By Adam Haigh
Nov. 23 (Bloomberg) -- European and Asian shares advanced and U.S. stock-index futures rose amid speculation the economic recovery is strengthening and as higher commodity prices boosted the earnings outlook for raw-material producers.
BHP Billiton Ltd. and Rio Tinto Group climbed at least 3 percent in London as copper and oil gained. Renault SA, Europe’s second-biggest automaker, increased 4.3 percent after Credit Suisse Group AG advised buying the shares. James Hardie Industries NV, the top seller of home siding in the U.S., surged 6.4 percent in Sydney after forecasting full-year earnings at the top end of a range of analyst estimates.
Europe’s Dow Jones Stoxx 600 Index advanced 1.5 percent to 247.22 at 10:20 a.m. in London as all 19 industry groups rose. The gauge has surged 56 percent since March 9 as governments worldwide enacted spending programs and cut borrowing costs to revive economic growth. The rally has pushed the index to more than 53 times its companies’ reported earnings, near the highest level since 2003, according to Bloomberg data.
“Valuations are really not that excessive and you have a good stimulus coming from monetary policy at the moment,” said Lucy MacDonald, chief investment officer at RCM UK Ltd., which has about $72 billion in assets under management. She spoke in a Bloomberg Television interview.
Standard & Poor’s 500 Index futures gained 1 percent before a report that may show sales of existing U.S. homes increased. The MSCI Asia-Pacific Excluding Japan Index rose 1 percent. Japan’s markets were closed for a holiday.
European Economy
Europe’s services and manufacturing industries expanded at the fastest pace in two years in November after a reviving global economy helped the euro region emerge from the worst recession in more than 60 years.
A composite index based on a survey of purchasing managers in services and manufacturing in the 16-nation euro area rose to 53.7 from 53 in October, London-based Markit Economics said today. A reading above 50 indicates expansion. The German, French and Italian economies have exited recession this year amid about $12 trillion in spending by governments worldwide and record low-interest rates.
“We are rather confident in developed-market equities and we don’t see any reason to starting reducing our position,” said Andrew Popper, London-based chief investment officer at SG Hambros Bank Ltd. “We aren’t in the midst of an asset bubble as far as the developed markets are concerned.”
Mining Companies
BHP Billiton, the world’s largest mining company, added 3 percent to 1,862 pence, leading a measure of basic-resource producers to the steepest increase among 19 industry groups in the Stoxx 600. Rio Tinto, the third-biggest, gained 3.7 percent to 3,264.5 pence.
Copper advanced as much as 2.4 percent in London and prices of lead, nickel and zinc climbed. Newcrest Mining Ltd., Australia’s largest gold producer, rose 3.2 percent to A$37 in Sydney and Randgold Resources Ltd. rallied 4.1 percent to 5,155 pence as gold jumped to a record.
Total SA, Europe’s third-biggest oil company, surged 2.1 percent to 42.32 euros as crude increased.
The S&P GSCI index of 24 commodities rose 1.3 percent in London, extending its annual advance to almost 48 percent, the best performance since 1973.
Renault, which owns 44 percent of Yokohama-based Nissan Motor Co., gained 4.3 percent to 33.36 euros. Credit Suisse raised its recommendation on the shares to “outperform” from “underperform,” citing “exposure to fast improving cash flows” at Nissan.
James Hardie
James Hardie jumped 6.4 percent to A$7.87. The company said profit excluding compensation payments to asbestos victims will be closer to the top analyst forecast of $115 million. The lower end of the range was $77 million.
Cadbury Plc rose 1.9 percent to a record of 815.5 pence after Nestle SA was said to weigh a takeover, the Wall Street Journal said Hershey Co.’s controlling trust wants the U.S. company to make an offer, and Reuters reported that Kraft Foods Inc. may raise its bid.
Sales of existing U.S. homes probably increased in October to the highest level in more than two years, spurred in part by a tax credit that lured first-time buyers, economists said before a National Association of Realtors report due at 10 a.m. in Washington. Purchases rose 2.3 percent to a 5.7 million annual rate, according to the median forecast of 60 economists surveyed by Bloomberg News.
For the first time since the equity rally began in March, the biggest U.S. stocks are beating the smallest as the dollar’s descent sends investors to companies with the most business in international markets.
The Dow Jones Industrial Average of companies with $111.4 billion in median market value rose 6.2 percent this quarter, compared with the 2.6 percent loss by the S&P SmallCap 600 Index, whose members are worth $572.3 million on average. The Dow had trailed by 26 percentage points following the stock market’s low on March 9.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
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