stocks in u.s. gain, commodities erase loss..

Stocks in U.S. Gain, Commodities Erase Loss as European Debt Concerns Ease:


U.S. stocks rose, trimming the worst Thanksgiving-week loss for the Standard & Poor’s 500 Index since 1973, and European shares and commodities reversed declines amid speculation euro-area leaders will do more to fight the debt crisis.
The S&P 500 rallied 0.8 percent to 1,171.14 at 10:20 a.m. in New York, paring its weekly retreat to 3.7 percent. The Stoxx Europe 600 Index was up 1.2 percent, reversing a 1.1 percent slide. The S&P GSCI Index of commodities rose 0.2 percent. The euro slipped 0.5 percent to $1.3287 after losing as much as 1 percent. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments lingered near a record, up 9 basis points at 390.

Banks rallied after Reuters cited European Union officials as saying that euro-area nations are considering dropping private-sector involvement from their permanent bailout fund as they discuss wider treaty changes. German Chancellor Angela Merkel and French President Nicolas Sarkozy “confirmed their support for Italy, saying that they are aware that the collapse of Italy would inevitably lead to the end of the euro,” Italian Prime Minister Mario Monti told a Cabinet meeting, according to an e-mailed statement.
U.S. financial shares “had been knocked down dramatically and there’s a better tone today,” Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co., said in a telephone interview. “We have to hope they can get their act together in Europe and we go back to concentrating on what we’re doing here.”
Financials Rebound
Financial stocks led gains in the S&P 500 today, climbing 1.8 percent as a group as Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. rose at least 2.5 percent. The group of 81 banks, insurers and investment firms is down 12 percent in November, leading the S&P 500’s 6.6 percent monthly drop.
European stocks and U.S. index futures slid earlier as Italy had to pay almost 7 percent to sell six-month bills at an auction today, nearly twice the rate it paid a month ago and the highest since 1997, spurring concern Europe’s debt crisis was spreading to the core nations.
European Central Bank Executive Board member Jose Manuel Gonzalez-Paramo urged euro-area politicians to take bold steps toward fiscal union to end the debt crisis, and said they should not rely on the ECB. European Union Economic and Monetary Affairs Commissioner Olli Rehn said it looks like contagion is spreading to core countries. Moody’s Investors Service cut Hungary’s debt to junk after S&P said yesterday Japan hasn’t made progress in tackling its debt load.
‘More Action’
“We need to see more action out of Europe before any sort of rebound happens,” Nick Maroutsos, who oversees the equivalent of about $3 billion as co-founder of Sydney-based Kapstream Capital, said in a Bloomberg Television interview. “Greece, Ireland, Portugal are becoming after-thoughts as the crisis is now unfolding at the footsteps of Italy, France and Germany. These are the larger countries and these would have the largest knock-on effects.”
Italian five- and 10-year bonds extended declines after borrowing costs increased at the bill sale even as the ECB bought the nation’s securities, according to three people with knowledge of the transactions, who declined to be identified because the deals are private. A spokesman for the ECB in Frankfurt declined to comment. The five-year yield was up 24 basis points to 7.77 percent and rates on 10-year debt were up 22 points at 7.33 percent.
The Rome-based Treasury sold 8 billion euros ($10.6 billion) of 183-day bills to yield 6.504 percent, up from 3.535 percent at the previous auction on Oct. 26 and the highest since August 1997.
The Spanish two-year note yield exceeded 6 percent for the first time since the euro was created in 1999. Portugal’s 10- year bond yield rose 43 basis points to 12.64 percent, a day after the nation’s credit ranking was lowered to below investment grade by Fitch Ratings.
Largest Debt Burden
Japan’s benchmark bond yields completed the biggest weekly gain since January on concern the government will fail to rein in the world’s largest debt burden. Ten-year yields added 3.5 basis points to 1.03 percent at the 6:05 p.m. close at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The last time the rate rose above 1 percent was Nov. 1. Yields have climbed 8.5 basis points this week, the most since the period ended Jan. 7.
The MSCI Emerging Markets Index slipped 0.8 percent. Hungary’s BUX Index lost 3.5 percent, the most in three weeks. Hong Kong’s Hang Seng China Enterprises Index slid 1.8 percent.
Gold futures fell 0.1 percent to $1,696.40 an ounce, heading for a second weekly decline. Oil rose 0.7 percent to $96.87 a barrel.

To contact the reporters on this story: Michael P. Regan in New York at [email protected]; Rita Nazareth in New York at [email protected]

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