Stocks, Euro Rise on Gain in German Confidence

By Stephen Kirkland and Shiyin Chen - Nov 24, 2011 7:48 PM GMT+0700

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Nov. 24 (Bloomberg) -- Pranay Gupta, chief investment officer for Asia Pacific at ING Investment Management in Hong Kong, talks about the European debt crisis and its implications for global stock markets. Gupta also discusses the U.S. economy and budget deficit. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

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Nov. 24 (Bloomberg) -- George Feiger, chief executive offer of Contango Capital Advisors Inc., a San Francisco-based wealth management firm, talks about the impact of the eurozone crisis on U.S. financial markets and his investment strategy. Feiger speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

European stocks rose for the first time in six days and the euro rebounded against the dollar after German business confidence unexpectedly increased. German bonds declined, while commodities gained.

The Stoxx Europe 600 Index added 1 percent at 12:45 p.m. in London, climbing from a seven-week low. Standard & Poor’s 500 futures jumped 0.9 percent. U.S. markets are closed today for Thanksgiving. The Nikkei 225 Stock Average sank 1.8 percent after S&P signaled it may be getting closer to lowering Japan’s sovereign grade. The euro strengthened 0.4 percent to $1.339, while the yield on Germany 10-year bond rose five basis points. Copper added 0.8 percent and oil advanced 0.7 percent.

German business confidence increased for the first time in five months in November, defying Europe’s worsening debt crisis. S&P said Japanese Prime Minister Yoshihiko Noda’s administration hasn’t made progress in tackling the public debt burden. More than $4 trillion has been erased from the value of equities worldwide this month as rising borrowing costs in the euro-area stoked concern the debt crisis will derail economic growth.

“We still see some ‘bright-ish’ spots in all the doom and gloom that surrounds us,” Annalisa Piazza, an strategist at Newedge Group in London, wrote in a report. “Today’s report clearly shows that activity is not going to collapse any time soon in the main EMU economy.”

Five shares advanced for every one that fell on the Stoxx 600. The measure yesterday slumped to the lowest close since Oct. 4. Germany’s DAX Index rallied 1.6 percent, halting an eight-day retreat.

Earnings Top Estimate

Raiffeisen Bank International AG gained 6 percent after eastern Europe’s third-biggest lender reported profit that topped analyst estimates. Dixons Retail Plc jumped the most since May, jumping 9.3 percent after the U.K.’s largest electronics retailer reported a smaller first-half loss (DXNS) than analysts had predicted.

The Munich-based Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 106.6 from 106.4 in October. Economists expected a decline to 105.2, according to the median of 40 forecasts in a Bloomberg News survey.

Germany’s business confidence is “surprisingly stable for the time being,” Markus Steinbeis, head of equity portfolio management at the Unterfoehring, Germany-based unit of Pioneer Investments KGmbH, which oversees about $221 billion globally, said in a phone interview. Macro-economic data in Germany. “Sideways movement from the current levels is the most likely scenario for the year-end.”

Euro Strengthens

The S&P 500 fell for a sixth day yesterday to the lowest level since Oct. 7. The market will reopen for shortened trading tomorrow, closing at 1 p.m.

The euro strengthened 0.2 percent against the pound. The yen climbed 0.4 percent to 77.04 per dollar.

Ten-year German yields advanced as much as 12 basis points to 2.26 percent. Two-year note yields increased three basis points to 0.48 percent.

Germany’s coalition government is concerned it may have to agree to issuing euro bonds under certain conditions, such as tightening the stability pact, Bild reported without saying where it got the information.

The yield on 10-year Spanish bonds fell eight basis points to 6.56 percent, while similar-maturity Italian debt yields rose four basis points to 7.01 percent. The cost of insuring European government debt fell from a record, with the Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments declining three basis points to 374.5.

Portugal Downgrade

Portugal’s bonds fell, with 10-year note yield climbing 74 basis points to 12.05 percent after Fitch Ratings cut the nation’s credit rating one step to BB+, the highest junk status, with a negative outlook.

Oil climbed to $96.86 a barrel in New York, after having dropped 1.9 percent yesterday. Nickel futures increased 1 percent and tin climbed 0.9 percent.

The MSCI Emerging Markets Index rallied 0.7 percent, snapping a seven-day decline, the longest slump since 2009. The Hang Seng China Enterprises Index climbed 1 percent in Hong Kong after the Chinese central bank lowered reserve-ratio requirements for some rural lenders. India’s Sensex rose 1 percent and South Africa’s All-Share Index jumped 1.1percent.

-- With assistance from Julie Cruz in Frankfurt, Emma Charlton, John Deane, Will Hadfield, Adam Haigh and Michael Shanahan in London. Editors: Stephen Kirkland, Stuart Wallace

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Shiyin Chen in Singapore at schen37@bloomberg.net

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