Nov. 23 (Bloomberg) -- Stocks rose around the world and the dollar and the yen fell as sales of U.S. homes increased more than forecast and speculation grew that central banks will keep interest rates near record lows.

The Standard & Poor’s 500 Index rallied 1.2 percent to 1,104.94 at 2:09 p.m. in New York, near a 13-month high on a closing basis. Europe’s Dow Jones Stoxx 600 Index jumped 2 percent, its best gain in six weeks. Copper rallied to a 14- month high and gold reached a record as the Dollar Index fell for the first time in three days.

Sales of existing U.S. homes increased 10 percent in October to the highest level since February 2007, National Association of Realtors data showed today. Economic reports this week will show rising export orders in Taiwan and South Korea, according to Bloomberg News surveys of economists’ forecasts.

“What may be perceived as strength in commodities or equity prices can just as easily be seen as weakness in the value of the dollar,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which manages about $98 billion in client assets. “What you’re seeing is an unprecedented array of government and taxpayer funded efforts to revive the economy, and they’re doing it, in the United States of course, at the expense of the dollar.”

Global stocks also advanced amid speculation U.S. policy makers will keep borrowing costs near record low levels. Charles Evans, president of the Federal Reserve Bank of Chicago, told the Financial Times that U.S. interest rates may stay near zero until “late 2010, perhaps later.”

‘Some Comfort’

Evans’s comment “is going to provide the market with some comfort in the near term, allow asset markets and higher-risk markets to continue to move higher,” Ian Stannard, a foreign- exchange strategist in London at BNP Paribas SA, said today in a Bloomberg Television interview. That “will keep the dollar under pressure for the time being,” he said.

All 10 industry groups in the S&P 500 advanced, led by technology and financial companies. Deere & Co. and Schlumberger Ltd. rallied more than 2.1 percent after analysts advised buying the shares. Verizon Communications Inc., General Electric Co. and Exxon Mobil Corp. climbed more than 1.8 percent to lead the Dow Jones Industrial Average up 119.48 points, or 1.2 percent, to 10,437.64.

The MSCI World Index of 23 developed nations added 1.7 percent, its biggest gain on a closing basis in two weeks. BHP Billiton Ltd., the world’s biggest mining company, and Rio Tinto Group rallied at least 3.5 percent in London. Renault SA, Europe’s second-biggest automaker, increased 3.8 percent in Paris after Credit Suisse Group AG advised buying the shares.

Asia Advances

The MSCI Asia Pacific Index rose 0.7 percent. China Construction Bank Corp., the nation’s second-biggest lender, gained 4.1 percent in Hong Kong after Zhang Ping, chairman of the National Development and Reform Commission, said China will favor “consistent, stable” policies on the economy. James Hardie Industries NV, the top seller of home siding in the U.S., surged 6.4 percent in Sydney after forecasting earnings at the top end of its range.

Copper for March delivery rose 1.9 percent to $3.1945 a pound in New York and climbed as high as $3.204. Nickel, zinc and tin also gained. Gold touched $1,174 an ounce in London as the slumping dollar boosted bullion’s appeal as an alternative asset.

Dollar, Yen Weaken

The U.S. dollar and yen dropped versus major counterparts as commodities and stocks advanced, spurring demand for riskier assets. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, decreased 0.7 percent to 75.119. It slid to 74.679 on Nov. 16, the lowest level since August 2008.

South Africa’s rand was the biggest winner versus the yen and dollar among the major currencies tracked by Bloomberg as the gain in commodities and stocks encouraged carry trades, in which investors buy higher-yielding assets with amounts borrowed in nations with low interest rates. The rand strengthened 1.9 percent against the yen and 1.6 percent against the dollar.

Treasuries were little changed after the U.S. sold a record-tying $44 billion of two-year debt at the lowest yield ever, the first of three note sales this week totaling a record $118 billion. The U.S. will sell $42 billion of five-year securities tomorrow and $32 billion of seven-year debt in two days. The yield on the current two-year note rose one basis point to 0.74 percent.

