By Stephen Kirkland and Lynn Thomasson - Dec 2, 2011 8:37 PM GMT+0700
Dec. 2 (Bloomberg) -- James Shugg, a senior economist at Westpac Banking Corp., discusses the performance of the U.S. economy and the outlook for "catastrophe" in Europe. He speaks from Sydney with Linzie Janis on Bloomberg Television's "First Look." (Source: Bloomberg)
Dec. 2 (Bloomberg) -- Mikio Kumada, a global strategist at LGT Capital Management in Singapore, talks about the global economy and stock markets. Kumada also discusses Europe's sovereign debt crisis, China's economy and central bank monetary policy. He speaks with John Dawson on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
Dec. 2 (Bloomberg) -- Stocks rose, poised for the best week in three years, and U.S. futures climbed as America’s jobless rate unexpectedly dropped and investors speculated the International Monetary Fund will play a larger role in fighting the debt crisis. Treasuries fell.
The MSCI All Country World Index added 0.6 percent at 8:34 a.m. in New York, bringing its five-day advance to 8.7 percent. The Stoxx Europe 600 Index gained 1.5 percent, and Standard & Poor’s 500 Index futures increased 1.2 percent. The euro strengthened for a third day against the dollar and the yen. The yield on Spain’s 10-year bonds fell 18 basis points, and Italy’s yield slipped eight basis points. Ten-year U.S. Treasury yields advanced five basis points to 2.14 percent. Gasoline jumped 2.8 percent and nickel rose 2.2 percent.
The jobless rate dropped to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed. Two people familiar with the negotiations said a proposal to channel loans through the IMF may deliver as much as 200 billion euros ($270 billion), while German Chancellor Angela Merkel renewed her push for European fiscal union.
“The U.S. economy isn’t as weak as investors feared,” said Kenji Sekiguchi, general manager at Tokyo-based Mitsubishi UFJ Asset Management Co., which oversees about $75 billion. “The focus has shifted temporarily away from Europe and toward the U.S., while investors wait for Europe to come up with policies.”
About $3 trillion was added to the value of global stocks this week and bond risk fell the most on record after central banks added liquidity to stimulate lending and support economic growth.
Banks Rally
The Stoxx 600 has rallied 9 percent this week. Banks led gains, with BNP Paribas SA, France’s largest lender (BNP), and Credit Suisse Group AG, Switzerland’s second-biggest (CSGN), adding more than 5 percent. Volkswagen AG, Bayerische Motoren Werke AG and Daimler AG jumped more than 2 percent after Autodata Corp. reported U.S. light-vehicle sales increased at the fastest pace since August 2009.
The increase in U.S. futures indicated the S&P 500 will extend its best weekly performance since March 2009. today in Washington. Payrolls climbed 120,000, with more than half the hiring coming from retailers and temporary help agencies, after a revised 100,000 rise in October that was more than initially estimated. The median estimate in a Bloomberg News survey called for a gain of 125,000.
James Bullard, president of the Federal Reserve Bank of St. Louis, said yesterday recent reports point to stronger growth and the central bank shouldn’t rush to ease monetary policy further.
Best Week on Record
The euro strengthened 0.6 percent versus the dollar and 0.9 percent against the yen. The Dollar Index (DXY) declined 0.4 percent, leaving the gauge 2.1 percent lower this week. Canada’s currency pared gains after a government report showed employers unexpectedly cut jobs in November and the unemployment rate rose.
Spanish 10-year government bonds rose for a fifth day, sending yields down more than 100 basis points in the week, the most since the euro-region was created in 1999. German 10-year bund yields rose one basis point to 2.19 percent.
The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments slipped seven basis points to 328, taking the drop this week to 57 basis points. The Markit iTraxx Financial Index of default swaps linked to the senior bonds of 25 banks and insurers fell 11 basis points to 285.5, making a weekly decline of 72.5. Both gauges were at record highs on Nov. 25.
Gasoline rose to $2.6295 a gallon. Copper increased 2.2 percent. The U.S. is the second-biggest user of copper, after China. West Texas Intermediate oil advanced 0.9 percent to $101.11 a barrel.
----With assistance from, Claudia Carpenter, Emma Charlton, Will Hadfield and Abigail Moses in London. Editors: Stephen Kirkland, Michael Regan
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net;
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
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