U.S. Stocks Gain on China, Dubai News

U.S. stocks rose, sending the Dow Jones Industrial Average to a 14-month high, as Chinese manufacturing grew at the fastest pace in five years and Dubai World said it's in talks to restructure less than half its debt.

Caterpillar Inc. (CAT), the biggest maker of earthmoving equipment, and aluminum producerAlcoa Inc. (AA) climbed more than 2.2 percent following the survey of production in China. Exxon Mobil Corp. (XOM) helped send Standard & Poor's 500 Index energy stocks to a 1.4 percent gain as oil rose for a second day. American International Group Inc. (AIG) surged 8.6 percent after reducing debt owed to the U.S. government by $25 billion.

The S&P 500 added 1.2 percent to 1,108.86 at 4 p.m. in New York. The Dow rose 126.74 points, or 1.2 percent, to 10,471.58. The Russell 2000 Index of small companies rose 1.6 percent.

"As much as everyone worries endlessly about when the sell-off's coming and the next bubble to pop and the next shoe to drop, we've just got too many damn good reports to get it down," said James Paulsen, who helps oversee about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis.

Stocks rose around the world after HSBC Holdings Plc's China purchasing managers' index rose to a seasonally adjusted 55.7 from 55.4. The government's PMI held at an 18-month high. Equities also advanced after Dubai World began talks with banks to restructure $26 billion of debt and said the rest of its liabilities are "stable." The company's attempt to delay debt payments roiled markets last week, sending the S&P 500 down as much as 2.4 percent on Nov. 27.

Monthly Gain The S&P 500 capped a 5.7 percent November rally yesterday as it rebounded from the first monthly decline since reaching a 12-year low in March. The benchmark gauge of U.S. equities has jumped 64 percent since March 9 as a four-quarter contraction in the world's largest economy ended.

Caterpillar, which generated 23 percent of sales in Asia during the third quarter, rose 2.2 percent to $59.68. Alcoa added 2.2 percent to $12.80.

Exxon increased 1.3 percent to $76.04. Oil rose 1.4 percent to $78.37 a barrel in New York.

AIG rallied 8.6 percent to $30.84. The insurer bailed out by the U.S. government said it reduced debt owed to the Federal Reserve Bank of New York by $25 billion after handing over stakes in two overseas units.

Existing Homes Builders gained after the number of contracts to buy previously owned U.S. homes unexpectedly rose 3.7 percent in October as consumers rushed to take advantage of a tax credit that was due to expire. The median economist estimate was for the National Association of Realtors' report to show a 1 percent drop. Homebuilders in the S&P 500 added 1.6 percent as Lennar Corp. (LEN) rallied 1.7 percent to $12.88.

The S&P 500 advanced even after the Institute for Supply Management's manufacturing index fell to 53.6, lower than the median analyst estimate of 55 in a Bloomberg survey, from October's three-year high of 55.7. Fifty is the dividing line between expansion and contraction.

A gauge of retailers in the S&P 500 rallied 1.8 percent after U.S. retail sales rose for the 12th straight week as Black Friday discounts lured holiday shoppers to malls, the International Council of Shopping Centers and Goldman Sachs Group Inc. said today in a statement.

The industry fell yesterday after the National Retail Federation said the average shopper spent $343.31 in stores and online over the Thanksgiving holiday weekend, less than the $372.57 spent during the same period last year.

Target, Limited Brands Target Corp. (TGT) added 0.5 percent to $46.78 today. Limited Brands Inc. (LTD) gained 5.8 percent to $17.55. Staples Inc. (SPLS), the world's largest office-supply retailer, surged 4.8 percent to $24.44 after reporting third-quarter earnings that beat analysts' estimates.

Knight Capital Group Inc., the largest trader of U.S. shares by volume, anticipates a rebound in transactions next year that may boost revenue following a slowdown in 2009. Fewer than 7.87 billion shares changed hands a day on U.S. exchanges during November, the lowest monthly average since August 2008, according to data compiled by Bloomberg.

"We're expecting to see a renewal of activity in 2010," Chief Executive Officer Thomas Joyce said in an interview yesterday. "Jan. 1, everybody starts at zero, so they'll have to be active in one shape or form in order to produce returns."

Volume exceeded 8 billion shares today, the most in more than a week.

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