Stocks Rise as Alcoa Boosts Earnings Optimism; Yen Slips

Stocks rose, with the benchmark equity gauge for Europe snapping a two-day slide, as Alcoa (AA) Inc. began the U.S. earnings season with better-than-estimated sales. Metals gained, while the yen weakened on expectations the Bank of Japan will expand stimulus.

The MSCI All-Country World Index climbed 0.2 percent at 9:30 a.m. in London and the Stoxx Europe 600 Index (SXXP) advanced 0.3 percent. Standard & Poor’s 500 Index futures added less than 0.1 percent as Alcoa rallied 2.6 percent in German trading. Copper and aluminum rose. The yen slid at least 0.6 percent against all its major peers. Ten-year Treasuries fell for the first time in four days before the U.S. auctions $21 billion of the notes.

Alcoa, the largest U.S. aluminum producer, predicted yesterday global demand growth for the commodity will recover as China’s economy rebounds. Japan’s Chief Cabinet Secretary Yoshihide Suga said the next BOJ governor should support bold monetary easing. Data today may show German industrial output rebounded in November, while European Central Bank President Mario Draghi and his board meet tomorrow.

“I am cautiously optimistic,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. “We are at a juncture with the earnings season just kicking off in North America. People will want to assess the lay of the land, in particular any forward-looking comments that companies make.”

Two shares advanced for every one that declined in the Stoxx 600, as telecommunications companies and banks climbed. Delta Lloyd NV jumped 7.5 percent, the biggest gain in six months, after Aviva Plc sold its 19.4 percent stake in the Dutch insurer for 433.8 million euros ($568 million).

Alcoa Earnings

The increase in S&P 500 futures indicated the U.S. gauge will advance for the first time in three days.

Alcoa reported after the close of trading yesterday that fourth-quarter sales fell to $5.9 billion from $5.99 billion, beating the $5.6 billion average of 11 estimates. Profit excluding one-time items was 6 cents a share, matching the average of estimates compiled by Bloomberg. Demand in China, the largest aluminum user, will grow 11 percent this year on stimulus spending announced by the new leadership, Alcoa Chief Executive Officer Klaus Kleinfeld said.

Fourth-quarter profit at companies in the S&P 500 probably increased 2.9 percent, according to analyst estimates compiled by Bloomberg, which would mark the second-slowest quarterly growth since 2009.

Copper climbed 0.3 percent and aluminum rose 0.4 percent. China is the biggest buyer of both metals. Brent oil was little changed at $112.01 a barrel. The S&P GSCI gauge of 24 commodities was up less than 0.1 percent, heading for the third consecutive advance, the longest winning streak since Dec. 3.

Yen Slips

The yen weakened 0.6 percent to 87.61 per dollar, ending a two-day advance. It declined 0.7 percent per euro. The 17-nation shared currency was little changed at $1.3087.

Treasury 10-year note yields rose one basis points to 1.88 percent. The rate on similar-maturity German bunds was little changed at 1.50 percent.

The MSCI Emerging Markets Index (MXEF) added 0.1 percent, snapping a three-day decline. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.9 percent as automakers advanced. Credit Suisse Group AG recommended buying shares in China’s carmakers.

Egypt’s EGX 30 Index advanced 1.4 percent to the highest since October. Qatar said yesterday it doubled deposits at Egypt’s central bank, helping ease a currency crisis. Benchmark gauges in Hungary, Thailand and the Philippines advanced at least 0.6 percent, while gauges in Indonesia, South Korea and Turkey slid more than 0.2 percent..

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

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