By Stephen Kirkland - Nov 30, 2011 8:19 PM GMT+0700
Nov. 30 (Bloomberg) -- Anthony Crescenzi, executive vice president at Pacific Investment Management Co., talks about the global economy and financial markets. Crescenzi also discusses the U.S. and China's banking industries and real estate markets. He speaks from Newport Beach, California, with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
Nov. 30 (Bloomberg) -- Ritesh Maheshwari, an analyst at Standard & Poor's in Singapore, talks about Asian banks' credit ratings. S&P upgraded ratings of Bank of China Ltd. and China Construction Bank Corp. to A from A- and maintained the A rating on Industrial & Commercial Bank of China Ltd., giving all three lenders higher grades than most big U.S. banks. Maheshwari speaks with John Dawson on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
European stocks rose for a fourth day and U.S. index futures rallied after central banks acted together to make additional funds available to banks. Italian bonds dropped while the German one-year yield sank below zero for the first time.
The Stoxx Europe 600 Index added 3 percent at 8:17 a.m. in New York. Standard & Poor’s 500 Index futures gained 2.6 percent. The three-month cross-currency basis swap, the rate banks pay to convert euro payments into dollars, dropped to 157 basis points below the euro interbank offered rate, from as high as 163 this morning, a three-year high. The yield on the 10-year Treasury note rose four basis points to 2.03 percent. Oil jumped 1.4 percent, and copper rallied 2.3 percent.
The central banks of the U.S., the euro region, Canada, the U.K., Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements, the Federal Reserve said in a press release. They also agreed to make other currencies available as needed, it said.
“The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the Fed said.
China said earlier it will cut reserve requirement ratio for banks by 0.5 percentage points from Dec. 5, according to the central bank website. Finance ministers yesterday agreed to guarantee as much as 30 percent of new bond sales from troubled governments to enhance the region’s bailout fund, and to improve its ability to cap yields by buying bonds.
China’s Concern
“The Chinese move reflects how concerned they are about the European Union debt threat and that’s how investors also see it,” Chris Weafer, chief strategist at Troika Dialog in Moscow, said by e-mail. “That is still the dominant issue affecting all markets and will remain so well into 2012.”
The next 10 days will be a “critical period” to complete the crisis response, European Union Economic and Monetary Affairs Commissioner Olli Rehn said today in Brussels.
More than 20 stocks advanced for every one that declined in the Stoxx 600. Barclays Plc and Deutsche Bank AG rallied more than 6 percent. BP Plc, Europe’s second-biggest oil producer, climbed 4.7 percent, and BHP Billiton Plc, the world’s largest mining company, jumped 5.7 percent.
Stocks fell earlier after S&P cut debt ratings on lenders from Bank of America Corp. to Goldman Sachs Group Inc. to UBS AG. More than $3 trillion has been erased from the value of global equities this month as rising borrowing costs in Italy and Spain signaled Europe’s debt crisis was worsening.
U.S. Jobs
The gain in U.S. index futures indicated the S&P 500 will pare a 4.6 percent retreat in November, its sixth month of declines in seven.
U.S. companies added 260,000 workers in November, according to data from ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for an advance of 130,000.
The 10-year Italian bond yield rose seven basis points to 7.30 percent, with the equivalent Spanish yield climbing three basis points. Germany’s one-year yield dropped 14 basis points to minus 0.06 percent.
Italian bonds fell even as the European Central Bank bought the nation’s securities, according to three people with knowledge of the transactions, who declined to be identified because the deals are private. A spokesman for the ECB in Frankfurt declined to comment.
----With assistance from Will Hadfield, Sharon Lindores, Daniel Tilles and Jason Webb in London. Editors: Stephen Kirkland, Mark Gilbert
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 jcarrigan@bloomberg.net
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