Global stocks rose the most in six weeks, with U.S. shares weathering a late-day selloff, as Greece made progress in meeting requirements for more international aid and Germany vowed continued support for the country. Treasuries trimmed losses and the euro pared gains.
The MSCI All-Country World Index surged 2.9 percent as of 4 p.m. New York time and benchmark gauges in France and Germany climbed more than 5 percent. The Standard & Poor’s 500 Index rose 1.1 percent to 1,175.38 after surging as much as 2.8 percent. Silver rebounded after a three-day, 26 percent slide. The 30-year Treasury yield rose nine basis points after surging as much as 13 points and the euro trimmed a 1 percent gain versus the dollar in half. Oil surged the most in four months.
U.S. stocks retreated from their session highs following a Financial Times report that some euro-area countries are demanding private creditors take bigger writedowns on their Greek bond holdings. Stocks rallied earlier as Greek Prime Minister George Papandreou won a vote on a new property tax in the parliament, bolstering his chances of pushing through austerity cuts aimed at securing further international financial aid for the country.
“Think of Europe as a hospital patient,” David Sowerby, a Bloomfield Hills, Michigan-based portfolio manager at Loomis Sayles & Co., which oversees $150 billion, said in a telephone interview. “There are lots of doctors in the room, but no clear-cut remedy.”
Producers of raw materials and industrial companies led gains among all 10 groups in the S&P 500, rallying more than 1.6 percent. Hewlett-Packard Co., Walt Disney Co. and United Technologies Corp. climbed at least 2.2 percent to lead the Dow Jones Industrial Average up 146.83 points, or 1.3 percent, to 11,190.69.
U.S. stocks pared their advance as gauges of financial firms, energy producers and industrial companies retreated more than 1.5 percent each after 3 p.m. in New York. After touching a high of 1,195.86 just after 2 p.m., the S&P 500 lost 20 points before the close, or about two-thirds of the rally at its highest level.
The Financial Times reported that as many as seven of the 17 nations using the euro believe private creditors should absorb bigger losses on their Greek bond holdings, a division that may threaten an agreement reached with private investors in July. The paper cited unnamed senior European officials.
The S&P 500 added to yesterday’s 2.3 percent advance and has climbed about 5 percent since falling as low as 1,114.22 on Sept. 22, the first time this month it slipped below its 2011 closing low of 1,119.46 on Aug. 8.
The U.S. Senate reached a bipartisan deal on stopgap spending designed to avoid a government shutdown. Senators approved legislation yesterday, 79-12, to finance the government through Nov. 18, a measure including $2.65 billion for federal disaster assistance.
Stocks remained higher in morning trading after U.S. consumer confidence rose less than forecast in September, as a measure of the difficulty of finding jobs rose to the highest in almost three decades. The Conference Board’s index increased to 45.4, from a revised 45.2 reading in August and below the 46 median forecast in a Bloomberg News survey of economists.
Home prices in the U.S. declined less than forecast in July from a year earlier, with the S&P/Case-Shiller index of property values in 20 cities dropping 4.1 percent from July 2010 compared with the median forecast of economists for a 4.4 percent decline.
Treasuries remained lower after the government’s $35 billion auction of two-year notes drew a yield of 0.249 percent, compared with the average forecast of 0.251 percent in a Bloomberg News survey of nine of the Federal Reserve’s primary dealers. Yields on existing two-year notes rose one basis point to 0.24 percent.
The Stoxx Europe 600 Index surged 4.4 percent and is up 7 percent after sliding to a two-year low on Sept. 22, capping the biggest three-day gain since May 2010. Allianz SE and Axa SA, Europe’s biggest insurers, climbed at least 8 percent. BNP Paribas SA and Deutsche Bank AG, the largest banks in France and Germany, rallied more than 12 percent.
The Euribor-OIS spread, which measures banks’ reluctance to lend to one another in Europe, declined for a second day. The spread, the difference between three-month Euribor and overnight index swaps, narrowed to 80.5 basis points, according to data compiled by Bloomberg. The gap rose to 89 basis points on Sept. 23, the widest since March 2009.
“There has been no concrete alteration in the structure of the euro zone since the end of last week but the market has been willing to clutch at the idea that politicians at least recognize there is an urgent requirement for action,” Jane Foley, a senior foreign-exchange strategist at Rabobank International in London, said in a report today.
A benchmark gauge of U.S. corporate credit fell for a third day from about the highest levels in more than two years. The Markit CDX North America Investment Grade Index, which typically falls as investor confidence improves and rises as it deteriorates, declined 0.4 basis point to a mid-price of 136.5 basis points.
The yield on the 10-year Spanish bond declined 11 basis points to 5.05 percent even after the government sold 3.22 billion euros ($4.3 billion) of three- and six-month bills at higher yields than previous auctions. Italy’s 10-year bond yield slid five basis points to 5.598 percent, according to Bloomberg generic rates, after an auction in that nation also resulted in higher borrowing costs.
‘Time to Move’
U.S. Treasury Secretary Timothy F. Geithner predicted that European governments will use more force to resolve the region’s crisis after they heard the concerns of global finance officials during meetings in Washington last weekend. The crisis is “starting to hurt growth everywhere, in countries as far away as China, Brazil and India, Korea,” Geithner said on ABC’s “World News With Diane Sawyer” program. “It’s time to move.”
German Chancellor Angela Merkel said that Greece is ready to meet the terms of international inspectors ruling on its bailout aid, voicing her government’s support for the debt-laden nation’s economic success.
“We want a strong Greece in the euro area and Germany is ready to offer all kinds of help that is needed,” Merkel said before hosting Greek Prime Minister George Papandreou for dinner in Berlin today. Greece has a “high responsibility to meet the conditions and expectations.”
The euro appreciated 1.1 percent against the yen after yesterday touching the lowest level in 10 years. The New Zealand dollar advanced 1 percent against the U.S. currency, with the Australian currency rising 0.7 percent.
Gold futures gained the most in seven weeks, climbing 3.6 percent to $1,652.50 an ounce. Silver futures rose 5.2 percent to $31.536 an ounce and London-traded copper rebounded from a 17 percent slide in seven days. Oil surged the most since May 9, advancing 5.3 percent to $84.45 a barrel in New York.
The MSCI Emerging Markets Index added 4.8 percent, the biggest rally since May 2009, after closing yesterday at a two- year low. South Korea’s Kospi Index jumped 5 percent, the most since January 2009. Indonesia’s Jakarta Composite Index added 4.8 percent and benchmark indexes gained more than 3.3 percent in Poland, Hungary and the Czech Republic. The South African rand appreciated 2.6 percent against the dollar as commodity prices surged.
Israel’s TA-25 Index rose 1.4 percent after the central bank unexpectedly cut the benchmark interest rate for the first time in 2 1/2 years yesterday after the market closed.
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