By Chua Kong Ho and Michael Patterson
Nov. 10 (Bloomberg) -- U.S. stock-index futures rose after China unveiled a $586 billion economic stimulus package and the Group of 20 nations urged central banks to cut interest rates.
General Electric Co. and Caterpillar Inc. climbed more than 2 percent as China's plan eased concern that infrastructure and construction spending may slow in the fastest-growing major economy. Citigroup Inc. rose 3.6 percent after the G-20 said it will use ``monetary and fiscal policy'' to combat the threat of a global recession. Newmont Mining Corp. added 4.3 percent and Exxon Mobil Corp. climbed 2.1 percent on higher metals and oil.
``Governments and businesses are working on solutions to the slowdown plaguing economies and earnings, which may bring us some positive surprises,'' Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview on Bloomberg Television. ``Given demand is waning, government spending will be a welcome boost to economies.''
Futures on the Standard & Poor's 500 Index gained 2.5 percent to 959.8 at 11:09 a.m. in London. Dow Jones Industrial Average futures added 2.2 percent, while Nasdaq-100 Index futures rose 2.5 percent. Europe's Dow Jones Stoxx 600 Index jumped 2.9 percent and the MSCI Asia Pacific Index increased 3.2 percent.
The S&P 500 has retreated 37 percent this year as concern deepened that the credit crises sparked by a surge in U.S. mortgage defaults will drag down the global economy. President- elect Barack Obama may inherit the worst U.S. recession since 1982, according to economists' estimates, putting pressure on the Democrat to assemble a response and name his economic team.
China Package
China's stimulus package, equivalent to almost a fifth of the country's gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said yesterday. China accounted for 27 percent of global economic growth last year, more than any other nation, according to the International Monetary Fund.
The extra spending may boost the nation's economic growth by 2 percentage points next year, said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. UBS AG and Credit Suisse AG, before yesterday's announcement, forecast GDP would rise no more than 7.5 percent next year, which would be the smallest increase in nearly two decades.
GE, which gets about 44 percent of its revenue from energy and technology infrastructure businesses, climbed 3.4 percent to $19.50. Caterpillar, the world's largest maker of bulldozers and excavators, increased 2.8 percent to $38.51 in Germany.
`Support Global Growth'
Citigroup increased 3.6 percent to $12.25 in Germany and JPMorgan Chase & Co. added 2.7 percent to $38.78.
``We stand ready to urgently take forward work and actions agreed by our leaders to restore and maintain financial stability and support global growth,'' the G-20 said in a statement released yesterday following a meeting in Sao Paulo. ``Countries must use all their policy flexibility, consistent with their circumstances, to support sustainable growth.''
Newmont Mining rose 4.3 percent to $27.13 in Germany. Exxon, the world's biggest oil company, advanced 2.1 percent to $75.53.
Copper surged 8.1 percent in London and crude oil added 5.4 percent in New York after the announcement by China, the world's largest user of the metal and second-largest oil consumer.
American International Group Inc. jumped 18 percent to $2.49. The U.S. Treasury will take a $40 billion stake in the insurer and the Federal Reserve will open two new emergency loan units to finance the company's securities, the government said today.
General Motors Corp. advanced 7.1 percent to $4.67 even after the biggest U.S. automaker was cut to ``underweight'' from ``equal-weight'' at Barclays Capital, which predicted the shares may tumble to $1.
To contact the reporters on this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Michael Patterson in London at mpatterson10@bloomberg.net.
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