Oil Climbs to Two-Year High, Stocks Gain on Recovery Confidence, Takeovers
Oil rose to a two-year high and Asian stocks climbed for a third day on signs of a global economic recovery and a pickup in corporate takeovers.
Crude oil traded in New York gained 0.2 percent to $90.70 a barrel as of 7 a.m. in London, bringing its three-month advance to 21 percent. The MSCI Asia Pacific Index Excluding Japan Index climbed 0.3 percent to 471.97. Japanese markets are closed today for a public holiday. Futures on the U.S. Standard & Poor’s 500 Index and the Euro Stoxx 50 index both rose 0.1 percent.
U.S. government data yesterday showed the economy expanded faster than previously estimated and crude supplies dropped to the lowest level since February, before a report today that will probably show consumer spending growth picked up last month. Rio Tinto Group, the world’s third-biggest mining company, offered A$3.9 billion ($3.9 billion) for Australian coking coal developer Riversdale Mining Ltd.
“The economic data is showing that the recovery is broadening from the emerging markets, and that even the U.S. recovery is entrenched,” said Prasad Patkar, who helps manage about $1.8 billion at Platypus Asset Management Ltd. in Sydney.
Oil gained for a fifth day, its longest winning streak in six weeks. The world’s largest economy grew at a 2.6 percent annual rate last quarter, above the government’s previous estimate of 2.5 percent. The U.S. Energy Department said stockpiles dropped 5.33 million barrels.
Spending by U.S. consumers, which accounts for about 70 percent of gross domestic product, rose 0.5 percent after a 0.4 percent gain in October, according to the median estimate of economists surveyed by Bloomberg News before the data is released today. A separate report may show bookings for durable goods excluding cars and planes climbed 1.8 percent.
“We are bullish on oil in the short, medium and long term,” Michael Haigh, global head of commodities research at Standard Chartered Plc in Singapore said in an interview on Bloomberg Television’s “On the Move Asia” program. “Over the next year we’re seeing oil creeping up into the mid-$90s.”
The regional stock benchmark that excludes Japan has climbed 5.2 percent this month as China refrained from raising interest rates and U.S. reports on consumer confidence, the trade deficit and employment beat analyst estimates.
Australia’s S&P/ASX 200 Index rose 0.4 percent today, climbing to the highest level in almost seven weeks. Rio Tinto gained 0.5 percent to A$87.20 as its acquisition will help boost its coal reserves in Mozambique as demand rises.
Takeovers in Australia surged to a record this quarter, renewing hopes that 2011 will uncork a backlog of deals in a commodities-led revival. The value of announced mergers and acquisitions since Sept. 30 more than quadrupled from a year ago to $59 billion, according to data compiled by Bloomberg. The past week saw bids for Bilfinger Berger SE’s construction unit and iron-ore explorer Giralia Resources NL.
Aker Solutions ASA, Norway’s largest engineering company, climbed 4.3 percent yesterday after Jacobs Engineering Group Inc. agreed to buy some of its units.
BHP Billiton Ltd. and Woodside Petroleum Ltd., Australia’s two largest oil and gas producers, gained 1.4 percent and 0.2 percent, respectively. Hon Hai Precision Industry Co., the world’s biggest electronics manufacturing services provider, advanced 1.7 percent in Taipei on speculation U.S. demand for its products will rise.
The Singapore dollar appreciated 0.3 percent to S$1.3054 against its U.S. counterpart and South Korea’s won climbed 0.5 percent to 1,148.95. Taiwan’s dollar rose 2.6 percent to NT$29.84, partly reflecting intervention to weaken the currency by the central bank yesterday. Taiwan will report today that factory production increased for a 15th month, and Singapore will say tomorrow that industrial output accelerated last month, economists predicted in separate Bloomberg surveys.
“Risk appetite is boosted again,” said David Cohen, the Singapore-based head of Asian forecasting at Action Economics. “We see a more optimistic tone amid investors worldwide as the global recovery is continuing.”
The New Zealand dollar advanced against all of its 16 most- traded peers as Finance Minister Bill English said economic expansion will accelerate next year, buoyed by the country hosting the Rugby World Cup finals and strong export prices. The nation’s GDP unexpectedly fell in the third quarter, a government showed today.
New Zealand’s currency climbed to NZ$1.3438 per Australian dollar from NZ$1.3489 yesterday in New York, where it reached as low as NZ$1.3521, the weakest since September 2000. It rose 0.8 percent to 74.63 U.S. cents.
“Markets were already braced for something relatively weak, so the bigger picture is one where GDP growth should continue to recover next year and that’s limiting downside in the kiwi,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington.
The pound advanced 0.3 percent to $1.5424 after Bank of England Markets Director Paul Fisher said in a Daily Telegraph interview that the central bank is seeking higher interest rates. The euro appreciated to $1.3132 from $1.3100 in New York yesterday. It fell to 109.17 yen from 109.47 yen.
Copper declined for a second day in London as the metal’s rally to a record deterred purchases in China, the world’s largest user. Three-month copper on the London Metal Exchange dropped 0.4 percent to $9,315 a metric ton.
China’s benchmark money-market rate surged to a three-year high on speculation a shortage of funds will worsen as banks hoard cash before the New Year holiday. Policy makers on Dec. 10 ordered lenders to park more money with the central bank for the third time in five weeks to limit inflation.
The seven-day repo rate, which measures lending costs between banks, jumped 150 basis points to 5.67 percent, the highest level since October 2007, according to a daily fixing published at 11 a.m. by the National Interbank Funding Center.
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