By Sarah Jones
Aug. 24 (Bloomberg) -- Stocks in Europe and Asia rose, pushing the MSCI World Index higher for a fifth day, as an advance in commodities boosted the earnings outlook for metal producers. U.S. index futures climbed.
BHP Billiton Ltd. and Rio Tinto Group gained more than 2 percent as copper rallied. Sulzer AG increased 2.7 percent after the Swiss maker of textile machines reported profit that beat analysts’ estimates. WPP Plc surged 5.1 percent as Deutsche Bank AG recommended the shares before the world’s largest advertising company reports earnings this week.
The MSCI World added 0.6 percent as of 11:43 a.m. in London for the longest stretch of gains in four weeks. The measure has rebounded 58 percent since March 9 to a 10-month high after companies from Goldman Sachs Group Inc. to GlaxoSmithKline Plc posted better-than-estimated earnings and the German and French economies unexpectedly expanded.
“People are relieved that we are no longer talking about the ‘D-word’ of depression and rather that we are now coming out of recession,” said Rupert Armitage, head of equities at Shore Capital Group Plc in London, which has about $2.3 billion in assets under management. “Ultimately it’s aboutw confidence and investors now are feeling much better than they did 9-to-12 months ago.”
Federal Reserve Chairman Ben S. Bernanke said at a meeting in Jackson Hole, Wyoming last week that the global economy is “beginning to emerge” from a recession after aggressive action by central banks and governments. European industrial orders increased more than economists forecast in June, the latest indication that the worst slump in six decades is easing.
European, Asian Shares
Europe’s Dow Jones Stoxx 600 Index added 0.7 percent today and the MSCI Asia Pacific Index jumped 2.5 percent. Standard & Poor’s 500 Index futures expiring in September gained 0.3 percent, indicating the benchmark gauge for U.S. equities may extend last week’s increase that sent the measure to the highest level since October.
Governments around the world have pledged about $2 trillion in stimulus measures to help end the worldwide recession. Bernanke and other global policy makers have cautioned that the recovery is likely to be muted, indicating they would not soon remove all the stimulus injected into the financial system. European Central Bank President Jean-Claude Trichet said “green shoots” aren’t enough for him to declare the recovery sustainable.
Double Dip
Nouriel Roubini, the New York University professor who predicted the financial crisis, said the chance of a double-dip recession is increasing because of risks related to ending global monetary and fiscal stimulus. Still, the global economy will bottom out in the second half of 2009, Roubini wrote in a Financial Times commentary today.
BHP Billiton, the world’s largest mining company, gained 2.3 percent to 1,627 pence, while Rio Tinto, the third-biggest, soared 3.6 percent to 2,483.5 pence. Copper rose as much as 2.3 percent on the London Metal Exchange amid speculation the demand outlook for industrial metals is improving.
Eramet SA, operator of the world’s biggest ferronickel plant, jumped 9.2 percent to 223.20 euros after Nomura Holdings Inc. upgraded the shares to “buy” from “neutral” and nickel prices gained.
Alcoa Inc., the largest U.S. aluminum producer, increased 1.8 percent to $12.78 in German trading. Freeport McMoRan Copper & Gold Inc. the world’s biggest publicly traded copper producer, advanced 1.8 percent to $66.21.
Relative Bargains
Commodity companies, the most-expensive stocks in the S&P 500, are turning into relative bargains, data compiled by Bloomberg show.
While investors are paying an average 33.1 times earnings this year for copper, plastic and seed producers, the premium drops to 17.7 based on 2010 analyst estimates that call for profits to almost double. The decline is the steepest for any group in the S&P 500 and would leave the companies 23 percent less expensive than their historical average of 23.2 times.
Sulzer gained 2.7 percent to 84.25 Swiss francs after reporting first-half net income of 155.6 million francs ($146 million). Analysts in a Bloomberg survey had predicted 128 million francs.
WPP advanced 5.1 percent to 530 pence after Deutsche Bank upgraded the advertising company to “buy” from “hold” and increased its share-price estimate by 31 percent to 610 pence.
Amlin Gains
Amlin Plc rallied 2.9 percent to 365.6 pence after the biggest insurer in the Lloyd’s of London market posted a 54 percent increase in first-half net income as gross written premiums increased and investment returns doubled. Pretax profit rose 29 percent to 177.1 million pounds, beating the 133.5 million-pound median estimate of six analysts surveyed by Bloomberg.
Swiss Life Holding AG soared 5.6 percent to 123.8 francs after Sonntagszeitung reported the nation’s largest life insurer may this week announce cost cut measures of 200 million to 300 million francs.
Centrica Group Plc climbed 3.4 percent to 236.5 pence as the company won control of 50.3 percent of Venture Production Plc following a five-month takeover battle for the oil and gas explorer. Britain’s biggest energy supplier bought 8.4 percent of Venture today for 845 pence a share, in line with the price it has offered for all outstanding Venture shares.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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