By Sarah Jones
Dec. 8 (Bloomberg) -- Stocks in Europe and Asia rallied and U.S. index futures climbed after U.S. President-elect Barack Obama pledged the largest infrastructure-spending package since the 1950s to stimulate economic growth.
CRH Plc, the world’s second-biggest building materials maker, and Siemens AG jumped more than 6 percent as Obama said he’s planning the biggest public works program since President Dwight D. Eisenhower created the interstate highway system. Daimler AG led carmakers higher after U.S. lawmakers agreed in principle with the Bush administration on providing funds to prevent the collapse of General Motors Corp. and Chrysler LLC. GM surged 25 percent in Germany. BHP Billiton Ltd. and Royal Dutch Shell Plc rose with copper and oil.
The MSCI World Index added 2.7 percent to 871.63 at 8:47 a.m. in London as all 10 industry groups increased. Standard & Poor’s 500 Index futures jumped 2.5 percent, and Europe’s Dow Jones Stoxx 600 Index advanced 5.5 percent. The MSCI Asia Pacific Index increased 4.3 percent as India cut interest rates and unveiled a $4 billion stimulus plan.
Obama’s spending plan “is important in terms of it being another sign that policy response is ongoing and we should expect to see more from authorities through 2009,” said Robert Talbut, who helps manage $31 billion of assets as chief investment officer at Royal London Asset Management. “That should help restore confidence in equity markets.”
Governments worldwide have introduced measures this year to buttress their economies from the worst financial crisis since the Great Depression as more than $31 trillion has been erased from the value of global equities. Debt losses and writedowns by the world’s largest lenders and insurers have approached $1 trillion.
Profits for Free
Stocks have fallen so far that 2,267 companies around the globe are offering profits to investors for free. That’s eight times as many as at the end of the last bear market, when the shares rose 115 percent over the next year.
Companies in the MSCI World trade for an average $1.17 per dollar of net assets, the lowest since at least 1995, and 39 percent sell at a discount to shareholder equity, data compiled by Bloomberg show.
CRH rallied 7.4 percent to 18.80 euros in Dublin and Germany’s Siemens, Europe’s largest engineering company, advanced 6.5 percent to 47.70 euros after Obama said on Dec. 6 he will boost investment in roads, bridges and public buildings to create and preserve 2.5 million U.S. jobs.
Daimler, the world’s second-biggest producer of luxury cars, gained 7.5 percent to 24.105 euros. Bayerische Motoren Werke AG, the largest luxury-car maker, climbed 5 percent to 20.805 euros. GM surged 25 percent to $5.09 in German trading.
Carmaker Bailout
U.S. lawmakers are working to hammer out details of legislation to bail out ailing auto companies, after reaching an agreement in principle with the Bush administration.
The legislation is taking shape after House Speaker Nancy Pelosi dropped her opposition to drawing on $25 billion in funds from the Energy Department intended to help automakers develop more fuel-efficient vehicles, according to a Democratic aide who declined to be identified.
BHP, the world’s largest mining company, climbed 11 percent to 1,078 pence. Shell, Europe’s biggest energy producer, added 7.4 percent to 1,677 pence.
Copper for delivery in three months snapping a seven-day losing streak, rising 4.5 percent in London.
Oil rebounded after six days of declines, with crude for January delivery gaining as much as $2.57, or 6.3 percent, to $43.38 a barrel in after-hours electronic trading.
Eni, Deutsche Boerse
Eni SpA gained 10 percent to 16.99 euros after the Italian government said the Libyan Energy Fund is interested in buying a stake in Italy’s biggest oil company.
Il Sole 24 Ore reported yesterday Libya could buy as much as 10 percent of Eni for as much as 9 billion euros ($11.5 billion), citing Libyan Ambassador to Italy Hafed Gaddur.
Deutsche Boerse AG, which runs the Frankfurt stock exchange, rallied 7.6 percent to 54.30 euros after saying the company had considered a merger offer for NYSE Euronext, operator of the world’s largest stock market. Deutsche Boerse said the talks had “ended without any conclusion.”
HSBC Holdings Plc gained 3.1 percent to 732 pence. Europe’s largest bank said it will increase the amount of money it loans for U.K. home mortgages next year by 20 percent to 15 billion pounds ($22 billion).
The announcement came less than a day after the bank created a $5 billion fund to increase access to credit for small and medium-sized businesses.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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