European Stocks, U.S. Index Futures Advance; UBS, Goldman Climb

By Adam Haigh

Sept. 24 (Bloomberg) -- European stocks and U.S. index futures gained as Warren Buffett's investment in Goldman Sachs Group Inc. overshadowed concern the Congress will hold up a $700 billion bank bailout plan. Financial shares in Asia also rose.

UBS AG added 1.8 percent and Goldman jumped 9.7 percent in Europe after Buffett's Berkshire Hathaway Inc. said it's buying $5 billion of perpetual preferred stock in Goldman with a 10 percent dividend. British Energy Group Plc climbed 5.7 percent after Electricite de France SA agreed to buy the U.K.'s biggest power producer for 12.5 billion pounds ($23 billion).

The Dow Jones Stoxx 600 Index increased 0.3 percent to 268.01 at 8:33 a.m. in London. Futures on the Standard & Poor's 500 Index rallied 1.3 percent. The MSCI Asia Pacific Index was little changed.

``The news today that Goldman could raise some money from Warren Buffett is pretty positive,'' said Sydney-based Shane Oliver, head of investment strategy at AMP Capital Investors, which has $81 billion. ``This turned around futures trading in the U.S. and gave a more positive tone to markets,'' he said in a Bloomberg Television interview.

U.S. stocks fell yesterday in the worst two-day slump in six years as Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson urged swift passage of the bailout measures, while lawmakers expressed objections. Senator Sherrod Brown, a Democrat from Ohio, said his constituents hold a ``universally negative'' opinion toward the proposal, while Senator Jim Bunning, a Kentucky Republican, said the plan would ``take Wall Street's pain and spread it to the taxpayers.''

`Critical'

``It's critical that it gets approved and the quicker the better as far as stability in financial markets is concerned,'' said Lucy MacDonald, the London-based chief investment officer of global equities at RCM Ltd., which has $100 billion under management. ``There is still a lot of arguing about the detail and especially about the buying into the distressed assets,'' she said in a Bloomberg Television interview.

The Stoxx 600 through yesterday had erased more than half of a record 8.3 percent rally on Sept. 19, when the U.S. government announced plans to stem credit-related losses. The measure is down 27 percent this year as losses at financial companies topped $521 billion globally.

UBS, the European bank hardest hit by the subprime crisis, added 1.8 percent to 19.5 Swiss francs. Goldman jumped 9.7 percent to $137.14 in German trading. Macquarie Group Ltd. of Australia gained 11 percent to A$40.

Warrants

Berkshire also gets warrants to buy $5 billion of Goldman's common stock at $115 a share at any time in the next five years. In addition to raising money from Buffett, Goldman said it plans to sell at least $2.5 billion of common stock to the public.

The Fed today said it has arranged to channel $30 billion into the global financial system by opening currency swap lines with central banks in Australia, Denmark, Norway and Sweden to relieve short-term dollar funding in markets worldwide.

British Energy advanced 5.7 percent to 765.5 pence. EDF will pay 774 pence a share for the East Kilbride, Scotland-based utility, according to a statement. That's 35 percent above the stock's closing price on March 14, the last trading session before British Energy said it may receive an offer. EDF climbed 5.3 percent to 52.83 euros.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.