Policy Makers

James Bullard, the St. Louis Fed president, said he favors the U.S. central bank seeking authority to continue buying mortgage-backed bonds after the first quarter of next year to bolster bank liquidity. International Monetary Fund Managing Director Dominique Strauss-Kahn told a Confederation of British Industry conference that “we don’t see a high probability of a double dip,” in the global economy, though avoiding that outcome isn’t “a done deal.”

Developing-nation stocks rose, led by shares in Hungary and Poland, as the MSCI Emerging Markets Index climbed 1.2 percent, its biggest gain in a week. OTP Bank Nyrt., Hungary’s largest lender, rallied 4.7 percent after the central bank cut the benchmark interest rate to the lowest in more than three years. The Czech koruna, Polish zloty and Hungarian forint all climbed at least 0.9 percent against the dollar.

Mexico’s Bolsa Index gained 1.3 percent even after Fitch Ratings downgraded the nation’s foreign-currency rating to BBB from BBB+, saying the recession has “accentuated weakness” in the country’s fiscal profile.

Russia, Israel

The Micex Index of stocks in Russia, the world’s biggest energy-exporting economy, increased 1.6 percent to the highest value since Nov. 18.

The Tel Aviv 25 Index climbed 1 percent before the Bank of Israel unexpectedly raised the benchmark interest rate for a second time since the global economy began to recover as growth accelerated and inflation approached the top of the government’s target range.

The Dubai Financial Market General Index increased 1.6 percent, the biggest gain in a week. The benchmark rebounded from a 2.6 percent decline yesterday after the emirate’s ruler, Sheikh Mohammed Bin Rashid Al Maktoum, fired a senior aide and removed three others.

Large-Caps Outperform

For the first time since the equity rally began in March, the biggest U.S. stocks are beating the smallest as the dollar’s descent sends investors to companies with the most business in international markets.

The Dow Jones Industrial Average of companies with $111.4 billion in median market value rose 6.2 percent this quarter through last week, compared with the 2.6 percent loss by the Standard & Poor’s SmallCap 600 Index, whose members are worth $572.3 million on average. The Dow had trailed by 26 percentage points following the stock market’s low on March 9.

A benchmark gauge of corporate credit risk in the U.S. fell for the first time in three days as stocks gained.

Credit-default swaps on the Markit CDX North America Investment-Grade Index Series 13, which is linked to 125 companies and used to speculate on creditworthiness or to hedge against losses, fell 2.75 basis points to 100.25 basis points as of 10:51 a.m. in New York, according to broker Phoenix Partners Group. The swaps typically fall as investor confidence improves.

Borrowers have sold a record $1.171 trillion in U.S. corporate bonds in 2009, surpassing the amount sold in 2007, according to data compiled by Bloomberg.

Sales of investment-grade and high-yield, high-risk debt compare with the more than $1.167 trillion that companies sold in all of 2007, a record year for corporate bond issuance, Bloomberg data show.

To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net; Stuart Wallace in London at swallace6@bloomberg.net

Nov. 23 (Bloomberg) -- General Electric Co. is leaning toward allowing an initial public offering of Vivendi SA’s 20 percent holding in NBC Universal as talks to purchase the stake stall, a person with knowledge of the situation said.

The two sides are about $500 million apart on a valuation for Vivendi’s stake in the entertainment unit, and little progress has been made in recent days, said the person, who declined to be named because discussions are private. GE, which owns the remaining 80 percent of NBC Universal, may still agree to buy out Vivendi if talks advance, the person said.

An IPO would complicate plans to move forward with the creation of a joint venture combining NBC Universal’s film, cable-television and theme-park properties with networks owned by Comcast Corp., the largest U.S. cable operator. Vivendi can also choose to keep its investment in NBC Universal.

GE is committed to forming the venture with Philadelphia- based Comcast, the person said. Any change in ownership of New York-based NBC Universal depends on Vivendi formally deciding to sell during an annual window that opened on Nov. 15 and runs through Dec. 10 each year through 2016. GE has the right of first refusal, allowing the company to negotiate a purchase of the NBC Universal stake, or it can allow an IPO to proceed.

