U.S. Futures Rise as Europe Stocks Gain on German Confidence; Oil Advances

By Claudia Carpenter - Dec 20, 2011 5:02 PM GMT+0700

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Dec. 20 (Bloomberg) -- Lorraine Tan, director of Asia equity research at Standard & Poor’s, talks about regional stock markets and economies. She speaks from Singapore with Rishaad Salamat on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

U.S. stock-index futures rose, indicating the Standard & Poor’s 500 index will rebound from its biggest drop in a week, and Treasuries fell before housing data that may show the world’s largest economy is improving. European stocks rallied after German confidence unexpectedly gained.

Futures on the Standard & Poor’s 500 Index climbed 1 percent at 10 a.m. in London. The Stoxx Europe 600 Index rose 0.6 percent after earlier dropping 0.5 percent. Spain’s government bonds stayed higher as the nation sold 5.64 billion euros ($7.4 billion) of Treasury bills. The yield on the 10-year U.S. Treasury note advanced five basis points to 1.86 percent, with the dollar weakening against all but one of its 16 most- traded peers. Oil advanced 1.3 percent and the GSCI index of 24 commodities gained for a second day.

Builders probably began work on more homes in the U.S. last month, economists surveyed by Bloomberg said before a report today. Federal Reserve Bank of Richmond President Jeffrey Lacker predicted the U.S. economy will grow at least 2 percent next year. German business confidence unexpectedly rose for a second month in December, according to the Ifo institute.

“U.S. equities offer the best risk-reward attractions of all the developed markets,” said Kevin Gardiner, head of global investment strategy at Barclays Wealth in London, which oversees 169.5 billion pounds ($263.8 billion). “Even in the eventuality of a slower-than-expected second-half recovery in the U.S. economy, we expect corporates to continue to demonstrate robust earnings growth.”

Housing Starts

The gain in S&P 500 futures signaled the benchmark U.S. stock index may rebound from yesterday’s 1.2 percent loss. Housing starts climbed 1.1 percent in November from the previous month to 635,000, according to a Bloomberg News survey of 79 economists before a Commerce Department report due for release at 8:30 a.m. in Washington.

About five shares advanced for every one that declined on the Stoxx 600. Bayerische Motoren Werke AG and Daimler AG led gains among automakers, rising at least 1.4 percent.

The German Ifo institute’s business climate index, based on a survey of 7,000 executives, increased to 107.2 from 106.6 in November, the Munich-based institute said. Economists had expected a drop to 106, the median forecast of 36 economists in a Bloomberg survey showed.

Fresenius Medical

Health-care shares limited gains in Europe as AstraZeneca Plc, the U.K.’s second-biggest drugmaker, slid 2.5 percent after saying earnings will be at the low end of its forecast following research setbacks. Fresenius Medical Care AG slipped 1.3 percent as the world’s largest provider of kidney dialysis cut its full- year revenue forecast.

Per-share earnings at health-care companies in the Stoxx 600 are forecast to grow 1.7 percent in 2012, compared with an increase of 9.8 percent for the index as a whole, according to analyst estimates compiled by Bloomberg.

The five-year Treasury note yield increased three basis points before the government auctions $35 billion of the securities. The yield on Germany’s 10-year bund rose four basis points, while similar-maturity Italian yields slid 13 basis points.

Spain’s 10-year bond yields were six basis points lower at 5.11 percent and two-year note yields were seven basis points lower at 3.31 percent.

The nation sold 5.64 billion euros of three-month and six- month bills, the Bank of Spain said, compared with a maximum target of 4.5 billion euros the Treasury had set for the sale.

Oil for January delivery climbed as much as 1.4 percent to $95.15 a barrel. U.S. crude inventories dropped 2 million barrels last week, according to the median of seven analyst estimates before today’s weekly Energy Department report. The GSCI index jumped 1 percent, as Brent crude, heating oil, aluminum, copper and gasoline climbed more than 1 percent.

Kospi Index

The MSCI Emerging Markets Index (MXEF) rose 0.2 percent. The Kospi Index climbed 0.9 percent in Seoul, rebounding from a 3.4 percent slide yesterday, and the won strengthened 1.1 percent against the dollar. South Korea’s National Pension Service, the nation’s biggest investor, said it bought stocks yesterday after the death of North Korean leader Kim Jong Il spurred some investors to sell on concern the leadership transition may lead to conflict on the peninsula. Moody’s Investors Service and Standard & Poor’s said Kim Jong Il’s death is unlikely to affect South Korea’s credit rating.

The won climbed 1.1 percent to 1,162.18 per dollar today after touching 1,179.95 yesterday, the weakest level since Oct. 7.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net