Stocks, Commodities Rise as Italy Prepares to Vote

By Stephen Kirkland and Rita Nazareth - Nov 8, 2011 9:30 PM GMT+0700

U.S. equities gained and European stocks halted a two-day slump as Italian lawmakers prepare to vote on Prime Minister Silvio Berlusconi’s budget. Commodities advanced for a fifth day, led by energy.

The Standard & Poor’s 500 added 0.3 percent at 9:30 a.m. in New York and the Stoxx Europe 600 Index climbed 1.7 percent. The S&P GSCI index of 24 commodities increased 0.8 percent as New York oil jumped to a three-month high. The German 10-year bund yield rose six basis points, gaining for the first day in three, while Italy’s yield retreated from a euro-era record.

The vote in Rome today will test Berlusconi’s majority in parliament, while Greece moved closer to agreement on naming the head of a unity government to secure a resumption of international aid. The European Central Bank’s Juergen Stark said yesterday the debt crisis will be controlled within two years and Germany’s Federal Statistics Office reported an unexpected increase in exports today.

“How many times do you bury the dead?” Stanley Nabi, New York-based vice chairman of Silvercrest Asset Management Group, which oversees more than $10 billion, said in a telephone interview. “We’ve been looking at this European crisis for a while, you get used to the problem and there’s a temporary accommodation. The market’s feeling a sense of relief about Italy. There’s a sense that they are finally trying to get their act together.”

Earnings Results

The S&P 500 rebounded for a second day after falling 2.5 percent last week, its firstly weekly retreat since September. Priceline.com Inc., the biggest U.S. online travel agency by stock market value, gained after saying fourth-quarter sales will rise 27 percent to 32 percent from a year earlier.

More than six shares advanced for every one that declined in the Stoxx 600, helping the gauge rebound from a two-day, 1.6 percent loss. Vodafone Group Plc (VOD), the world’s largest mobile- phone operator, gained 3.1 percent, the most since September after boosting its full-year earnings forecast. Marks & Spencer, the U.K.’s largest clothing retailer, climbed 2 percent after saying expenses will rise less than earlier predicted. Lloyds Banking Group Plc and Societe Generale SA rallied more than 7 percent after also reporting results.

SocGen, France’s second-largest bank, said net income dropped 31 percent to 622 million euros, hurt by a writedown of Greek government debt and lower trading revenue. The shares rose as the company accelerated the reduction of its balance sheet and decreased U.S. dollar financing needs.

The Dutch 10-year yield increased three basis points to 2.26 percent as the Netherlands sold 1.99 billion euros, compared with a maximum target of 2.5 billion euros, of July 2021 bonds. The Italian 10-year yield fell two basis points to 6.63 percent after rising to 6.74 percent, the most since before the euro was introduced in 1999.

Bond Risk

The cost of insuring sovereign debt fell for a second day, with the Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments dropping four basis points to a mid-price of 322.

The yield on the 10-year U.S. Treasury note was little changed at 2.04 percent. The government auctions $32 billion of three-year notes, the first of three sales this week totaling $72 billion.

The pound strengthened against most of its 16 major peers monitored by Bloomberg after a report showed U.K. manufacturing production rose for the first time in four months in September, led by transport equipment and metals.

New York oil climbed as much as 1.4 percent to $96.87 a barrel, the highest since Aug. 1, on shrinking crude stockpiles in the U.S. Copper climbed for the first day in three as stockpiles in warehouses monitored by the London Metal Exchange fell to an eight-month low.

The MSCI Emerging Markets Index increased 0.2 percent, after falling 0.5 percent. The benchmark BUX Index in Budapest advanced 1.1 percent, and Poland’s WIG20 gained 1.2 percent. South Korean chipmakers including Samsung Electronics Co. retreated as prices for dynamic random access memory declined for a fourth day.

To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net