global stocks rebound as commodities signal sustai
CATERPILLAR INC CAT 69.83 2.35 3.48 3,065,500
Global Stocks Rebound as Commodities Signal Sustained Growth
June 15 (Bloomberg) -- A rebound in stocks worldwide picked up momentum as oil and metal prices climbed, renewing confidence global economic growth will be sustained in the face of higher interest rates.
BHP Billiton and Anglo American Plc, the world's biggest mining companies, led the advance in Europe as gold prices had their greatest jump in a month and copper continued its advance from a seven-week low. Emerging markets posted their largest increase in almost two weeks.
U.S. stocks gained for a second day, following the Dow Jones Industrial Average's biggest rise in five weeks, after earnings from Bear Stearns Cos. topped analysts' estimates. Mitsubishi UFJ Financial Group Inc. paced Asia's rise after Merrill Lynch & Co. said to buy Japanese banks.
``People were reacting to some of the short-term news and started to extrapolate significant tightening and significant damage to the economy,'' said William Quinn, who helps manage the $2.7 billion American Beacon International Equity Fund in Fort Worth, Texas. ``The economy is still relatively good, inflation is still relatively under control.''
Europe's Dow Jones Stoxx 600 Index added 2 percent to 308.14, bringing its two-day climb from a six-month low to 2.2 percent. The Dow average rose 68.11, or 0.6 percent, to 10,885.03 after losing its gain for the year two days ago.
The Morgan Stanley Capital International Asia Pacific Index climbed 1 percent to 118.14 in Tokyo. It's up 1.7 percent since closing two days ago at its lowest since Dec. 9. The MSCI Emerging Markets Index, a measure of stocks in 25 developing countries, rose 1.8 percent to 685.38, the biggest jump since June 2.
Interest Rate Concern
World indexes gained for a second day after tumbling the past month from the highest in at least five years on concern central banks will keep raising interest rates to fight inflation, choking off growth in the process.
U.S. reports the previous two days showed that consumer and producer prices, excluding food and fuel, climbed more than economists' forecast. The reports caused traders to bet that it is certain the Federal Reserve will raise rates a 17th time at the end of this month and increase their bets it will lift rates again in August. Central banks for Europe and India were among those that raised lending rates last week.
Exxon Mobil Corp., the largest publicly traded oil company, added 59 cents to $58.39 in the U.S. Oil rose for a second day following reports of an unexpectedly large drop in crude inventories in the U.S. and buoyant demand in Asia, where consumption is rising fastest. Oil for July delivery rose 0.7 percent to $69.65 a barrel.
Lukoil, PetroChina Gain
Lukoil, Russia's largest oil company, gained 4.5 percent to $70 to pace the gain in emerging markets. Gazprom, the world's largest natural-gas producer, rose 3.4 percent to $253.47. PetroChina Co., China's biggest oil company, climbed 3.5 percent to HK$7.35.
Gold for immediate delivery increased $13.75, or 2.5 percent, to $573.50 on the London Metal Exchange. Earlier it rose as much as 3.1 percent to $576.90, bullion's biggest intraday gain since May 17. Copper for delivery in three months rose $79.80, or 1.2 percent, to $6,709 a metric ton. The metal climbed for a second day after tumbling 25 percent from a record high.
``Demand remains solidly in place,'' said Robert Smith, chairman of Smith Affiliated Capital Corp. in New York, an adviser to funds totaling $1.6 billion. ``There is no sign of a slow-up in China, India.''
BHP Billiton added 4.2 percent to 954.5 pence and Anglo American advanced 4.6 percent to 1,942 pence. Merrill raised Anglo American to ``buy'' from ``neutral,'' saying the shares are inexpensive.
U.S. Growth
Manufacturing growth in New York state unexpectedly accelerated this month, reinforcing speculation economic growth will be sustained in the face of higher rates. The Federal Reserve Bank of New York's general economic index rose to 29.0, the highest in three months, from 12.9 in May. Readings above zero signal expansion, and the index is almost twice last year's average of 15.6.
Caterpillar Inc., the world's largest maker of earthmoving equipment, gained $2.76 to $70.24 to lead the rise in the Dow.
Bear Stearns rose $3.48 to $127.68. The New York-based securities firm said net income in the second quarter ended May 31 climbed 81 percent to $539.3 million, or $3.72 a share, from $298 million, or $2.09, a year earlier, as revenue from trading and investment banking swelled. Profit exceeded the $3.12 average estimate of analysts in a Thomson Financial survey.
Profit Strength
Analysts predict profit growth in the U.S. and Asia will remain above 10 percent. Stoxx 600 earnings are expected to rise 12 percent in 2006, according to analysts' estimates gathered by FactSet. That's up from 8.6 percent predicted a month ago. Profits climbed 24 percent in 2005.
Second-quarter earnings for companies in the Standard & Poor's 500 Index are expected to grow 11 percent, according to Thomson Financial, the 12th straight quarter of gains greater than 10 percent. Since 1950, there has been only one other instance of at least 11 consecutive quarters of growth above 10 percent.
In Asia, Merrill raised its recommendation on the Japanese banking industry to ``overweight'' from ``market-weight,'' saying recent share-price declines made them more attractive. Merrill raised its rating on Mitsubishi UFJ, the world's largest bank by assets, to ``buy'' from ``neutral.'' The stock gained 1.4 percent to 1.43 million yen. Mizuho Financial Group Inc., Japan's second-largest bank by assets, gained 1.4 percent to 850,000 yen.
The Bombay Stock Exchange Sensitive Index, or Sensex, rose 6.9 percent, its biggest climb in two years, and the steepest move among stock markets included in global benchmarks. It dropped 29 percent to yesterday from its May 10 peak.
Infosys Technologies Ltd., India's second-largest software company, jumped 9.9 percent to 2,728.25 rupees, reversing a 22 percent slide since May 10.
DOW Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
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