By Adria Cimino
Nov. 7 (Bloomberg) -- European stocks and U.S. index futures gained as higher copper and oil buoyed commodity shares and investors speculated central banks will lower interest rates further to spur economic growth.
BHP Billiton Ltd., the world's biggest mining company, and BP Plc, Europe's second-largest oil company, rallied more than 3 percent. British Airways Plc, the region's third-biggest carrier, surged 17 percent after raising its revenue forecast. Munich Re jumped 5 percent as the world's largest reinsurer maintained its dividend and earnings-per-share targets.
Europe's Dow Jones Stoxx 600 Index added 0.1 percent to 215.71 at 1:34 p.m. in London, leaving the index down 2.9 percent this week. Central banks from London and Frankfurt to Washington and Tokyo have cut rates over the past months to shore up the banking system in the worst financial crisis since the Great Depression.
``There will be more rate cuts in the U.S. and Europe before the end of the year, and that's favorable,'' said Jerome Forneris, a fund manager at Banque Martin Maurel in Marseille, France, who helps oversee $10 billion. ``We know the jobs data won't be good.''
European stocks and U.S. futures pared gains after the Labor Department said the jobless rate climbed more than forecast in October to the highest level since 1994 and the payrolls dropped by 240,000 workers. The data shows the economic slump inherited by Barack Obama will last well into his first year as president.
Ford Motor Co. earlier posted a third-quarter loss of $2.98 billion and said it used up $7.7 billion in cash and would cut more salaried jobs.
Two-Day Tumble
Standard & Poor's 500 Index futures climbed 0.5 percent as Wal-Mart Stores Inc., the world's biggest retailer, rose. The S&P 500 yesterday capped a 10 percent retreat over two days, wiping out more than half of the market's rebound from a five- year low on Oct. 27. The tumble following Election Day on Nov. 4 was the biggest two-day slide since the crash of October 1987.
The MSCI Asia Pacific Index slipped 1.2 percent today as Toyota Motor Corp. and Olympus Corp. dropped more than 9 percent after lowering profit forecasts.
National benchmarks advanced 13 of the 18 western European markets. The U.K.'s FTSE 100 gained 1.3 percent with Royal Dutch Shell Plc and Rio Tinto Group climbing. Germany's DAX added 0.2 percent as did France's CAC 40.
The Stoxx 600 has declined 41 percent this year, headed for its worst year on record. More than $27 trillion has been erased from the value of global equity markets as credit losses and writedowns topped $690 billion.
Worst Crisis
The worst banking crisis in almost a century pushed the Bank of England to slash its key rate 1.5 percentage points yesterday, while the European Central Bank cut its benchmark rate by half a point. Denmark and Switzerland also lowered rates yesterday.
The Bank of Korea lowered interest rates today for the third time in four weeks and signaled it's ready to act again to prevent the economy from sinking into recession.
Money-market rates extended declines, the latest evidence the paralysis in credit markets is easing. The London interbank offered rate, or Libor, that banks charge each other for three- month loans in dollars dropped 10 basis points to 2.29 percent, the lowest level in four years. The comparable euro rate fell to the lowest since March 6.
The TED spread, which measures the difference between the cost of three-month loans and the yield on U.S. Treasury bills of the same maturity, dropped below 200 basis points for the first time since Sept. 12, the last day before the collapse of Lehman Brothers Holdings Inc.
Wells Fargo
Wells Fargo & Co., the biggest bank on the U.S. West Coast, raised $11 billion in a stock sale to help pay for its purchase of Wachovia Corp. and signaled banks may be able to tap the public markets for cash.
BHP added 3.2 percent to 1,000 pence, after tumbling 15 percent yesterday, the steepest drop in at least six months. Rio Tinto, the world's second-biggest exporter of iron ore, climbed 2.8 percent to 2,577 pence, after falling 15 percent yesterday.
The Stoxx 600 Basic Resources Index had the second-biggest gain among the broader index's 19 industry groups today, rebounding from a 19 percent slump in the previous two days. The index traded at 4.4 times earnings, near its cheapest since at least 1998.
Copper gained for the first time in three days in London. Nickel, lead, zinc and tin also advanced.
BP climbed 4.3 percent to 514 pence. Shell, Europe's biggest energy producer, added 2.4 percent to 1,682 pence.
Oil rose, extending its rebound from a 19-month low in New York. Crude for December delivery climbed as much as $2.05, or 3.4 percent, to $62.82 a barrel in New York.
British Airways
British Airways jumped 13 percent to 148.1 pence after boosting its revenue forecast and saying it will trim summer flights and complete a job-cutting program.
The London-based carrier raised its forecast for full-year revenue growth to 4 percent from 3 percent and said it will reduce its summer schedule by 1 percent to save money as traffic declines.
Munich Re climbed 6.5 percent to 102.66 euros. The company said it will continue to buy back shares as planned and confirmed a target to increase earnings per share by an average of 10 percent until 2010 to at least 18 euros.
The company reiterated a statement from Aug. 6 that it plans to pay a dividend of at least 5.50 euros per share this year, matching the payout for 2007.
Investors in U.K. equities should increase holdings in retailers and homebuilders, because yesterday's larger-than- expected interest-rate cut from the Bank of England will alleviate households' debt, Cazenove said.
Taylor Wimpey Plc, the U.K.'s largest homebuilder, gained 11 percent to 15 pence. Marks & Spencer Group Plc, Britain's largest clothing retailer, advanced 1.1 percent to 255.5 pence.
Sanford C. Bernstein raised its recommendation on shares of Marks & Spencer to ``outperform'' from ``market-perform,'' saying the rate cut could spark buying in British retail stocks.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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