U.S. Stock-Index Futures Advance; Alcoa, AIG Climb in Europe

By Alexis Xydias

Dec. 22 (Bloomberg) -- U.S. stock-index futures advanced, indicating the Standard & Poor’s 500 Index may extend two weeks of gains, as governments from Beijing to Washington stepped up efforts to combat a global recession.

Alcoa Inc., the largest U.S. aluminum producer, climbed 4.2 percent after China cut interest rates for the fifth time in three months to support the world’s fourth-biggest economy. American International Group Inc. rose as the insurer sold its Hartford Steam Boiler unit to Munich Re for $742 million. General Motors Corp. slid as Toyota Motor Corp. forecast its first operating loss in 71 years on plummeting demand.

The S&P 500 capped its second straight weekly gain after the Federal Reserve slashed interest rates to a record low and President George W. Bush granted emergency loans for GM and Chrysler LLC. President-elect Barack Obama is boosting his stimulus package with a goal of creating or saving 3 million jobs over two years after the U.S. entered a recession and the S&P 500 sank 40 percent in 2008.

The moves by China and the incoming U.S. administration are “part of the ongoing process from governments to stimulate and re-liquefy global economies,” said John Haynes, senior U.S. equity strategist at Rensburg Sheppards Plc in London. “We hope it helps.”

S&P 500 futures expiring in March added 0.5 percent to 885.6 at 8:14 a.m. in New York. Dow Jones Industrial Average futures gained 0.4 percent to 8,567 and Nasdaq-100 Index futures increased 0.4 percent to 1,215.75.

Obama’s Jobs Plan

Obama’s new jobs target was revised from the 2.5 million he previously announced and came at the suggestion of Christina Romer, the president-elect’s pick to head the Council of Economic Advisers, during a Dec. 16 meeting with top economic advisers, a transition aide said Dec. 20.

Obama, who takes office Jan. 20, is making job creation his first priority as reports suggest unemployment will grow further in the worst financial crisis since the Great Depression.

The S&P 500 may rebound 18 percent next year, Barron’s reported, citing a survey of 12 strategists and chief investment officers. The gains may come even as the respondents expect the economy to continue to contract, Barron’s said.

Alcoa gained 4.2 percent to $10.11 in Germany. China’s one- year lending rate will drop by 0.27 percentage point to 5.31 percent and the deposit rate by the same amount to 2.25 percent from tomorrow, the People’s Bank of China said on its Web site. The central bank also reduced the proportion of deposits lenders must set aside as reserves by 0.5 percentage point.

AIG, GM

AIG added 3.1 percent to $1.65. The insurer will sell Hartford Steam Boiler for $742 million, about a third less than what it paid for it eight years ago, as it tries to repay loans tied to the company’s $152.5 billion government rescue.

GM fell 6.2 percent to $4.21 in German trading, indicating the stock may trim its 23 percent surge on Dec. 19. Toyota forecast the operating loss as the global recession decimates car demand and the yen strengthens. Moody’s Investors Service signaled it may downgrade Toyota’s top-rated debt.

Manpower Inc., an employment-services provider, slid 1.1 percent to $36. The company withdrew its forecast for the fourth quarter, citing continued declines in the global labor markets and changes in foreign currencies. Manpower said it plans to take a restructuring charge in the fourth quarter related to job cuts and office closure costs.

Chile Acquisition

Walgreen Co., the largest U.S. drugstore chain, drifted between gains and losses before reporting its fiscal first- quarter earnings today.

AllianceBernstein Holding LP may be active. The New York- based money manager whose assets have dropped 44 percent this year named Merrill Lynch & Co.’s Peter S. Kraus chairman and chief executive officer to replace Lewis Sanders, who is retiring. AllianceBernstein didn’t trade in Europe.

Wal-Mart Stores Inc., which gets almost a quarter of revenue overseas, rose 1.2 percent to $56.42. The retailer plans to buy Distribucion y Servicio D&S SA, Chile’s biggest grocer, to expand in South America.

To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net.