dec. 7, touching the weakest since Nov. 9. The Japanese currency was little changed at 111.66 per dollar after earlier dropped to 111.89 per dollar, also the weakest since Nov. 9. The euro rose to $1.4711 from $1.4658.

EUROPEAN STOCKS RISE, LED BY LAFARGE, UBS, PHILIPS ELECTRONICS

European stocks rose, led by construction companies and banks, after Lafarge SA shares climbed the most in at least 17 years on an acquisition in the Middle East and UBS AG said it will shore up capital by selling stakes.

Lafarge, the world's biggest cement maker, jumped 13 percent. UBS, Europe's largest bank by assets, Credit Suisse Group and Lloyds TSB Group Plc gained. Royal Philips Electronics NV rallied after two hedge funds said they teamed up to review the company's results and capital structure.

The Dow Jones Stoxx 600 Index added 0.6 percent to 375.06. Stocks advanced last week on speculation lower U.S. interest rates and a government plan to avert more loan defaults will support corporate earnings and bolster the world's largest economy.

National benchmarks increased in all 18 western European markets except Iceland and Portugal. France's CAC 40 advanced 0.6 percent. Germany's DAX added 0.5 percent. The U.K.'s FTSE 100 rose 0.2 percent. The Stoxx 50 rallied 0.5 percent, while the Euro Stoxx 50, a measure for the euro region, climbed 0.4 percent.

EUROPEAN BONDS DECLINE AS POLICY MAKERS SIGNAL PRICE CONCERN

European bonds fell after comments on inflation by European Central Bank policy makers and a rally in stocks reduced demand for government fixed income securities.

Governing Council member and Bank of Finland governor Erkki Liikanen said ``upside risks to price stability over the medium term'' remain, while his ECB colleague Juergen Stark said the central bank is ``ready to act'' to contain inflation. Stocks rose after investors in Singapore and the Middle East agreed to buy $11.55 billion of UBS AG convertible bonds.

The yield on the 10-year German bund rose 7 basis points to 4.26 percent by 5:34 p.m. in London, pushing the yield difference between two- and 10-year notes to 33 basis points, the widest in a week, from 29 basis points in the previous session. The so-called steeper yield curve suggests investors remain pessimistic about near-term economic growth prospects.

The yield on the two-year note gained 2 basis points to 3.92 percent, after dropping as low as 3.86 percent earlier. Yields move inversely to bond prices.

CRUDE OIL FALLS ON SPECULATION OF U.S. FUEL SUPPLY INCREASE

Crude oil fell on speculation that U.S. fuel stockpiles will rise as economic growth in the world's biggest energy consuming country slows.

Inventories of distillate fuel, a category that includes heating oil and diesel, and gasoline rose last week, according to analyst responses in a Bloomberg News survey. Prices in New York have dropped 12 percent from the record reached last month. The U.S. consumes about a quarter of global oil supply.

Crude oil for January delivery fell 42 cents to $87.86 a barrel on the New York Mercantile Exchange. Oil rose as high as $89.80 and fell as low as $87.09 in today's session. Futures reached $99.29 on Nov. 21, the highest since trading began in 1983. Prices are up 42 percent from a year ago.

GOLD, SILVER FUTURES CLIMB AS DOLLAR WEAKENS AGAINST EURO

Gold rose the most in two weeks as a decline in the value of the dollar against the euro boosted the appeal of the precious metal as an alternative investment. Silver also gained.

The dollar fell against the euro on speculation the U.S. will continue to cut borrowing costs, while the European Central Bank raises interest rates to fight inflation. Gold has climbed 28 percent this year, and the euro rose 11 percent against the dollar.

Gold futures for February delivery rose $13.30, or 1.7 percent, to $813.50 an ounce on Comex, marking the biggest percentage gain since Nov. 23.

Silver futures for March delivery jumped 34.5 cents, or 2.4 percent, to $14.85 an ounce. The metal is up 15 percent this year.

HIGHLIGHTS FROM NEWSPAPERS

REITs Listed in Japan May Invest Overseas in April, Nikkei Says

Real estate investment trusts listed in Japan may invest in overseas assets as early as April if new guidelines to lift a ban are approved, Nikkei English News reported, without saying where it obtained the information.

Rio Tinto Will Ask Takeover Panel to Rule on BHP, FT Reports

Rio Tinto Group will ask the U.K. Takeover Panel this week to tell BHP Billiton Ltd. to make a formal bid or withdraw its proposal, the Financial Times reported, without saying where it got the information.

Last Updated: December 10, 2007 16:22 EST