By Adam Haigh
Nov. 10 (Bloomberg) -- Stocks rose in Europe and Asia and U.S. index futures climbed after China unveiled a $586 billion plan to stimulate the economy and world leaders urged further cuts in interest rates. Oil and copper rallied, while the yen fell.
China's CSI 300 Index jumped 7.4 percent, and Japan's Nikkei 225 Stock Average surged 5.8 percent. BHP Billiton Ltd.ArcelorMittal and ABB Ltd. added more than 10 percent in Europe. The yen slipped 1.7 percent against the euro on speculation China's package will give investors confidence to buy higher- yielding assets using money borrowed in Japan.
``This is very encouraging,'' said Virginie Maisonneuve who helps oversee $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 MSCI World Index increased 1.6 percent to 954.36 at 11:27 a.m. in London, trimming this year's drop to 40 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.
Europe's Dow Jones Stoxx 600 Index advanced 2.8 percent, and futures on the Standard & Poor's 500 Index climbed 2.5 percent. The MSCI Asia Pacific Index added 3.2 percent.
The yen fell 1.7 percent to 127.24 per euro, and it declined to 98.98 from 98.24 against the dollar.
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.
Emerging-market stocks, bonds and currencies gained. The MSCI Emerging Markets Index added 3.4 percent, with Russia's Micex Index climbing 8.1 percent and India's Sensitive Index adding 4.4 percent. The Polish zloty, South African rand and Hungarian forint gained against the dollar, and the extra yield investors demand for developing nations' bonds fell against U.S. Treasuries.
``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.
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.
Obama's Team
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 expand 9.9 percent in 2008, down from 11.9 percent, the data show. The U.S., Japan and the euro zone will all shrink next year, the IMF said last week.
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.
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 has declined 38 percent in 2008, headed for its worst year on record.
BHP Billiton, the world's biggest mining company, rose 15 percent to 1,165 pence. Rio Tinto Group, the world's third- largest mining company, added 16 percent to 3,024 pence.
Copper, Gold Rally
Copper jumped 8.4 percent on the London Metal Exchange. Gold rose 1.8 percent.
ArcelorMittal, the world's largest steelmaker, climbed 15 percent to 20.22 euros.
BP Plc, Europe's second-largest energy producer, increased 4.2 percent to 536.75 pence. Royal Dutch Shell Plc, the region's biggest oil company, gained 4.7 percent to 21.775 euros.
Crude oil for December delivery rose as much as 5.3 percent to $64.30 a barrel in New York.
ABB, the world's largest builder of electricity grids, jumped 11 percent to 15.07 Swiss francs.
AIG Advances
American International Group Inc. rallied 9 percent to $2.30 after the insurer bailed out by the U.S. got an expanded government rescue package valued at more than $150 billion after posting a fourth straight quarterly loss.
The U.S. will reduce the original $85 billion loan that saved the New York-based insurer in September to $60 billion and buy $40 billion of AIG preferred shares. The insurer lost $24.5 billion, or $9.05 a share in the period ended Sept. 30, compared with profit of $3.09 billion, or $1.19, a year earlier.
Air France-KLM Group climbed 2.5 percent to 12 euros. Europe's biggest airline said passenger traffic rose 9 percent in October as more travelers took trans-Atlantic flights and year-earlier figures were held back by a strike.
Cable & Wireless Plc surged 7.1 percent to 144.3 pence after the U.K.'s second-biggest phone company increased its full-year forecast for operating profit. 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, Telefonica
Crucell NV rose 3.7 percent to 10.58 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.
Telefonica SA, Spain's largest telephone company, gained 3.6 percent to 15.60 euros after JPMorgan Chase & Co. upgraded the shares to ``buy'' from ``neutral.''
Santander SA fell 3.6 percent to 8.04 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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