European Stocks, U.S. Index Futures Gain; Asian Shares Retreat

By Michael Patterson

Sept. 9 (Bloomberg) -- European stocks rose, extending the Dow Jones Stoxx 600 Index's biggest rally since March, as consumer shares climbed on lower oil and investors speculated the mortgage market will rebound. U.S. index futures gained, while Asian shares retreated.

Ryanair Holdings Plc rose 4.2 percent and Daimler AG gained 1.5 percent as crude dropped on Saudi Arabia's assurance that supplies are sufficient to meet demand. Royal Bank of Scotland Group Plc led banks higher, jumping 6 percent, after the London- based Times reported the U.K. government may take steps to shore up the nation's home-loan market. Dell Inc., the U.S.-based personal computer maker, climbed 1.5 percent in German trading.

The Stoxx 600 added 0.8 percent to 283.48 at 9:52 a.m. in London. The index surged 3.3 percent yesterday, the steepest gain since March 18, on the U.S. government's takeover of Fannie Mae and Freddie Mac, the largest mortgage-finance companies.

``Stocks are reacting to the macroeconomic news, with oil helping cars and airlines,'' said Matthieu Bordeaux-Groult, a fund manager at Richelieu Finance in Paris, which oversees $6.2 billion. ``Banks continue to rise after the U.S. government's intervention to avoid systemic risk.''

Futures on the Standard & Poor's 500 Index added 0.3 percent, while the MSCI Asia Pacific Index fell 2.1 percent.

Global Bear Market

Europe's Stoxx 600 has dropped 22 percent this year, led by financial shares including HBOS and UBS AG, as the biggest surge in mortgage defaults in at least three decades sparked writedowns and losses at banks that topped $500 billion worldwide. The MSCI World Index, a benchmark for equities in 23 developed nations, tumbled into a bear market in July and fell last week to the lowest level since 2006.

National benchmark indexes advanced in all 18 western European markets today except Luxembourg and Norway. France's CAC 40 gained 0.5 percent and Germany's DAX added 0.6 percent. The U.K.'s FTSE 100 rose 1.1 percent.

Ryanair, Europe's biggest discount airline, gained 4.2 percent to 2.75 euros. British Airways Plc, Europe's third- largest carrier, increased 2.8 percent to 260 pence.

Daimler, the world's second-largest luxury carmaker, advanced 1.5 percent to 40.995 euros. Carnival Plc, the U.K. cruise operator, advanced 2.4 percent to 2,066 pence.

Oil fell in New York as Saudi Arabia's oil minister said supplies are sufficient to meet demand. Crude for October delivery dropped 1.2 percent to $105.05 a barrel.

Royal Bank, the U.K.'s second-biggest bank, increased 6 percent to 259.25 pence. HBOS Plc, Britain's largest mortgage lender, gained 4.3 percent to 320.25 pence.

Fannie Mae, Freddie Mac

Chancellor of the Exchequer Alistair Darling is preparing to act on the U.K.'s housing finance market, the London-based Times reported, citing unidentified senior government officials. Darling is waiting on a report from former HBOS Chairman James Crosby, which is due to be submitted by the end of the month, before making any decisions, the newspaper said.

In the U.K., ``when other institutions had difficulties, the state has intervened,'' Alfonso Lopez de Castro, a fund manager at Financiere d'Uzes, which oversees $1.4 billion in Paris, said in a Bloomberg Television interview. ``Today is maybe an occasion to return to bank stocks.''

Equities rallied across the world yesterday after Treasury Secretary Henry Paulson said the U.S. will provide short-term funding to Fannie Mae and Freddie Mac and buy mortgage-backed securities.

Resolution Ltd., the U.K. holding company run by insurance executive Clive Cowdery, said today it plans a 1 billion-pound ($1.8 billion) share sale in November to acquire assets of financial companies.

Founder Buys Shares

Dell added 1.5 percent to $20.47 in German trading. Michael Dell, the chairman and chief executive officer of the Round Rock, Texas-based personal computer maker, paid $20.42 a share for 3.5 million shares on Sept. 4, and $20.67 for 1.378 million on Sept. 5, a regulatory filing yesterday showed.

Anglo American Plc, the world's fourth-biggest diversified mining company, lost 0.7 percent to 2,380 pence. Xstrata Plc, the fourth-largest copper producer, dropped 3.4 percent to 2,478 pence. Copper, nickel, tin and zinc declined in London.

BHP Billiton Ltd. fell 0.9 percent to 1,471 pence. The world's largest mining company said falling commodity prices and a slowing global economy will convince investors to support its $121.5 billion hostile bid for Rio Tinto Group.

Higher Margins

Shareholders are likely to favor the takeover because BHP has higher profit margins and lower debt than its rival, Chief Executive Officer Marius Kloppers said yesterday in an interview in New York. The expected cost savings of $3.7 billion are also more valuable as commodity prices decline, he said.

U.K. manufacturing production declined for a fifth month in July to the lowest level in 1 1/2 years as oil rose to a record, dragging on economic growth. Factory output fell 0.2 percent from June, the Office for National Statistics said. Economists predicted 0.1 percent, according to the median of 28 forecasts in a Bloomberg News survey. The index of manufacturing was at 103.3, the lowest since February 2007.

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.