Stocks, Metals Gain as China Cuts Reserve Ratio

By Stephen Kirkland and Lynn Thomasson - Feb 20, 2012 8:05 PM GMT+0700

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Feb. 20 (Bloomberg) -- Henrik Drusebjerg, senior strategist at Nordea Bank AB, talks about a second bailout package for Greece and his investment strategy. He speaks from Copenhagen with Maryam Nemazee on Bloomberg Television's "The Pulse." (Source: Bloomberg)

Stocks rose for a fourth day and metals rallied after China’s central bank cut reserve requirements for lenders. The euro and Italian bonds gained as European leaders prepared to discuss a Greek rescue.

The MSCI All-Country World Index (MXWD) added 0.6 percent to a six-month high at 1 p.m. in London. Standard & Poor’s 500 Index futures advanced 0.6 percent. U.S. markets are closed for a holiday. The euro appreciated 1 percent to $1.3272, and the yield on the 10-year Italian note fell 11 basis points. Copper rose for the first time in seven days. Oil climbed to a nine- month high as Iran said it halted some crude exports.

Finance ministers gathering today in Brussels will try to settle remaining disputes to wrap up a 130 billion-euro ($173 billion) bailout to fend off a Greek default. The proportion of cash that Chinese lenders must set aside will be cut by half a percentage point from Feb. 24, the central bank said Feb. 18.

“The market is once again hoping and expecting a deal in Greece, and that’s lifting risk appetite,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen. Investors “are looking to China to generate growth so it’s very important that officials are supporting the growth outlook. It also fits into the broader picture with most central banks in an easing mode, very focused on securing monetary conditions that are stimulating to growth,” he said.

TNT Bid

The Stoxx Europe 600 Index (SXXP) climbed 0.9 percent to the highest since Aug. 1 as five shares rose for every one the fell. TNT Express NV surged 55 percent after Europe’s second-largest express-delivery service rejected a $6.43 billion takeover offer from United Parcel Service Inc. PostNL NV, which owns 29.9 percent of TNT Express after a spin off from Dutch postal operator TNT NV in May, rose 48 percent.

The euro climbed 0.9 percent versus the yen. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, declined 0.6 percent. The yen weakened against 13 of 16 major counterparts monitored by Bloomberg.

The yield on the Greek bond due October 2022 declined 39 basis points to 33.99 percent, with the price rising to 20.82 percent of face value. The Spanish 10-year yield slipped nine basis points, while the German 10-year bund yield rose four basis points.

The cost of insuring against default of European financial- company debt fell to the lowest in two weeks, with the Markit iTraxx Financial Index of credit-default swaps linked to 25 banks and insurers dropping 6.5 basis points to 216.

Iran’s New Customers

Copper advanced 1 percent. Oil in New York jumped as much 2.1 percent to $105.44 a barrel, the highest price for a most- active contract since May 5, before trading 1.8 percent higher. Iran will supply crude to “new customers” instead of companies in the U.K. and France, the oil ministry’s news website, Shana, said, citing Alireza Nikzad Rahbar, a spokesman.

The MSCI Emerging Markets Index (MXEF) increased 0.4 percent, on course for its highest closing level since Aug. 4. Russia’s Micex Index (MICEX) rose 0.7 percent on higher oil. Benchmark gauges climbed 1.5 percent in Hungary and 1 percent in Turkey. The Shanghai Composite Index (SHCOMP) added 0.3 percent, while the Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong retreated 0.4 percent. India is closed for a public holiday.

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: Mark Gilbert at magilbert@bloomberg.net