Stocks in Europe, Asia Gain, Led by BMW; U.S. Futures Advance

By Adria Cimino

Aug. 11 (Bloomberg) -- Stocks in Europe and Asia rose as investors speculated carmakers will benefit from the stronger dollar and higher oil prices lifted energy producers. U.S. index futures also gained.

Bayerische Motoren Werke AG advanced for a second day after Merrill Lynch & Co. said the dollar's rally last week will help ``reduce margin headwinds.'' BP Plc and Total SA climbed as oil rebounded from a 14-week low. UBS AG jumped after maintaining its earnings guidance following a settlement in the U.S., while Commonwealth Bank of Australia rallied as the country's central bank said ``there's scope'' to cut interest rates.

The MSCI World Index added 0.5 percent to 1,364.29 at 12:10 p.m. in London all of the 10 industry groups increased. The dollar last week had the biggest weekly increase against the euro on a percentage basis since January 2005, boosting the value of earnings when converted into the European currency.

``The dollar's gain is a positive element for companies that export,'' said Chicuong Dang, an analyst at Richelieu Finance in Paris, which has $6.2 billion under management. ``It's lifting the market today.''

A retreat in commodity prices last week and better-than- expected earnings from Cisco Systems Inc., Procter & Gamble Co., Societe Generale SA and Royal Bank of Scotland Group Plc helped lift the MSCI World to its first weekly gain in three weeks. Still, the index has lost 14 percent this year on concern accelerating inflation and credit losses approaching $500 billion will stifle profit growth.

Europe, Asia

Futures on the Standard & Poor's 500 Index added 0.2 percent today. Europe's Dow Jones Stoxx 600 Index gained 0.9 percent today, while the MSCI Asia Pacific Index increased 1.3 percent.

Shares in Asia climbed today after the MSCI Asia Pacific Index ended last week at the cheapest relative to its companies' profits since at least 1995, according to weekly data compiled by Bloomberg. The regional benchmark was valued at 10.9 times profit on Aug. 8, down from 17.6 at the end of last year, the data show.

Europe's Stoxx 600 is valued at 11.9 times profit, near the level of 10.8 times earnings last month that was the cheapest since at least 2002, data compiled by Bloomberg show. The S&P 500 is more expensive, with the benchmark for American equities trading at 25.9 times profit. That's the highest since 2003, data compiled by Bloomberg show.

In China, the benchmark stock index fell today to the lowest in 18 months, overtaking Vietnam as the world's worst performer this year, after producer prices rose and Goldman Sachs Group Inc. said the Olympic Games will slow the economy.

Russian Stocks

Russian equities advanced after President Dmitry Medvedev said the military had completed a ``significant'' part of its operations in the breakaway Georgia republic of South Ossetia.

BMW, the world's largest maker of luxury cars, jumped 3.4 percent to 30.42 euros. The company derives more than a fifth of its sales from America.

``We believe BMW has lost over 2 billion euros ($3 billion) in U.S. profits from the U.S. dollar weakness in the past four years,'' Merrill wrote in a report. ``Any, even short-term, U.S. dollar strength helps reduce these margin headwinds.''

Michelin & Cie., which makes 33 percent of its sales in North America, advanced 2.2 percent to 46.75 euros. Hochtief AG gained 5.3 percent to 55.27 euros. Germany's biggest construction company relies on the Americas for 43 percent of its revenue.

The euro traded at $1.5021 after earlier falling to $1.4907, the lowest level since Feb. 26, from $1.5005 at the end of last week.

One-Month Rally

The Stoxx 600 has rallied 9.5 percent from a three-year low on July 15, as declines in the euro and oil eased concern earnings will erode further. The European currency has retreated 5.5 percent against the dollar, while oil has fallen more than $30 a barrel from a record $147.27 on July 11.

Oil has climbed 21 percent this year, while the Stoxx 600 has lost 20 percent in the period.

Analysts predict profit for companies in the Stoxx 600 will drop 2.5 percent this, according to projections compiled by Bloomberg. That's down from 11 percent growth forecast at the start of the year.

BP added 1.4 percent to 527 pence. Total, Europe's biggest oil refiner, climbed 1.2 percent to 48.05 euros.

Oil prices climbed on concern the Russia-Georgia conflict may disrupt crude supplies from the Caspian Sea. Crude for September delivery gained as much as $1.70, or 1.5 percent, to $116.90 a barrel on the New York Mercantile Exchange.

UBS, the European bank hardest hit by the subprime contagion, jumped 3.9 percent to 22.86 francs. The company said Aug. 8 it will buy back as much as $18.6 billion of auction-rate securities and pay $150 million of fines, the largest settlement in a U.S. probe into whether banks stuck clients with hard-to- sell bonds.

UBS

The bank, which will set aside about $900 million in the second quarter to account for the settlement, follows New York- based Citigroup Inc. and Merrill in yielding to regulatory pressure to make investors whole. Following the settlement, UBS said its results would still be ``consistent'' with its guidance.

``This burden is already included in the result around break-even that UBS said it would produce for the second- quarter,'' Georg Kanders, a WestLB analyst wrote. ``We therefore believe that the quality of the second-quarter results is better than anticipated and clearly confirm our `buy' recommendation.''

Commonwealth Bank, Australia's biggest mortgage lender, gained 2.4 percent to A$44.48. Australia & New Zealand Banking Group Ltd., the nation's fourth-largest bank, added 2.5 percent to A$17.78.

The Reserve Bank of Australia said it will have more room to cut interest rates as weakening domestic demand eases inflation.

Ericsson AB, the world's biggest maker of wireless networks, climbed 4.5 percent to 69.8 kronor. Tata Teleservices Ltd. will spend $2 billion in the next two years to provide telephone services based on the global system for mobile communications technology, or GSM, the Press Trust of India news agency reported.

India is Ericsson's third-largest market behind the U.S. and China, the Swedish company said in last year's annual report.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.