By Adam Haigh
Nov. 10 (Bloomberg) -- European stocks advanced for a second day after China unveiled a $586 billion plan to stimulate the economy and world leaders urged more cuts in interest rates.
BHP Billiton Ltd., ArcelorMittal and Rio Tinto Group jumped more than 7 percent and BP Plc increased 2.5 percent as copper and oil rallied. Deutsche Post AG added 6.5 percent after Europe's biggest mail carrier confirmed its full-year profit target.
China's plan ``is very encouraging,'' said Virginie Maisonneuve who oversees $19 billion as head of global equities at Schroder Investment Management in London. ``We need a speedy implementation. From a sentiment standpoint and in terms of planning ahead, this will create a positive shift.'' She spoke in a Bloomberg Television interview.
The Dow Jones Stoxx 600 Index rose 1.3 percent to 222.35 at 3:44 p.m. in London, trimming this year's drop to 39 percent. The International Monetary Fund predicts global growth will slow to 2.2 percent in 2009 from 3.7 percent this year, meaning a world recession under the fund's informal definition -- growth of 3 percent or less.
National benchmarks gained in all 18 western European markets except Austria and Spain. The U.K.'s FTSE 100 jumped 1.5 percent with Royal Dutch Shell Plc and Cable & Wireless Plc advancing. Germany's DAX added 2.5 percent, while France's CAC 40 increased 1.8 percent.
Infrastructure Spending
The government of China, the world's fourth-largest economy, announced infrastructure spending, tax deductions and farming subsidies. The central bank has already cut interest rates three times in two months, joining policy makers from Washington and Tokyo to Frankfurt and London in efforts to lower borrowing costs and inject cash to avoid recession.
The yen fell 1.2 percent to 126.46 per euro, and it declined to 98.74 from 98.24 against the dollar on speculation China's package will give investors confidence to buy higher- yielding assets using money borrowed in Japan.
Emerging-market stocks, bonds and currencies gained. The MSCI Emerging Markets Index added 4 percent, with Russia's Micex Index climbing 2.2 percent. The South African rand and Hungarian forint rose against the dollar, and the extra yield investors demand for developing nations' bonds fell against U.S. Treasuries.
``China is very stand alone in having the flexibility to do what it wants,'' said Gary Dugan, chief investment officer for Europe at Merrill Lynch Global Wealth Management in London, which manages $2 trillion. ``With the rest of the emerging market world we are somewhat more skeptical. They can't be as bold as China can.''
More Cuts
The Group of 20 nations said yesterday that it is prepared to act ``urgently'' to bolster growth and called on governments to cut interest rates and raise spending as the world's leading industrialized economies battle the economic slump.
The U.S. economy, the world's biggest, is forecast to expand 1.6 percent this year, down from 2 percent growth in 2007, according to economists' estimates compiled by Bloomberg News. China's will grow 9.9 percent in 2008, down from 11.9 percent, the data show. The IMF last week predicted the economies of the U.S., Japan and the euro zone will all shrink next year.
U.S. President-elect Barack Obama doesn't plan to name a Treasury secretary or fill other top positions on his economic team this week, people familiar with the matter said, as he tries to keep from being drawn into Bush administration decisions he may disagree with.
Worst Year
More than $28 trillion has been erased from the value of global equity markets as credit losses and writedowns totaled $690 billion in the worst financial crisis since the Great Depression. The Stoxx 600 is headed for its worst year on record.
``With China accounting for roughly 27 percent of global economic growth last year, this package should certainly help in averting a global recession,'' said Ben Potter, research analyst at IG Markets in Melbourne.
Money market rates in Europe fell today indicating measures taken by authorities across the globe are unlocking credit markets. The London interbank offered rate, or Libor, the rate banks charge each other for three-month loans in dollars, slid almost 6 basis points to 2.24 percent, according to British Bankers' Association. It was the 21st consecutive decline and the lowest level in four years.
BHP Billiton, the world's biggest mining company, rose 12 percent to 1,133 pence. Rio Tinto, the world's third-largest mining company, added 9.9 percent to 2,878 pence.
Copper jumped 7.9 percent on the London Metal Exchange. Gold rose 2.5 percent.
ArcelorMittal, the world's largest steelmaker, climbed 7.4 percent to 18.775 euros.
Oil Climbs
BP, Europe's second-largest energy producer, increased 2.5 percent to 528 pence. Shell, the region's biggest oil company, gained 1.8 percent to 21.17 euros.
Crude for December delivery rose as much as 7.4 percent to $65.56 a barrel in New York.
Deutsche Post rose 6.5 percent to 9.965 euros after saying it plans to widen workforce cuts by 9,500 jobs. Third-quarter net income more than doubled to 805 million euros ($1.04 billion) from 350 million euros.
Cable & Wireless, the U.K.'s second-biggest phone company, gained 5.1 percent to 141.5 pence. Earnings before interest, taxes, depreciation and amortization are now predicted to reach at least 780 million pounds ($1.2 billion) in the 12 months ending March 31, 2009. The previous forecast was for Ebitda of 702 million pounds to 725 million pounds.
Crucell NV rose 7.4 percent to 10.95 euros after its experimental AIDS vaccine kept six monkeys from getting an animal equivalent of the disease. Crucell is a biotechnology company that markets vaccines and antibodies to treat infectious diseases such as influenza, hepatitis A and B, and typhoid fever.
Santander SA fell 4.7 percent to 7.95 euros after saying it will raise 7.2 billion euros ($9.2 billion) by selling shares. Spain's biggest bank will sell stock at 4.5 euros each.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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