U.S. Stock-Index Futures Gain; Fannie Mae, Freddie Mac Advance

By Henrietta Rumberger

July 14 (Bloomberg) -- U.S. stock-index futures rose after Treasury Secretary Henry Paulson said he would seek approval from Congress to shore up Fannie Mae and Freddie Mac and investors speculated takeovers will increase.

Fannie Mae and Freddie Mac climbed more than 11 percent in Germany after Paulson asked Congress for authority to buy unlimited stakes in and lend to the companies to stem a collapse in confidence. Anheuser-Busch Cos. gained as InBev NV agreed to buy the maker of Budweiser beer for $52 billion.

Futures indicated the Standard & Poor's 500 Index would rebound after the benchmark for American equities posted its sixth straight weekly decline and fell into a bear market.

``The promise to bail out Freddie Mac and Fannie Mae is supporting the market,'' Carsten Klude, Hamburg-based chief investment strategist at M.M. Warburg & Co., which has the equivalent of $25 billion, said in a Bloomberg Television interview.

S&P 500 futures expiring in September added 14.4, or 1.2 percent, to 1,254.20 at 11:30 a.m. in London. Dow Jones Industrial Average futures gained 97 to 11,193 and Nasdaq-100 Index futures increased 21.25 to 1,841.75.

Fannie Mae slid 45 percent last week, while Freddie Mac sank 47 percent on concern the two companies, which own or guarantee about half of the $12 trillion of U.S. mortgages, may require a bailout that would wipe out shareholders. Last week's slump left the S&P 500 and the Dow average down 16 percent for the year as earnings season enters its second week.

Explicit Guarantee

Freddie Mac today rose 90 cents to $8.65 in Germany, while Fannie Mae added $1.25 to $11.50. Paulson's proposal, which the Treasury anticipates will be incorporated into an existing congressional bill and approved this week, signals a shift toward an explicit guarantee of Fannie Mae and Freddie Mac debt.

The Federal Reserve separately authorized the firms to borrow directly from the central bank.

Freddie Mac is scheduled to sell $3 billion in short-term notes today, and Paulson's comments indicate a concern about a collapse in private investors' willingness to fund the firms. The companies issue debt to raise money for their purchases of mortgage securities.

Lehman Brothers Holdings Inc., once the biggest U.S. underwriter of mortgage bonds, gained 62 cents to $15.05. Lehman on July 11 fell the most since Bear Stearns Cos. collapsed in March on speculation Freddie Mac and Fannie Mae might fail.

Budweiser Beer, Belgians

Anheuser-Busch rose $1.53 to $68.03 in Germany. InBev will put the maker of Budweiser beer under Belgian control after almost 156 years as a family-run company.

The $70-a-share transaction ends a month of court fights and public denunciations as InBev tried to acquire the St. Louis-based beermaker in a hostile takeover. Leuven, Belgium- based InBev sweetened its initial offer by 7.7 percent and agreed to rename itself Anheuser-Busch InBev, the brewers said.

``A takeover such as InBev-Anheuser one is a positive sign,'' Thomas Tilse, head of portfolio strategy for private clients at Cominvest in Frankfurt, which has the equivalent of $101 billion under management, said in a Bloomberg television interview. ``Such mergers and acquisitions show that stocks are still very attractive and cheap at their current levels.''

FedEx Corp. may be active. The second-largest U.S. package- shipping company is in preliminary talks to take over TNT NV, the Financial Times reported. Buying the Dutch operator would make FedEx the No. 2 express-delivery service in Europe. FedEx shares didn't trade in Europe.

Pieter Schaffels, a spokesman for TNT, and Jess Bunn of FedEx both declined to comment on the Financial Times report when contacted by telephone and e-mail on July 12.

Genzyme Corp. climbed $1.26 to $76.93 in Germany. Citigroup Inc. raised its recommendation on shares of the world's largest maker of enzyme therapies for rare genetic disorders to ``buy'' from ``hold.''

To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net