Global Stocks Rally; S&P 500 Heads for Best Week Since November

By Rita Nazareth

March 13 (Bloomberg) -- Stocks rose around the world, extending the biggest weekly gain since November for the Standard & Poor’s 500 Index, as China’s premier drove investors out of Treasuries and Japan pledged aid for its economy.

Bank of America Corp. jumped 7.5 percent, following a 19 percent advance yesterday after the largest U.S. bank by assets said it is profitable. Citigroup Inc. and Wells Fargo & Co. increased at least 6 percent, while Europe’s Barclays Plc and Bank of Ireland Plc rose more than 12 percent. Financial shares in the S&P 500 have soared 36 percent this week, the biggest gain since at least 1989. BHP Billiton Ltd. and Rio Tinto Group climbed as copper and oil prices rose and on speculation China may boost its stimulus measures.

The S&P 500 rose 0.3 percent to 752.74 at 10:27 a.m. in New York, extending its weekly gain to more than 10 percent. The Dow Jones Industrial Average climbed 25.01 points, or 0.4 percent, to 7,195.07. Europe’s Dow Jones Stoxx 600 Index rose 1.4 percent and the MSCI Asia Pacific Index added 3.5 percent.

“The bulls seem to be taking the lead for now,” said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors, which manages $2.1 billion in Rochester, New York. “There’s been a change in tone to more positive comments from financial institutions in addition to the fact that the market had been largely oversold.”

Treasuries fell for the first time in three days after China’s Premier Wen Jiabao said he’s concerned about the safety of U.S. government debt. The yield on the benchmark 10-year note rose 0.07 percentage point to 2.93 percent.

Banks Predict Profits

The S&P 500 yesterday completed the biggest three-day gain since November after General Electric Co. said losing the top credit rating at S&P won’t hurt business. Bank of America joined two of its biggest competitors, JPMorgan Chase & Co. and Citigroup, in saying that it made money during the first two months of the year, rebounding from the worst year for financial institutions since the Great Depression.

The S&P 500 is on course for its biggest weekly increase since a 12 percent rally in the period ended Nov. 28. The measure has increased 12 percent since closing at a 12-year low of 676.53 on March 9.

Bank of America climbed 44 cents to $6.29. Citigroup, the recipient of $45 billion in government rescue funds, rose 9.6 percent to $1.83, while Wells Fargo added 6 percent to $14.78.

Earnings Watch

Earnings at financial companies in the S&P 500 are expected to decline 27 percent in the first quarter of 2009, while rising more than 10-fold for the full year, according to estimates compiled by Bloomberg.

BHP Billiton, the world’s largest mining company, and Rio Tinto, the third-biggest, rallied on speculation that China may boost its stimulus measures.

China is able to add “at any time” to 4 trillion yuan ($585 billion) of stimulus measures to revive the world’s third- biggest economy, Wen told reporters in Beijing. He reaffirmed China’s target for 8 percent growth in 2009.

Japan’s Prime Minister Taro Aso will ask ministers to propose measures and may be ready to announce a package to world leaders at the Group of 20 summit in the U.K. in April, Finance Minister Kaoru Yosano said in Tokyo today.

Copper rose the most in a week and aluminum as the rally in global equities eased concern that the recession will deepen and reduce metals demand. Crude oil traded above $47 a barrel, set for a fourth weekly gain, as OPEC prepared to meet this weekend to consider a cut in output.

Merck & Co. rose 5.7 percent to $25.40. The drugmaker was raised to “outperform” from “market-perform” at Sanford C. Bernstein & Co., which cited the company’s planned acqusition of Schering-Plough Corp.

Technology Shares

Palm Inc. climbed 3.7 percent to $8.15. The maker of the Treo and Centro mobile phones was raised to “outperform” from “sector perform” at RBC Capital Markets, which said the WebOS operating system “has raised Palm’s chances for Smartphone leadership.”

National Semiconductor Corp. lost 3 percent to $10.68, limiting gains in technology shares, after the chipmaker’s credit rating was cut to junk by Standard & Poor’s, which cited “pressure on profitability.”

Confidence among U.S. consumers in March held close to a 28-year low, reflecting mounting job losses amid a deepening recession. The Reuters/University of Michigan preliminary index of consumer sentiment climbed to 56.6 from 56.3 in February. The gauge reached a 28-year low of 55.3 in November.

Goldman Sachs Group Inc. cut its forecast for the global economy for the second time in eight days after predicting a deeper recession in Europe. The bank now estimates a 1 percent contraction after previously saying the world economy may shrink 0.6 percent.

To contact the reporter on this story: Rita Nazareth in New York at nazareth@bloomberg.net.