Comcast and Fairfield, Connecticut-based GE value NBC Universal as it exists now at about $30 billion, people familiar with the discussions said this month.

Vivendi Exit

GE and Comcast haven’t commented publicly on their discussions. GE spokeswoman Anne Eisele declined to comment today, as did Vivendi spokeswoman Flavie Lemarchand-Wood and Comcast spokeswoman D’Arcy Rudnay.

Under certain conditions, Vivendi can sell shares for as much as $4 billion in the market each year if the French company decides to exit the partnership and GE doesn’t pre-empt a sale, according to the original 2004 agreement between the companies. Paris-based Vivendi can also exercise a put option to GE, according to Vivendi’s annual report for that year.

Vivendi would like to sell its stake, Chief Financial Officer Philippe Capron said on Nov. 19. Vivendi’s NBC Universal stake is valued on the company’s 2008 balance sheet at about 4.3 billion euros ($6.4 billion).

“We are not interested in staying on board a new GE- Comcast ownership of NBCU, so yes, we would exit,” Capron said at a conference in Barcelona. “This year the situation is a bit more complex. We are not forced to do anything. We could just also say no.”

If GE were to create the joint venture with Comcast, the cable operator would gain cable channels USA, CNBC, MSNBC and Bravo. Comcast also would get the NBC television network and Universal film studio, helping its push into programming.

GE Chief Executive Officer Jeffrey Immelt said last month he is studying “all the options” for NBC Universal.

“We’ve done all the planning to see if an IPO would be fine,” Immelt said Oct. 21 in San Francisco, referring to an IPO of NBC Universal. “You’ve got to think a couple years ahead in the space and ask: ‘Might there be partnerships to run the company in a better way?’ In this case, we’ve got all the options.”

To contact the reporters on this story: Rachel Layne in Boston at rlayne@bloomberg.net

Nov. 23 (Bloomberg) -- Morgan Stanley, preparing for a resurgence in securitized debt sales, hired former Merrill Lynch & Co. executive David Moffitt to lead the effort within the firm’s capital markets division.

Moffitt, 47, starts Dec. 1 in New York as head of global credit solutions and will report to Raj Dhanda and John Hyman, co-heads of global capital markets. Moffitt will coordinate his efforts with J.D. Pearce, 41, who will run the sales and trading part of the business, reporting to Steve D’Antonio, according to an internal memo obtained by Bloomberg.

Morgan Stanley, the second-biggest U.S. securities firm before becoming a bank last year, is hiring as many as 400 sales and trading employees to boost revenue from the business. While debt and equity underwriting have recovered this year after slumping in 2008, Dhanda said he expects the securitization business to rebound next year.

“Within our capital markets business this is one of the big growth areas,” Dhanda, 41, said in an interview. “Nobody expects underwriting to double, but securitization or structured solutions business can double, or triple.”

Demand for securitized debt plummeted in 2008 and 2009 after the worst financial crisis since the Great Depression, which was driven in part by a collapse in the value of bonds backed by home loans. Financial companies around the world have taken more than $1.7 trillion in writedowns and credit losses since the crisis began in mid-2007, according to data compiled by Bloomberg.

“Borrowers’ expectations on what the market will deliver are much more reasonable in terms of price, type of assets, the leverage you can put on it,” Dhanda said.

U.S. Aid Repaid

Morgan Stanley, which reported its first quarterly profit for a year in October, is one of the biggest U.S. banks to return money received from the U.S. Treasury department this year, although it continues to benefit from federal guarantees on some of its debt. The firm repaid $10 billion in June.

Moffitt is joining Morgan Stanley after consulting for about a year at MatlinPatterson Global Advisers LLC, a buyout firm led by former Credit Suisse Group AG distressed-debt specialist Mark Patterson. Moffitt previously oversaw structured-product sales in the fixed-income division of Merrill Lynch, which was sold to Bank of America Corp. last year after suffering losses on structured debt investments.

