Stocks Rise in Europe on Debt Sales as U.S. Futures Gain; Sugar Advances

By Stephen Kirkland and Lynn Thomasson - Dec 13, 2011 8:12 PM GMT+0700

European stocks gained after German investor confidence unexpectedly increased and Spain sold more debt than planned at an auction. U.S. index futures rose before a report that may show American retail sales advanced.

The Stoxx Europe 600 Index added 0.7 percent at 8:10 a.m. in New York. Standard & Poor’s 500 Index futures jumped 0.7 percent. The yield on the Spanish two-year note fell 32 basis points to 4.16 percent. The 10-year Italian yield rose 11 basis points, after climbing as much as 19 basis points. Silver, cocoa and Brent crude led commodity gains.

The ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations increased to minus 53.8 in December from a three-year low of minus 55.2 the previous month. Spain sold 4.94 billion euros ($6.5 billion) of bills, more than the maximum target of 4.25 billion euros. Sales at U.S. retailers probably rose 0.6 percent last month, economists said before a Commerce Department report.

Germany’s confidence data show “the first monthly uptick since the start of the year and it suggests some stabilization in future expectations after the ‘panic’ decline due to the worsening of the European Monetary Union debt crisis,” Annalisa Piazza, a strategist at Newedge Group in London, wrote in a report.

Three shares advanced for every one that declined in the Stoxx 600. Gauges of energy, mining and technology stocks led gains among 19 industry groups, jumping more than 1 percent. Lagardere SCA, France’s biggest publisher, rose 4.7 percent after Deutsche Bank AG upgraded the shares. Whitbread Plc sank 4.6 percent as the U.K. owner of Premier Inn budget lodges and Costa Coffee shops reported revenue growth slowed.

Fed Meeting

The ZEW’s gauge of expectations was forecast to drop to minus 55.8, according to the median of 34 estimates in Bloomberg survey of economists. Its index of current conditions fell to 26.8 from 34.2 in November, compared with a reading of 31 in a Bloomberg survey.

The gain in U.S. futures indicated the S&P 500 will snap yesterday’s 1.5 percent decline. Retail purchases excluding autos rose 0.4 percent after a 0.6 percent advance, according to the median forecast of 75 economists in a Bloomberg survey. The Federal Reserve may keep its target rate in a range of zero to 0.25 percent at a policy meeting today, a Bloomberg survey showed.

The yield on Spain’s 10-year note rose less than one basis point, after climbing as much as 11 basis points. The government sold 12-month debt at an average yield of 4.050 percent, compared with 5.022 percent at an auction on Nov. 15, and 18- month bills at 4.226 percent, down from 5.159 percent last month.

ESFS Debt Sale

German bonds declined, driving the 10-year yield up three basis points, with the two-year note yield rising four basis points. The European Financial Stability Facility, the region’s temporary bailout fund, sold 1.97 billion euros of 91-day bills at an average yield of 0.2222 percent, the Bundesbank said. Investors bid for 3.2 times the amount sold, according to data from the central bank.

The cost of insuring sovereign and bank debt fell after the EFSF bill sale. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments dropped four basis points to 378 and the gauge of swaps on financial companies lost 8.5 to 317 basis points.

The U.S. 10-year Treasury yield increased two basis points to 2.03 percent as the government prepared to auction $21 billion of the securities, the second of four sales of coupon- bearing debt this week. A three-year sale yesterday drew record demand as investors sought a haven from Europe’s debt crisis.

Commodities Gain

The S&P GSCI index of 24 commodities rose 0.6 percent. Crude oil for January delivery gained 0.8 percent to $98.52 a barrel on the New York Mercantile Exchange, while gasoline advanced 1.2 percent to $2.5942 a gallon. Copper for delivery in three months added 0.3 percent and aluminum 0.5 percent. Raw sugar for March settlement jumped 1 percent in New York.

The MSCI Emerging Markets Index fell 0.6 percent, heading for the lowest close since Nov. 29. South Korea’s Kospi Index sank 1.9 percent after Morgan Stanley cut its rating for the nation’s equities to “equal-weight” from “overweight.” The Shanghai Composite Index dropped 1.9 percent to a more than two- year low.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net

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