By Adam Haigh
Nov. 3 (Bloomberg) -- Stocks rose in Europe and Asia and U.S. index futures as declining money-market rates bolstered confidence the financial crisis is ebbing.
Rio Tinto Group, the world’s third-biggest mining company, advanced 1.5 percent. Siemens AG, Europe’s largest engineering company, climbed 2.6 percent. HBOS Plc rallied 3.5 percent on speculation the mortgage lender may receive a rival bid to Lloyds TSB Group Plc.
The MSCI World Index added 0.7 percent to 964.26 at 8:47 a.m. in London as all 10 industry groups increased. Money-market rates in Asia fell amid speculation central banks will keep cutting rates to spur lending and bolster growth.
“You are seeing some signs of the stress indicators, or interbank lending, are reducing,” said Andrew Bell, head of research and strategy at Rensburg Sheppards Plc. “Clearly liquidity is being provided from central banks and governments to show that the banks can continue to function. I don’t think the bank bailouts are over, but what you have now is a belief that sufficient capital will be found to plug the holes.”
Europe’s Dow Jones Stoxx 600 Index advanced 0.3 percent. And futures on the Standard & Poor’s 500 Index added 0.3 percent.
The MSCI Asia Pacific excluding Japan Index rose 4.8 percent as South Korea pledged to pump $10.8 billion into its economy and India cut interest rates to ease the fallout from the global credit crisis. Japanese markets are shut for a holiday.
Rate Cuts
Europe’s Stoxx 600 had its biggest weekly rally since 2001 last week as money markets began to unfreeze and central banks from the U.S. to Japan cut borrowing costs to revive economic growth.
Rio Tinto advanced 1.5 percent to 2,909 pence, while Siemens gains 2.6 percent to 47.65 euros.
The Stoxx 600 was valued on Oct. 27 at 7.9 times reported earnings of the companies in the index, the cheapest level since at least January 2002, according to data compiled by Bloomberg. The European equity benchmark has tumbled 39 percent in 2008, poised for a record annual drop, as a jump in U.S. mortgage defaults saddled global banks with more than $684 billion of losses and caused credit markets to lock up.
Money-market rates in Asia fell today. Hong Kong’s three- month interbank offered rate, or Hibor, declined 26.5 basis points today to a six-week low of 3.08 percent, at the 11 a.m. fixing by the Hong Kong Association of Banks. The similar rate for U.S. dollar loans in Singapore, or Sibor, dropped 16 basis points to 3.09 percent, the lowest since Sept. 16, according to the Association of Banks in Singapore.
Unlocking Markets
The decline in money market rates signals as much as $3 trillion of emergency funds provided by governments to alleviate the credit crisis may be easing interbank lending. The cost of borrowing dollars for three months in London fell 49 basis points last week to 3.03 percent, capping the first monthly decline since May, according to the British Bankers’ Association.
European Central Bank policy makers meet Nov. 6, when they will probably reduce the region’s main refinancing rate a half point to 3.25 percent, a Bloomberg survey of economists showed. The Bank of England will also announce a cut in borrowing costs on the same day to 4 percent, a separate survey indicated.
HBOS rose 3.5 percent to 102.8 pence. Scottish financier Jim Spowart contacted Scottish Secretary Jim Murphy this past week about “another potential bid,” the Scottish Office said in a statement in London. For now, though, “there is only one bid,” it said. HBOS spokesman Shane O’Riordain declined to comment.
Edinburgh based HBOS agreed to be bought in September after its shares plunged amid concerns with the company’s access to cash as the credit crunch discouraged loans between banks.
Wood, SocGen
John Wood Group Plc, the U.K.’s largest oilfield-services provider, gained 2.5 percent to 246.25 pence. UBS AG raised its recommendation on the shares to “buy” from “neutral” and separately Morgan Stanley upgraded the stock to “equal weight” from “underweight.”
Societe Generale SA rose 2.5 percent to 43.225 euros even as France’s third-largest bank after said third-quarter profit fell a more-than-estimated 84 percent as credit-related writedowns resulted in losses at the investment-bank and asset- management units.
StatoilHydro ASA, Norway’s largest oil and gas company, fell 2.6 percent to 127.4 kroner as third-quarter profit plunged 56 percent as the weakening krone pushed up debt costs.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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