At Morgan Stanley, Moffitt will gain responsibility for all primary securitization and asset restructuring, according to the memo. Morgan Stanley’s corporate securitization business, led by Tom Cahill, will report to Moffitt, as will the businesses led by Val Kay, Matt Salvner and Kevin Ryan.

Pearce, who works within the fixed-income division, will be the point person handling inquiries from sales and trading clients on credit-portfolio restructurings and asset disposals, the memo said. Tom Jackivicz will lead the effort in Europe, reporting to Pearce, the memo said.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.

Nov. 23 (Bloomberg) -- The Treasury sold $44 billion of two-year notes at a yield of 0.802 percent, the lowest on record, as demand for the safety of U.S. government securities surges going into year-end.

Investors are piling into short-term Treasuries on concern that this year’s rally in risk assets has outpaced growth prospects and as Federal Reserve officials signaled interest rates will remain near zero for an extended period. Rates on some Treasury bills turned negative last week for the first time since last December, when global credit markets froze.

“It just points to ongoing yield grab at the front-end,” said Carl Lantz, an interest-rate strategist in New York at Credit Suisse Group AG, one of 18 primary dealers that trade with the Fed. “People are being pushed further out the money market curve when you have bills at the front-end trading at zero or negative.”

The yield on the current two-year note rose one basis point, or 0.01 percentage point, to 0.74 percent at 2:06 p.m. in New York, according to BGCantor Market Data. The 1 percent security maturing in October 2011 fell less than 1/32 to 100 16/32.

The previous low for the so-called high yield was 0.922 percent on the auction held. Dec. 26, 2008. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 3.16, compared with 3.63 at the previous auction. The average at the last 10 auctions was 2.92.

‘Option to React’

The last auction, a $44 billion offering on Oct. 27, drew a yield of 1.02 percent. Indirect bidders, a class of investors that includes foreign central banks, purchased 44.5 percent of the notes today, the same as at the October sale. The average for the past 10 sales was 44 percent.

The size of today’s two-year offering matched the record set last month. The Treasury is scheduled to sell $42 billion of five-year securities tomorrow and $32 billion of debt maturing in seven years on Nov. 25, both record amounts.

Fed Bank of St. Louis President James Bullard said yesterday the central bank should retain the flexibility to respond to any weakening in the economy by extending beyond March its authority to buy mortgage-backed securities and agency bonds.

“I would just like to keep them active at a very low level instead of saying we’re shutting down, shutting down permanently,” Bullard told reporters after a speech in New York. “Initially it would do nothing for the economy, but it would give the Fed the option to react to future news as it comes in.”

Negative Rates

The Fed said on Nov. 4 that it will purchase a total of $1.25 trillion of agency mortgage-backed securities through the first quarter of next year. It reiterated that interest rates will stay at almost zero for “an extended period.”

For the first time in seven decades, Treasury bills are paying no interest while stocks continue to appreciate -- a divergence that might be perilous if Federal Reserve Chairman Ben S. Bernanke didn’t know all about 1938.

That’s when the Standard & Poor’s 500 Index climbed 25 percent even as bill rates tumbled to 0.05 percent from 0.45 percent. In 1939 stocks began a three-year, 34 percent decline after the Fed increased borrowing costs prematurely to stymie inflation that never materialized.

Great Depression Buff

While almost no one expects Bernanke, a self-described “Great Depression” buff, to raise rates before mid-2010, bond investors say with unemployment above 10 percent and housing taking another downturn, they have no qualms about lending the government money for nothing to ensure their capital is preserved. Stock investors, meanwhile, say the worst is over and that low borrowing costs coupled with the $12 trillion of fiscal and monetary stimulus will bolster earnings.

The three-month bill rate rose two basis points, or 0.02 percentage point, to 0.023 percent, according to Bloomberg data. Three-month bill rates turned negative on Nov. 19 for the first time since last year’s credit freeze.

The Treasury also sold $31 billion of six-month notes today at a yield of 0.14 percent and $30 billion of three-month notes at a yield of 0.04 percent, the lowest since Dec. 22, 2008, a week after the Fed lowered its target rate for overnight loans between banks to a range of zero to 0.25 percent.

To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net.

