European, Asian Shares Advance; U.S. Stock-Index Futures Rise
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By Adria Cimino
Sept. 22 (Bloomberg) -- European and Asian stocks rose, resuming a six-month rally for the MSCI World Index, amid signs government stimulus measures are helping the global economy to recover. U.S. futures advanced.
Samsung Electronics Co. and STMicroelectronics NV surged more than 3 percent as chip prices climbed to the highest level in more than a year. Carnival Corp. gained 4.2 percent in London after Bank of America Corp. recommended shares of the world’s biggest cruise-line operator. BHP Billiton Ltd. led mining companies higher as commodities advanced.
The MSCI World added 0.9 percent at 12:26 p.m. in London. The index has soared 66 percent since March 9 as results at companies from HSBC Holdings Plc to GlaxoSmithKline Plc surpassed projections and the German and French economies unexpectedly exited recessions. The gauge is valued at more than 27 times the reported earnings of its companies, the highest level since 2003, weekly data compiled by Bloomberg show.
The rally “can run a bit further,” Georgina Taylor, an equity strategist at Legal & General Group Plc in London, which oversees $456 billion worldwide, said in a Bloomberg Television interview. “We’re positive on equities. There’s evidence of real economic activity starting to increase.”
The Dow Jones Stoxx 600 Index of European equities gained 1.1 percent today as all 19 industry groups advanced. Standard & Poor’s 500 Index futures added 0.7 percent and the MSCI Asia Pacific excluding Japan Index increased 0.9 percent. Markets in Japan, Malaysia, Indonesia and Pakistan are shut for holidays.
Asian Growth
The Asian Development Bank raised its economic growth forecast for the region on strengthening expansion in China, India and Indonesia, and said it’s too early for governments to withdraw stimulus policies. Asia, excluding Japan, will grow 3.9 percent in 2009, faster than a March estimate of 3.4 percent, the Manila-based institution said today. Growth may accelerate in 2010 to 6.4 percent, the bank said.
The Italian government increased its forecast for next year’s economic growth to 0.7 percent from 0.5 percent. The economy will shrink 4.8 percent in 2009, compared with a previous prediction for a contraction of 5.2 percent, a Finance Ministry official said today.
The global economy has yet to feel the biggest impact of government-led spending programs to stimulate demand, according to U.K. Prime Minister Gordon Brown, who yesterday reiterated concerns about removing them too early.
‘Safeguard a Recovery’
“The stimulus that we have still got to give the world economy is greater than the stimulus we have already had,” Brown told reporters in London before his departure today for the Group of 20 meeting in Pittsburgh. “What we want to do is safeguard a recovery from a recession we feared would develop into a depression.”
Global leaders meet this week seeking to deliver the broadest financial regulation overhaul since the 1930s, potentially threatening profits and stock prices of banks. The G-20 convenes in Pittsburgh on Sept. 24-25 to discuss forcing banks to curb leverage, hold more equity capital and keep a greater pool of assets that can be easily traded.
Stocks have rallied since March as the G-20 committed about $12 trillion to revive growth and the Federal Reserve kept overnight borrowing costs near zero to unlock credit markets. The collapse of subprime mortgages spurred $1.6 trillion in writedowns and losses at the world’s biggest financial firms.
Fed Chairman Ben S. Bernanke’s efforts to stoke a U.S. economic recovery may be undermined by the central bank’s other goal of restoring the banking system to health.
Fed Meeting
The Federal Open Market Committee, at the conclusion tomorrow of a two-day meeting, will probably maintain its assessment that “tight” bank credit is impeding growth. Economists surveyed by Bloomberg News unanimously forecast the Fed will leave its benchmark interest rate unchanged.
Samsung Electronics, the world’s largest computer-memory chipmaker, gained 3.4 percent to 825,000 won in Seoul. The price of the benchmark computer-memory chip climbed 1.1 percent yesterday to the highest level since August 2008, according to Dramexchange Technology Inc.
Separately, Citigroup Inc. raised its price estimate to 1,030,000 won from 900,000 won on expectations earnings will benefit from growing demand for computer-memory chips.
STMicroelectronics, Europe’s biggest semiconductor maker, added 3.3 percent to 6.76 euros and Infineon Technologies AG, the region’s second-largest, gained 1 percent to 3.63 euros.
Carnival Climbs
Carnival rallied 4.2 percent to 2,146 pence after Bank of America added the shares to its “Europe 1” list.
Basic resources stocks climbed as prices of copper, lead, nickel and tin rose in London. Silver and gold also increased.
BHP Billiton, the world’s largest mining company, advanced 2.7 percent to 1,748.5 pence and Rio Tinto Group, the third- biggest, gained 4.3 percent to 2,758 pence. Lonmin Plc, the third-largest platinum producer, added 3.9 percent to 1,766 pence. Fresnillo Plc, the biggest primary silver producer, rallied 6 percent to 798.5 pence.
U.S. Steel Corp. advanced 2.9 percent to $49.39 in early New York trading. The largest U.S.-based steelmaker by sales was raised to “neutral” from “underperform” at Bank of America, which said in a report that “improving utilization should return the company to profitability in 2010.”
Air France-KLM Group jumped 5.4 percent to 12.79 euros after Europe’s biggest carrier cut passenger capacity by 2 percent for the winter 2009 season from year-earlier levels.
Airline Estimates
Separately, CA Cheuvreux lifted its share-price estimates for European airlines by about 40 percent overall, citing higher economic growth and rising passenger traffic forecasts for 2010.
Deutsche Lufthansa AG, Europe’s second-largest carrier, climbed 4.1 percent to 12.43 euros.
Vivendi SA rose 2.7 percent to 21.27 euros. The owner of the world’s biggest music company may decide at an Oct. 14 board meeting to sell its stake in NBC Universal, according to a person with knowledge of the situation.
Vivendi spokesman Antoine Lefort declined to comment yesterday on the company’s plan for NBC Universal and on the board meeting. Anne Eisele, a spokeswoman for General Electric Co., which owns 80 percent of NBC, declined to comment on Vivendi’s potential decision beyond previous statements.
Grupo Ferrovial SA, Spain’s second-largest builder, climbed 8 percent to 32 euros after being upgraded to “buy” from “hold” at Banco Santander SA.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
Last Updated: September 22, 2009 07:28 EDT
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