By Sarah Thompson
Nov. 21 (Bloomberg) -- Most stocks rose in Europe and the Standard & Poor's 500 Index was poised to rebound from its lowest level 11 years buoyed by speculation Citigroup Inc. may be up for sale and a rally in commodity shares.
Citigroup rallied 11 percent. UBS AG, Switzerland's biggest bank, and Deutsche Bank AG jumped more than 5 percent. BHP Billiton Ltd. climbed 8.3 percent after mining shares fell to their lowest price relative to earnings since records began in 1995. Dell Inc., the second-largest personal-computer maker, advanced 4.6 percent on better-than-expected earnings.
``A split of Citigroup was already rumored quite a while ago,'' said Philippe Gijsels, a Brussels-based senior equity strategist at Fortis Global Markets, which has $62 billion under management. ``I still think there is an upside between now and the end of the year because we are oversold. Maybe this is the start of this bear-market rally we have been waiting for.''
The MSCI World Index added 0.7 percent to 776.876 at 1:14 p.m. in London, trimming this week's decline to 12 percent. A retreat by European drugmakers and utilities dragged the Stoxx 600 down 0.2 percent, even as seven stocks rose for every five that fell. The MSCI Asia Pacific Index increased 3.2 percent.
Futures on the S&P 500 advanced 2.7 percent before a possible meeting of Citigroup's board. The benchmark index for U.S. equities has dropped to within 10 points of its level on Dec. 5, 1996, the day former Federal Reserve Chairman Alan Greenspan questioned in a speech whether the U.S. stock market suffered from ``irrational exuberance.''
More than $33 trillion has been erased from the value of global equities this year as credit losses and writedowns topped $967 billion and countries from the U.K. and Germany to the U.S. and Japan slip into recession.
Citigroup
Citigroup climbed 11 percent to $5.24 in pre-market trading. The board meets today to discuss the bank's options, a person familiar with the matter said, after Chief Executive Officer Vikram Pandit's efforts to rebuild investor confidence failed to halt the stock's descent to a 15-year low.
The board, under Chairman Win Bischoff and lead independent director Richard Parsons, will meet at Citigroup's headquarters in New York, said the person, who declined to be identified because the deliberations are private. The panel may consider selling off pieces of the bank or the entire company, the Wall Street Journal reported, citing people familiar with the matter. The New York Times reported that bank executives are not actively considering selling or splitting the firm.
UBS, the European bank hardest hit by credit-related losses, jumped 6.2 percent to 12 francs. Deutsche Bank, Germany's largest, gained 5.6 percent to 20.45 euros.
`Priced for Armageddon'
Banks have led declines this month that pushed Europe's Stoxx 600 to the lowest since 2003 and the S&P 500 of the U.S. to an 11-year low. The Stoxx 600 closed yesterday at 8.3 times reported earnings, below the four-year average of 14 times profit. The S&P 500 is valued at 16 times earnings, the lowest since 1995. The MSCI World Index of 23 developed countries trades at 11 times profit.
``Everything has been priced for Armageddon,'' said Geoffrey Pazzanese, manager of the Federated InterContinental Fund, which invests in developed and emerging markets equities outside the U.S. Federated Investors, based in Pittsburgh, manages $344 billion. ``Valuations are very attractive. Pessimism will subside at some point.''
BHP Billiton, the world's largest mining company, rallied 8.3 percent to 815 pence. Rio Tinto Group, the third-biggest, added 5.9 percent to 2,141. Vedanta Resources Plc, the Indian mining company controlled by billionaire Anil Agarwal, climbed 10 percent to 427 pence.
Record Low Valuation
The MSCI World Materials Index has lost 22 percent this month, the worst performance after a 28 percent retreat by financial shares in the gauge of 23 developed countries. Mining stocks closed yesterday at 5.6 times reported earnings of the companies in measure, the lowest since records began in 1995.
Dell added 4.6 percent to $10.26 in Germany. Third-quarter net income of 37 cents a share beat the 33-cent average of analysts' estimate in a Bloomberg survey. Dell has cut 13 percent of its workforce since its high point last year, helping bolster earnings even a sales missed analysts' estimates by more than $1 billion.11
DSG International Plc jumped 35 percent to 14.5 pence after the U.K.'s largest electronics retailer was upgraded to ``outperform'' from ``underperform'' at Credit Suisse Group AG, which said concerns about the company's survival dragged the stock too low. Today's rally trimmed the stock's slump this month to 28 percent.
``The risk of a near-term financial failure is in our view being over discounted by the market and we believe management will reassure on its financial position'' next week, Credit Suisse analyst Assad Malic wrote in a research note today.
Bank of Ireland
Bank of Ireland Plc jumped 19 percent to 1.2 euros after the country's biggest bank by assets said it has received ``unsolicited approaches'' from a number of groups looking to invest in the bank.
Aer Lingus Group Plc gained 8.6 percent to 1.07 euros after Ireland's second-biggest airline was added to Goldman Sachs Group Inc.'s ``conviction buy'' list, which said ``Aer Lingus is one of the few airlines where we believe full-year 2010 consensus estimates are now realistic.''
CRH Plc advanced 3.8 percent to 15.95 euros after the world's second-biggest building materials maker said it has completed the renewal and extension of its 1.5 billion euro debt facilities.
Immofinanz AG may sell property worth 300 million euros ($376 million) to the Austrian government and issue convertible bonds to help boost its liquidity, Vienna's Die Presse reported without citing anybody. Shares of Austria's largest property developer gained 42 percent to 54 cents.
Repsol YPF SA climbed 7.1 percent to 14.56 euros. OAO Lukoil, Russia's biggest non-state oil company, may buy a stake of as much as $6.3 billion in Spain's largest oil company, to extend its refining investments in the Mediterranean.
-- Editor: Stephen Kirkland, Daniel Hauck
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net.
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