Nov. 23 (Bloomberg) -- CIT Group Inc., the bankrupt 101- year-old commercial lender, won approval to borrow as much as $500 million to issue letters of credit guaranteeing its obligations.

To contact the reporter on this story: Christopher Scinta in New York at cscinta@bloomberg.net

Nov. 23 (Bloomberg) -- Bank of America Corp.’s board may extend its search for a permanent new chief executive officer into 2010 if directors can’t settle on a candidate in the next three days, according to people familiar with the matter.

The directors, who met Nov. 20, may be willing to go past their Nov. 26 target and the Dec. 31 retirement of CEO Kenneth D. Lewis if it means getting a better choice, according to a person familiar with the deliberations. At least four external candidates, including Citigroup Inc. director Michael O’Neill, rebuffed approaches. Options include an interim chief or a delay in Lewis’s retirement.

Bank of America faces pressure to pick someone in a short period who’s acceptable to regulators and whose pay would be low enough to win approval from Treasury Department paymaster Kenneth Feinberg, the people said. Politics also has influenced the choice at the biggest U.S. bank, the people said. House Oversight Committee Chairman Edolphus Towns said last week Brian Moynihan, one of two internal candidates, may lack the needed leadership.

That’s narrowing the field and giving the board “an incredibly tough job,” said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. “For people who have choices, it’s hard to figure out why someone would take this job.”

The people familiar with the matter spoke before any board meetings this past weekend. They declined to be identified because CEO selection is confidential at the Charlotte, North Carolina-based bank.

Decision Nears

Bank of America representatives have said the bank was aiming for a decision by the Nov. 26 Thanksgiving holiday, calling it a target rather than a deadline. “The board has been talking to a number of candidates, both internal and external, and expects to have a decision in the very near future,” spokesman Robert Stickler said in a Nov. 20 e-mail.

Holland said director Charles K. “Chad” Gifford, a former CEO of FleetBoston Financial Corp., which was bought by Bank of America in 2004, could step in on an interim basis.

Some candidates are reluctant to wade into disagreement between board members and the government over the bank’s future strategy, said Rochdale Securities LLC analyst Richard Bove, citing large shareholders briefed on the matter.

“The government and perhaps some of the new directors want the bank cut back in size, while the old core Bank of America people don’t want to do that,” Bove said.

Dropping Out

O’Neill, a former chief financial officer of predecessor BankAmerica Corp., withdrew from consideration after talking with search-committee members because he felt they didn’t fully grasp how serious regulators are in their demands for change, the people said.

O’Neill told the committee members that the company needed to increase the size of its banking operations and shrink its trading business, one person briefed on the talks said. The committee members responded that such a shift would be unproductive because it would abandon the strategy set when Lewis bought Merrill Lynch & Co., the person said.

Compensation is another obstacle, because Bank of America’s $45 billion bailout from the Troubled Asset Relief Program puts the CEO under the purview of Feinberg, the paymaster. Lewis agreed in October to forgo any pay for 2009 after being advised to do so by Feinberg. Feinberg’s pay restraints have limited the board’s options, one of the people said.

Feinberg’s Role

Feinberg probably wouldn’t approve a package big enough to lure PNC Financial Services Group Inc. Senior Vice Chairman William Demchak, who was among 18 candidates on a list provided Nov. 3 by Finger Interests Ltd., a Houston-based investment fund with 1.1 million Bank of America shares. As of August, Demchak owned about 219,000 PNC shares, currently worth about $12 million, data compiled by Bloomberg show.

Bank of America may need to buy out stakes in competing lenders owned by candidates like Demchak to prevent a conflict of interest. Some candidates could be eliminated because Feinberg isn’t likely to approve their buyouts on concern that Congress wouldn’t tolerate large payments, according to a person familiar with the process. Getting rid of TARP would eliminate that obstacle as well as unwanted input from regulators, according to a person familiar with the board.

