U.S. Stock Futures Rally; Shares in Asia and Europe Advance

By Patrick Rial

Oct. 28 (Bloomberg) -- U.S. stock futures surged, following rallies in Asian and European equities, amid speculation the cheapest valuations in two decades will lure investors.

S&P 500 futures expiring in December soared 38.7, or 4.6 percent, to 873.4 as of 8:35 a.m. in London. Dow Jones Industrial Average futures climbed 343, or 4.3 percent, to 8,354, while Nasdaq-100 Index futures rose 51, or 4.4 percent, to 1,213.

U.S. shares dropped yesterday, sending the Standard & Poor's 500 Index to the lowest since March 2003 and leaving it with a 42 percent decline for the year. The gauge is now valued at 10.7 times estimated profit, the cheapest compared with the multiple using trailing profit since 1985. The slump prompted value investor Jeremy Grantham to say yesterday shares are approaching a ``once-in-a-lifetime investing opportunity.''

``There is some bottom fishing going on,'' said Tom Hougaard, chief market strategist at City Index, a spread- betting firm in London. ``I'm bullish. I was looking for a low towards the end of October, but it's still going to be tumultuous,'' he said in a Bloomberg Television interview.

Equities have tumbled around the world this month, wiping out more than $12 trillion of market value, as a seizure in money markets sparked by $678 billion of asset writedowns and credit losses at banks spurred concern the global economy is headed for a recession. The S&P 500 slumped 27 percent, its worst monthly decline since 1931.

Japan's Nikkei 225 Stock Average today rallied from a 26- year low to gain 6.4 percent, while Hong Kong's Hang Seng index surged 14 percent. The MSCI Asia Pacific Index added 3.7 percent, while Europe's Dow Jones Stoxx 600 Index climbed 2.1 percent.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net.