European, Asian Shares Gain; U.S. Stock-Index Futures Climb

By Andrew Rummer

Nov. 25 (Bloomberg) -- European and Asian stocks advanced and U.S. index futures rose as Japan’s exports fell at the slowest pace in a year and Federal Reserve officials increased their forecast for U.S. economic growth.

Compass Group Plc, the world’s largest catering company, gained 4 percent after earnings topped analysts’ estimates. BHP Billiton Ltd., the largest mining company, climbed 2.3 percent in London as metals increased and Australia’s central bank said the country’s economy entered a “new upswing.”

Europe’s Dow Jones Stoxx 600 Index added 0.9 percent to 249.15 at 8:24 a.m. in London. The gauge has advanced 58 percent since March 9 amid signs government spending and record-low interest rates are helping to drag the economy out of recession.

“The macro setting is clearly improving,” said Franz Wenzel, deputy director of investment strategy at Axa Investment Managers in Paris, which oversees about $600 billion. “GDP is going to continue to expand and central banks will remain fairly accommodative. A lot of investors have been reluctant to buy equities so there is a lot of cash waiting on the sidelines,” he said in a Bloomberg television interview.

The MSCI Asia Pacific Index added 1 percent today as Japan’s exports fell at the slowest pace in a year in October. Shipments abroad slid 23.2 percent from a year earlier, according to the Finance Ministry in Tokyo. The median estimate of economists surveyed by Bloomberg was for a 26.8 percent drop.

Standard & Poor’s 500 Index futures rose 0.5 percent before reports on consumer spending, durable goods and home sales.

Fed Forecasts

Fed policy makers raised their forecast for 2010 economic growth yesterday, to a range of 2.5 percent to 3.5 percent from 2.1 percent to 3.3 percent. Fed governors and regional-bank presidents predicted the unemployment rate will range from 9.3 percent to 9.7 percent in next year’s fourth quarter, down from the June projection of 9.5 percent to 9.8 percent, according to minutes of the Federal Open Market Committee’s Nov. 3-4 meeting.

The Fed indicated the benchmark lending rate would remain near zero “for an extended period” as long as inflation expectations are stable and unemployment fails to decline. The earliest policy makers will increase borrowing costs is in the third quarter of next year, according to economists in a Bloomberg survey.

European stocks may yield a total return of 12 percent to 14 percent next year, as valuations are attractive when adjusted for interest rates, while sales growth will boost earnings, strategists at Exane BNP Paribas wrote in a report today.

Double-Dip ‘Unlikely’

“A double-dip recession looks unlikely in 2010 as fiscal stimulus and restocking have yet to have their full impact on GDP growth,” Exane’s Paris-based strategist Bert Jansen wrote in the report. “Equities remain attractive when adjusted for exceedingly low interest rates and bond yields.”

The U.K. economy shrank less than previously estimated in the third quarter as the longest recession on record eased, a survey of economists shows. Gross domestic product probably fell 0.3 percent from the second quarter, less than the 0.4 percent drop reported on Oct. 23, according to the median of 28 economists’ forecasts in a Bloomberg News survey. The Office for National Statistics will release its second estimate at 9:30 a.m. in London.

Compass advanced 4 percent to 417.9 pence. Net income in the year ended Sept. 30 climbed to 586 million pounds ($974 million) from 443 million pounds a year earlier, the Chertsey, England-based company said. That beat the 526 million-pound median estimate of seven analysts surveyed by Bloomberg.

BHP Billiton rose 2.3 percent to 1,901 pence as copper, zinc and lead climbed in London. Rio Tinto Group, the third- largest mining company, increased 1.6 percent to 3,222 pence.

Australia’s economy has entered a “new upswing” that will last for several years, helping the nation’s households fund mortgage costs, said Ric Battellino, deputy governor of the central bank.

Accor SA added 2.6 percent to 37.42 euros after Wansquare reported that the board of Europe’s biggest hotel company hired JPMorgan Chase & Co. as an independent adviser on a possible split of its hotel and voucher businesses.

To contact the reporter on this story: Andrew Rummer in London at arummer@bloomberg.net.