Finger Candidates

The Fingers helped lead a shareholder revolt that stripped Lewis of his chairman’s title in April. At least four people on the Finger list subsequently said they weren’t interested. They are O’Neill; former JPMorgan Chase & Co. investment-banking co- head William Winters; U.S. Bancorp CEO Richard Davis; and Eugene McQuade, a former Freddie Mac president who now oversees Citigroup’s largest banking subsidiary, according to people familiar with the matter.

Two executives not on the list, Bank of New York Mellon CEO Robert Kelly and BlackRock Inc. CEO Laurence Fink, have told colleagues and friends they’re not interested.

Ex-GMAC LLC CEO Alvaro de Molina, a former Bank of America chief financial officer who also made the list, was never contacted, people said. Charles Scharf, head of retail banking at JPMorgan, was contacted, people familiar with the matter said. Scharf and de Molina declined to comment.

Aside from Moynihan, 50, other internal candidates include Chief Risk Officer Gregory Curl, 61. Lewis, 62, favors Curl, one person familiar with the matter said earlier this month.

Fed’s Choice

Federal Reserve officials, who questioned Lewis’s judgment when he considered backing out of the bank’s $29 billion purchase of Merrill Lynch, are pressing for an outsider because they want more drastic change, a different person said.

“B of A would really benefit from a fresh set of eyes and a fresh management approach,” said William Atwood, executive director of the Illinois State Board of Investment, which holds 2 million Bank of America shares. “It would be a bad thing if they’re focusing their attention internally.”

Lewis has indicated to associates that he would remain as CEO on an interim basis if asked by the board, according to a person familiar with his thinking. Rochdale’s Bove wrote in a Nov. 20 note that several large investors support the idea.

“That would give the board time to get their ducks in a row and they would have more breathing room,” said Marc Oken, a former Bank of America chief financial officer who left in 2005.

It also would be a discouraging sign of how poorly the search is going, Atwood said.

“If that’s their best option, they’re really not doing very well,” Atwood said.

To contact the reporters on this story: Bradley Keoun in New York at bkeoun@bloomberg.net; David Mildenberg in Charlotte at dmildenberg@bloomberg.net; Ian Katz in Washington at ikatz2@bloomberg.net

Nov. 23 (Bloomberg) -- Palm Inc. director and former EBay Inc. executive Rajiv Dutta is joining Elevation Partners LP and will help the private equity firm raise money for a second fund, according to a person familiar with the decision.

Dutta, 48, is Elevation’s first new partner since its founding in 2004, said the person, who requested anonymity because Dutta’s move hasn’t been formally announced. The private equity firm already has two directors on Palm’s board.

Elevation, which has invested about 75 percent of its existing $1.9 billion fund, will use the new money to back technology companies that target consumers, an area of expertise for Dutta, the person said. The plans for a new fund follow Norwest Venture Partners’ announcement that it completed a $1.2 billion investment pool this month.

In addition to Palm, maker of the Pre mobile phone, Elevation’s investments have included real estate Web site Move Inc., publisher Forbes Media LLC and SDI Media Group, which provides video translation, dubbing and subtitling services.

Elevation co-founder Fred Anderson, also an EBay director and a former chief financial officer at Apple Inc., worked to recruit Dutta for more than a year, the person said. Dutta ran all three divisions of EBay, the most visited U.S. e-commerce site, including PayPal, Skype and Marketplaces. He also served as EBay’s finance chief during his 10-year career at the company.

Palm Investment

Elevation, based in Menlo Park, California, is best known for its $460 million investment in Palm. That makes it the largest shareholder of the Sunnyvale, California-based company.

Anderson, 65, also helped coax former Apple executive Jon Rubinstein out of retirement to lead Palm. Elevation’s other partners include Silver Lake co-founder Roger McNamee and U2’s Bono. McNamee serves on Palm’s board along with Anderson.

Lynn Fox, a spokeswoman for Palm, said the company hadn’t received notice of Dutta’s plans to join Elevation and declined to comment further. Ron Low, a spokesman for Elevation, declined to comment. Dutta declined to comment.

Palm fell 18 cents to $11.56 at 2:16 p.m. New York time in Nasdaq Stock Market trading. The shares have risen almost fourfold this year.

To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net